5 ms·

As I pointed out in https://news.ycombinator.com/item?id=18632319 https://news.ycombinator.com/item?id=18632319, established ICE car companies are going to find

by btilly 8y ago

As I pointed out in https://news.ycombinator.com/item?id=18632319 https://news.ycombinator.com/item?id=18632319, established ICE car companies are going to find that their electric cars are facing a headwind because it is not in their dealers' interests to sell car that require less maintenance. So they aren't a real source of competition for Tesla. However a pure electric company that has established itself in another country, THAT can potentially give Tesla a run for its money! This will be interesting to watch.

Waterluvian 8y ago
If the future is electric and there will be electric companies not hindered by having dealerships, it'll be fascinating to watch them fight to dismantle the dealership system and start selling direct as well. Feels like consumers could win on many fronts here.
- esturk 8y ago
  The dealership system will be attacked from multiple sides, not just the electrification revolution. There's also the self driving revolution and online purchasing business model.
  - wyldfire 8y ago
    Autonomous vehicles could likely bring about a new cars-as-a-utility marketplace. Why own a car when you can subscribe to a service with service latency guarantees?
  - sircastor 8y ago
    Vehicles are provided by the manufacturer, to licensed dealers in geographically exclusive plots. Online purchasing isn't really adding anything at the moment.
- icelancer 8y ago
  > Feels like consumers could win on many fronts here. Consumers will win on tons of fronts and a lot of dead jobs will be cut, and it'll be spun by a large contingency of people of increasing unemployment and hating the middle class more. That's generally what happens when actual pro-consumer stuff happens, and I expect this to especially be true regarding cars.
pacificmint 8y ago
The wholer dealership model really has to go. I don't think I've ever met a person that actually enjoyed the dealership experience. I realize that the legal protection were put in place to protect the smaller player from the global company that they are dependent on, but it's a good example of rules that are put in place and end up calcifying a whole industry, at the cost of all of us.
- AzMoo_ 8y ago
  The dealership model exists outside of the US where it's legally enforced as well. Most businesses are pretty good at their core business but not so good outside of that, and the same is true for the automotive industry. Manufacturers are good at designing and manufacturing vehicles, but retailers in general are much better at selling them and managing the customer relationship. Many manufacturers outside of the US sell direct to consumer alongside private retail dealerships, and in general they are outperformed by the private dealerships.
  - fludlight 8y ago
    Your argument makes sense in theory and yet I can't think of a single retail shopping experience that's worse than going to a dealership. I've been putting off replacing two cars because the experience is so awful.
    - AzMoo_ 8y ago
      What specifically are the problems you have? I'm interested in this because I've been working in the automotive retail industry for the better part of my career, and it's my job to provide technological solutions to improve the customer experience in dealerships.
      - fludlight 8y ago
        The problem isn’t tech, it’s sales and marketing. The OEMs advertise a low starting price. Once you’re in the door a salesman who can’t tie his shoelaces tells you that heated seats are only available on the super-luxury XSEL++ model which costs 1.5-2x as much. Then you have to negotiate with some other guy over pricing. Then some guy who the dealership hired away from the mafia tries to sell you the most expensive financing imaginable. Then he tries to sell you underbody liner and some other junk. Three hours later you have a car. It would be nice if almost everything was included and if I didn’t have to haggle like some I’m at a flea market.
gnicholas 8y ago
We considered leasing a Nissan Leaf a couple years ago, due to an incentive offered to employees of my wife’s company. The monthly lease price was good, but one of the many unexpected addons that dissuaded us from leasing was the mandatory maintenance that could only be done at the dealership. During the course of the lease, the dealership could increase the cost of the maintenance checkups, which they wouldn’t tell us the current cost of.
- analog31 8y ago
  That would certainly turn me off. I really don't like dealer service, especially the high pressure sales pitch for work that the car doesn't need. I'm pretty loyal to my independent garage. Then again, I don't know what goes wrong with an EV, or what kind of maintenance it really needs.
- nradov 8y ago
  Some premium brands include all scheduled maintenance in the lease. They want to ensure that the car is in good shape when the lease is over so they can keep the residual value high.
  - gnicholas 8y ago
    That’s fair, and for ICE vehicles there are a number of things to check/maintain. Here, they couldn’t tell me what exactly they were going to be doing, other than “checking the battery”. Obviously there’s no oil changes or the like.
clouddrover 8y ago
> established ICE car companies are going to find that their electric cars are facing a headwind because it is not in their dealers' interests to sell car that require less maintenance. I'm not convinced by this. Nissan's been selling the Leaf for 8 years now. All manufacturers are moving to non-ICE cars because they have to. Customers want them and legislation has been introduced in various countries and cities which will ban ICE cars in future. Aston Martin, for example, has an electric conversion program so you can keep driving your vintage car after the bans are introduced: https://www.roadandtrack.com/car-culture/classic-cars/a25414229/aston-martin-heritage-ev/ https://www.roadandtrack.com/car-culture/classic-cars/a25414... Dealerships are going to have to sell electric cars or stop being in the car dealership business. What probably will happen though is that the auto mechanic industry as a whole will contract as electric vehicles become more common.
- grecy 8y ago
  > Dealerships are going to have to sell electric cars or stop being in the car dealership business Interesting you should say that. Virtually all dealerships actually run at a loss "selling cars" (front of house), and turn a profit from "fixing cars" (back of house). Going back to your quote, there is no such thing as a profitable "Dealership business". There is only a profitable "fixing" business. I believe your prediction is correct, they will stop being in business.
  - jjeaff 8y ago
    They definitely won't go out of business. They have a legal monopoly on selling cars. They will have to increase their front of house margins though. And since all dealerships will be in the same boat, they will all have to increase their markup so it won't be a problem for them. Either that or they will find new ways to hide the true costs of the vehicles. You'll probably see a lot more leases. Complicated leases are a great way to squeeze extra money out of people.
    - btilly 8y ago
      The legal monopoly is weaker than it used to be. See https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes for some information about the battled that Tesla already fought on this issue. That said, it is a lot easier for Tesla to sell direct than an established manufacturer with a network of dealerships to placate.
ams6110 8y ago
Modern ICE cars need very little drivetrain maintenance. Fluid changes are about the only thing most new cars need for a hundred thousand miles. There will still be maintenance work on EVs for all of the non-drivetrain stuff that cars have. Tires, suspension and steering components, climate control, electrical accessories, none of those are any different on an EV nor are they any more reliable because they are on an EV.

by btilly 8y ago

Waterluvian 8y ago

If the future is electric and there will be electric companies not hindered by having dealerships, it'll be fascinating to watch them fight to dismantle the dealership system and start selling direct as well. Feels like consumers could win on many fronts here.

esturk 8y ago
The dealership system will be attacked from multiple sides, not just the electrification revolution. There's also the self driving revolution and online purchasing business model.
- wyldfire 8y ago
  Autonomous vehicles could likely bring about a new cars-as-a-utility marketplace. Why own a car when you can subscribe to a service with service latency guarantees?
- sircastor 8y ago
  Vehicles are provided by the manufacturer, to licensed dealers in geographically exclusive plots. Online purchasing isn't really adding anything at the moment.
icelancer 8y ago
> Feels like consumers could win on many fronts here. Consumers will win on tons of fronts and a lot of dead jobs will be cut, and it'll be spun by a large contingency of people of increasing unemployment and hating the middle class more. That's generally what happens when actual pro-consumer stuff happens, and I expect this to especially be true regarding cars.

pacificmint 8y ago

The wholer dealership model really has to go. I don't think I've ever met a person that actually enjoyed the dealership experience. I realize that the legal protection were put in place to protect the smaller player from the global company that they are dependent on, but it's a good example of rules that are put in place and end up calcifying a whole industry, at the cost of all of us.

AzMoo_ 8y ago
The dealership model exists outside of the US where it's legally enforced as well. Most businesses are pretty good at their core business but not so good outside of that, and the same is true for the automotive industry. Manufacturers are good at designing and manufacturing vehicles, but retailers in general are much better at selling them and managing the customer relationship. Many manufacturers outside of the US sell direct to consumer alongside private retail dealerships, and in general they are outperformed by the private dealerships.
- fludlight 8y ago
  Your argument makes sense in theory and yet I can't think of a single retail shopping experience that's worse than going to a dealership. I've been putting off replacing two cars because the experience is so awful.
  - AzMoo_ 8y ago
    What specifically are the problems you have? I'm interested in this because I've been working in the automotive retail industry for the better part of my career, and it's my job to provide technological solutions to improve the customer experience in dealerships.
    - fludlight 8y ago
      The problem isn’t tech, it’s sales and marketing. The OEMs advertise a low starting price. Once you’re in the door a salesman who can’t tie his shoelaces tells you that heated seats are only available on the super-luxury XSEL++ model which costs 1.5-2x as much. Then you have to negotiate with some other guy over pricing. Then some guy who the dealership hired away from the mafia tries to sell you the most expensive financing imaginable. Then he tries to sell you underbody liner and some other junk. Three hours later you have a car. It would be nice if almost everything was included and if I didn’t have to haggle like some I’m at a flea market.

gnicholas 8y ago

We considered leasing a Nissan Leaf a couple years ago, due to an incentive offered to employees of my wife’s company. The monthly lease price was good, but one of the many unexpected addons that dissuaded us from leasing was the mandatory maintenance that could only be done at the dealership. During the course of the lease, the dealership could increase the cost of the maintenance checkups, which they wouldn’t tell us the current cost of.

analog31 8y ago
That would certainly turn me off. I really don't like dealer service, especially the high pressure sales pitch for work that the car doesn't need. I'm pretty loyal to my independent garage. Then again, I don't know what goes wrong with an EV, or what kind of maintenance it really needs.
nradov 8y ago
Some premium brands include all scheduled maintenance in the lease. They want to ensure that the car is in good shape when the lease is over so they can keep the residual value high.
- gnicholas 8y ago
  That’s fair, and for ICE vehicles there are a number of things to check/maintain. Here, they couldn’t tell me what exactly they were going to be doing, other than “checking the battery”. Obviously there’s no oil changes or the like.

clouddrover 8y ago

> established ICE car companies are going to find that their electric cars are facing a headwind because it is not in their dealers' interests to sell car that require less maintenance. I'm not convinced by this. Nissan's been selling the Leaf for 8 years now. All manufacturers are moving to non-ICE cars because they have to. Customers want them and legislation has been introduced in various countries and cities which will ban ICE cars in future. Aston Martin, for example, has an electric conversion program so you can keep driving your vintage car after the bans are introduced: https://www.roadandtrack.com/car-culture/classic-cars/a25414229/aston-martin-heritage-ev/ https://www.roadandtrack.com/car-culture/classic-cars/a25414... Dealerships are going to have to sell electric cars or stop being in the car dealership business. What probably will happen though is that the auto mechanic industry as a whole will contract as electric vehicles become more common.

grecy 8y ago
> Dealerships are going to have to sell electric cars or stop being in the car dealership business Interesting you should say that. Virtually all dealerships actually run at a loss "selling cars" (front of house), and turn a profit from "fixing cars" (back of house). Going back to your quote, there is no such thing as a profitable "Dealership business". There is only a profitable "fixing" business. I believe your prediction is correct, they will stop being in business.
- jjeaff 8y ago
  They definitely won't go out of business. They have a legal monopoly on selling cars. They will have to increase their front of house margins though. And since all dealerships will be in the same boat, they will all have to increase their markup so it won't be a problem for them. Either that or they will find new ways to hide the true costs of the vehicles. You'll probably see a lot more leases. Complicated leases are a great way to squeeze extra money out of people.
  - btilly 8y ago
    The legal monopoly is weaker than it used to be. See https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes for some information about the battled that Tesla already fought on this issue. That said, it is a lot easier for Tesla to sell direct than an established manufacturer with a network of dealerships to placate.

ams6110 8y ago

Modern ICE cars need very little drivetrain maintenance. Fluid changes are about the only thing most new cars need for a hundred thousand miles. There will still be maintenance work on EVs for all of the non-drivetrain stuff that cars have. Tires, suspension and steering components, climate control, electrical accessories, none of those are any different on an EV nor are they any more reliable because they are on an EV.