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Auto Dealers, Startups Try Amazon-Style Ordering for Cars

59 points by prostoalex 8y ago

neonate 8y ago
https://outline.com/DjHJdV https://outline.com/DjHJdV
blakesterz 8y ago
Buying a car is such a horrible and archaic process still. I love this quote at the end... "For the vast majority of dealerships, in-store sales will continue to be the main way they sell cars. Delivering cars to customers can get expensive, and dealers see a benefit in getting them in showrooms, where they can be induced to spend more for features and add-ons, like paint protection and extended warranties, " That word "induced" made me laugh.
- johnchristopher 8y ago
  > Buying a car is such a horrible and archaic process still. Tell me about it. I bought a used car today and my stress level is through the roof.
  - lotsofpulp 8y ago
    If you can afford to, go buy a car before absolutely needed, get a Costco quote, go to the dealer and tell them that’s what your willing to pay, and keep saying no to whatever the financing person says. If they get annoying, walk out and find another dealership and hand them the Costco quote, and repeat. Should be done with whole process in 2 to 3 hours with minimal stress. This is if you don’t want to play the haggling game. But I feel like most sought after cars don’t really have much haggle room anyway since they are so in demand, might as well save a few hours of your life and just walk in with the Costco quote the dealer has agreed to. I avoid trading in and all that nonsense, that’s when dealers get to start playing games. I just prefer to run the car into the ground, give it away to family, or if I want a luxury car just lease it and return it.
    - hbosch 8y ago
      Also, or alternatively, make sure you have your loan approval in hand as well. I recently bought a car and thought I got an okay rate at the dealer through CapitalOne, but they “figured out” a way to get my interest rate a whole point lower (much better than anticipated) if I went with the dealer warranty. So the price of my purchase went up, but my monthly payments went down. That’s okay with me in the end, but I really would have preferred my “real” rate and no extra warranty of course. Having a hard price and a solid loan letter in hand before you even step on to the lot is really the only sane way to deal with auto purchasing.
      - lowercased 8y ago
        i went in with a 3.64% approval rate. car guy says "oh, we can beat that!". Come back with "how does 3.5 sound?". "well... fine, I guess... not a huge difference, but if it makes it any easier... whatever". Mind you this was... $9k loan. I get their paperwork... reviewing it - 3.59%. .05% difference. I mean, yes, it's lower, but ... "damn, we can beat that!". He was so excited! It's about 40 cents per month cheaper.
        stevehawk 8y ago
        40 cents per month cheaper for you, but he made money on the deal. If a car dealership sells you an extended warranty or financing then they get a cut of it. Se he went from making $0 on your third party financing to making some level of money on you. It's a plus for both of you when it works out.
        lowercased 8y ago
        that's what I figured - they had to be making some sort of kickback or referral fee or piece of that action.
        shostack 8y ago
        Not only that, but for many people, you should probably try to negotiate for the lower net cost vs. lower monthly payments with a higher total cost. If you can float the money, why pay more?
  - moonka 8y ago
    Not wanted to deal with a dealership is the biggest reason I haven't bought a new car in a long time. Last time was such an awful experience.
    - PaulHoule 8y ago
      I bought a car recently, I was in a hurry and I got stuck with the extended service contract. When I got home I read the contract carefully and found that I could cancel it within 15 days, so I did.
  - notyourday 8y ago
    If you want to buy a car without much ( if any ) haggling and you do not want a specific car with specific options you should (strangely it applies to both used and new cars in larger dealerships i.e. non Buy here/Pay here shops) 1. Only talk to someone at the dealership who does the fleet sales. Simply ask for "Feet sales" 2. Only buy a car that is already on the floor 3. Do it in the last 27-29th day of the month -- dealerships pay monthly floor plan financing fees and you want to take something off their hand at the last moment they can replace it with a new car and still have the entire 30 days clock to sell it. If you are buying the car on 30th or 31st, the replacement car probably won't be there before 2nd or 3rd of the month, meaning the dealership would pay for 2 or 3 days of a floor plan financing when there is no car that they can immediately sell. That in turn means they would attempt to either bake higher price into the car you are buying or kick the sale to the next month giving themselves another 30 days to sell it.
    - ec109685 8y ago
      Why would a dealer go through all this rigmarole about being worried about which day of the month the car was being purchased? Wouldn’t it be far more sane for the delay to just average things out and know that every day will eventually have a similar number of cars sold, so they should be priced accordingly?
      - notyourday 8y ago
        Because anyone who is not purchasing it on the worst day would overpay by a few bucks. The margins are very tight, if any.
- christophilus 8y ago
  Carmax feels a lot like dealing with Saturn dealerships. No haggling. Fairly simple process. Low pressure. I’m never buying from a dealership again.
  - amyjess 8y ago
    Carmax still only sells used cars, don't they? I want a no-haggle dealer for new cars, especially if they sell economy cars like the Nissan Versa and Chevrolet Spark.
    - PaulHoule 8y ago
      I had the hardest time getting a Honda Fit when I wanted one this summer. Everybody wanted to push me to buy an S.U.V. though... I'm not sure if drivers really want S.U.V.'s or if carmakers really want to sell them.
      - christophilus 8y ago
        It’s the latter, I think. SUVs are more profitable than cars.
        crooked-v 8y ago
        From what I understand, SUVs generally count as "trucks" rather than "cars" for regulation purposes, so they don't need to meet the same efficiency standards. I'm sure that's a big part of it.
        PaulHoule 8y ago
        See also https://en.wikipedia.org/wiki/Chicken_tax https://en.wikipedia.org/wiki/Chicken_tax
        argonaut 8y ago
        That's not necessarily true anymore, and is pretty inconsistent. Most crossover "SUVs" (which are the best selling segment of cars in America), for example, are classified as cars.
- kazinator 8y ago
  This must be all about new cars; I wouldn't buy a second hand car without seeing it first.
adamqureshi 8y ago
I am curious to know how many other EV carmakers will be going direct to consumer. I know Tesla is doing it but they can't be the only one? I read about Rivian and Bollinger but i don't know if they are going D2C
amyjess 8y ago
It's a shame that more dealerships aren't like this. The traditional car dealership needs to go away. While companies like Carvana are great, the vast majority of car dealers are just engaging in rent-seeking behavior. These dealers exist solely so they can inject their own markup into the supply chain. They only continue to exist because their lobbyists have bribed state legislatures into passing laws that prohibit automakers from selling cars directly and blue laws that prohibit dealerships from being open on Sundays. Yes, most of the blue laws that are still on the books are the direct result of lobbying by car dealerships: small businesses are terrified that they're going to be replaced by corporate-owned dealerships that can afford to hire employees to staff their dealerships seven days a week, so they bribe lawmakers to pass anti-consumer laws that make it illegal for dealerships to be open seven days a week. Can't compete with a company that offers better service? Outlaw them! They are actively trying to drag the standard of living for the entire state all the way down to the lowest common denominator. Small businesses cause more externalities than they're worth. We really need an aggressive push at the state level to overturn laws forbidding automakers selling cars and to overturn blue laws. And while we're at it, let's get rid of the archaic third-world practice of haggling over car prices. We don't haggle over anything else, and it's an emotionally draining process that discriminates against people who don't have natural tendencies towards aggression. Honestly, I'm really disappointed Saturn and Scion went away, because they were the best hopes for dealership reform. And if we are going to have dealers lobbying state legislatures for laws, then let's actually have them do something beneficial and make it illegal to buy or sell a new car for anything other than MSRP. Carvana is great, but ideally the automakers should be selling cars directly and adopting every single one of Carvana's innovations for themselves. We'd all benefit if every automaker in the country moved to the Apple Store model. No more blue laws. No more dealers extracting markup from an unnecessary step in the supply chain. No more haggling. No more lying to and hiding information from buyers. Online sales as a first-class citizen of the omnichannel.
- ralph84 8y ago
  > We don't haggle over anything else On the contrary, almost all big ticket items are negotiated. It's just cars are the most frequently encountered big ticket item for the average person.
izacus 8y ago
Can someone lift my european ignorance and tell me what's wrong with the dealers? How are they different from BestBuy, Target, etc - just essentially bringing the car to a showroom and selling it to you? Why are dealers such a huge problem and who would buy such an expensive thing as a car without trying it first?
- pxeboot 8y ago
  Historically there have been a lot of sketchy dealers who are very pushy and dishonest. If you go in with your own financing or cash, and say 'no' to all the upselling, it isn't much different than Best Buy. Most new car dealers make more money from their service center than sales.
  - elliekelly 8y ago
    > Most new car dealers make more money from their service center than sales. And from the "finance reserve." If Toyota Financial Services approves you for an autoloan at 3% the dealer will tell you're eligible for 5% - and they keep the difference.[1] That can really add up over the life of the loan. And why it's important to read your TILA disclosures. [1] http://www.realcartips.com/carloans/220-how-much-dealers-make-car-financing.shtml http://www.realcartips.com/carloans/220-how-much-dealers-mak...
  - criddell 8y ago
    If you go in with your own financing or cash, you are going to get a worse deal. I would use their financing then just pay it off after a month or two. If you don't do your homework ahead of time, a dealership is a tough place to navigate. When I bought a Toyota, the sales guy only wanted to talk about payment - what payment did I want because he could get me that payment. I wanted to talk about absolute numbers for trade-in and purchase and then talk about financing for the balance. They really resisted that. The last car I bought was a Subaru and that dealership felt even slimier. They handed me off from person-to-person-to-person and only the last guy could tell me the final numbers.
    - 8y ago
larrydag 8y ago
I work in auto finance for a lender. There are so many gimmicks used by a dealership to get a customer into a car with financing. A lot of it is the lenders too because they offer incentives like markup to the dealers. There is a lot that goes on behind the scenes as far as car market value, backend products like warranty and GAP, and dealer incentives from lenders. It is just too much to understand for the typical customer. My recommendation is to research the car you want and understand the market value. Then get pre-approved financing through a trusted lender. This will leave a lot of the confusion out of the car buying experience.
- ced 8y ago
  OT question: why does a car with financing cost less (summing up all the monthly payments) than a car paid cash?
  - dangwu 8y ago
    I’ve never seen this before. With 0% APR they should be identical. Are you missing an initial down payment?
  - larrydag 8y ago
    It shouldn't. In fact it should be more since there is interest. I'm guessing there are some fees involved.
  - deleted 8y ago
    [deleted]
  - toast0 8y ago
    Manufacturer financing is weird. You might be eligible for some rebates only if you take manufacturer financing. The financing arm may be trying to get more loans on the books in general, or specifically good credit loans, or ? Strange incentives all around.
    - larrydag 8y ago
      Great point. Manufacturers are interested in moving inventory. Not so much with making money on loans. So they will take a small margin or even a loss on the loan as long as it sells the car.
Casseres 8y ago
Is there a way for people to learn to be good negotiators? Below was my last negotiation. I think I did pretty well because I put a lot of research into it and had some background knowledge already. Most people won't have those luxuries, and I won't always be able to research or know everything before a negotiation. I would like to learn to be a better negotiator in general. --- I recently just bought a new vehicle. I found the VIN I wanted, called up the dealership and asked for the Internet Sales Manager's email address. Sent a very short email saying I'm ready to buy a 2019 MAKE/MODEL in City, State. The dealership's website shows VIN in stock, is it still available? And without incentives, what is their best offer on that vehicle? I got an email with a number, it was very close to invoice, and replied when I would be there to take a look at the vehicle. (Dealerships do need to make some profit to keep the lights on and pay salaries. Even if you pay invoice, the dealership still makes money on dealer holdbacks and dealer incentives. Additionally, you do not want the dealer to include customer incentives/rebates when giving you a quote, because that's money you'll be paying directly into the dealership's pocket otherwise. Agree on a price, then let the dealership know what incentives you're eligible for. Also check with your bank and organizations you're a member of for additional rebates, I got an additional $1000 just for being a member of my bank.) The only tricks the dealership tried to play on me was the waiting game, and the dealership's protection package that they "already applied" for $1500. I told them to take it off or I walk. They came back at $500. I said the VIN etching is a $20 kit that only takes a few minutes to apply, we're already breathing 78% nitrogen, and I'll offer them $100 because the anti-theft lug nuts actually cost some money. I was immediately offered $150 with no window tint (the 4th and last part of the package which I guess they didn't really apply yet). Later the salesperson said he looked up their cost for the VIN etching and it was $68 because they had a third party do it for them. I looked up the cost of the OEM anti-theft lug nuts, and they were about the same, so $150 does seem like the dealer's cost on what I got. I only realized after I took the vehicle home, that it didn't have the window sticker on it (illegal for the dealership not to display the Monroney Sticker). I did thoroughly inspect every part (including the engine compartment and undercarriage) of the vehicle and test all of the features to make sure they worked (and that the manufacturer didn't forget to install something - it's happened before), but somehow I overlooked that. I knew everything about the vehicle prior and got the PDF of the window sticker from the manufacturer.
jonbaer 8y ago
It's been rather hard to find others who might have used Fair before (https://www.fair.com https://www.fair.com) - or have an open opinion about it, short term leasing I guess would be best way to describe.
- sahaskatta 8y ago
  I've used Fair to lease a car. The entire experience has been a nightmare. Billing errors, really bad support, them losing records of giving me a car, charging me interest for not making a payment when their system had an error, their auto-pay system is broken, their mobile app not working, they forgot to register my car with the DMV, them not able to generate receipts for me, etc. The idea is great, but have had a really bad experience so far. I hope the resolve these issues. We need more competition/innovation in the space.
  - ryan_j_naughton 8y ago
    Thanks for the honest feedback, Sahas. I'm a director of engineering at Fair, and we realize our ops and customer support need improvement (and we have directed significant resources in that regard). I'm curious when you used us, as we have resolved most of those issues. When trying to deconstruct the entirety of the car industry and re-invent it in an app, there are so many moving pieces and entrenched players. For example, our partners on wall street (with whom we pledge the assets and finance them through securitization agreements require us to use third party servicers so that these cashflows would still be serviceable if we happen to go bankrupt. Thus, our recurring billing is still through them and these old school finance companies are not paragons of modern technology (to say the least). We are moving a lot of this servicing and payments in house and focusing on core customer support experience as our top priorities for this year in order to ensure we can scale while providing an amazing experience. I'd be interested in talking to you more about your experience. E-mail me.
- ravedave5 8y ago
  That looks super interesting. I am not convinced a subaru hatchback will come close to replacing ur minivan, probably a good way to try for a few months.
davedx 8y ago
Yep, I work for Carnext.com, a spinoff of LeasePlan and we are doing this. Its very satisfying how hard everyone works to streamline the whole process from start of order to delivery of the car.
- sixQuarks 8y ago
  Is this like a Fair.com for europe? Any plans to come to the US with the service?
choward 8y ago
Since I can't view the article can someone tell me what Amazon is doing in the title?
- CaliforniaKarl 8y ago
  If you scroll down through the comments, by now someone would have posted an outline.com link that allows you to get around the paywall. That should get you to the article!
ctime 8y ago
For those looking to buy a new car and have a Costco in your area, I highly recommend looking into their Auto Purchase program. They negotiated great pricing below invoicing. I did a ton of work shopping around for a new car just before Thanksgiving and I couldn’t find a better price. For reference the 2017 Toyota Highlander XLE AWD was $1700 under invoice.
- argonaut 8y ago
  Just know that the Costco price will always be higher than the price you could achieve by negotiating, simply because dealers pay Costco a referral fee for each sale made through the program. It's great for getting quotes though.
  - ec109685 8y ago
    Why do you think a dealer will sell you a car for X, just because Costco isn’t taking Y commission?
cujo 8y ago
I'll share my last car buying experience. We had done our homework and more or less knew within a couple within a couple of models, which car we wanted. After going through the test drives and the stupid dance with a couple of dealerships, the process smoothed out. I checked out a few regional dealers, and called 3 different ones for prices. 2 of them were willing to me prices over the phone. Great. I found another regional dealer which had this "amazon-style" process. I could configure the car I wanted on their website, and it showed me the price. It was the best of the 3 prices I was quoted, so I "placed my order". I got an auto-responder email email saying that paperwork was on the way and salesperson would be in touch. The guy called to discuss the trade in process, and tell me how the paperwork would be handled. In about 3 days I had a new car, delivered to my house, having never set foot in a dealership. They even did the trade in estimate remotely (I took some photos and sent them in). Hopefully that's the trend things move in the future. It was a breeze.
- Someone1234 8y ago
  Related to this I have the "best-worst" idea for a business... So everyone hates car dealerships. But we need to test drive vehicles (or physically look at them). Right now car demos are linked to buying, and therefore the dealership. What if there was a business that ONLY did car demos? You go in, and there's a row of SUVs from all the major manufacturers. This saves you from driving all over town for the different dealership, and because they aren't selling you vehicles it is a no-pressure situation. I'd pay money for this. But people are cheap and I doubt it would work as a concept, unless buying cars online became the norm.
  - rticesterp 8y ago
    The carmax experience isn't too far off from this. Carmax specializes in used cars. However, most of their used cars are 3-5 years old. I've always used them as a starting point when I'm not sure which make or model I want for my next car.
  - adtac 8y ago
    And the developers can call the process test driven development!
habosa 8y ago
Anything would be an improvement. I was looking into getting my first car recently. Narrowed it down to a few Honda models and walked into the SF Honda Dealership. Never seen anywhere so incompetent in my life. When I asked about car features the guy would just Google "honda fit sunroof on ex?" where I could clearly see. I finally asked for a price and he came back with something 3.0x the market rate for the car ... When I asked why it was so high he said computer error nothing he could do. So yeah, let's Amazon it up.
cookiecaper 8y ago
Article is paywalled so I'm just gonna assume my experience with Vroom is relevant. The long and short of it is that Vroom sold me a car, promised delivery by a certain date, and missed it by about 3 weeks ostensibly because they noticed a variety of maintenance issues with the vehicle during "final conditioning". In addition to being almost a month late, the delivery driver was expecting to pick up the trade-in at the same time, despite the Vroom rep telling us more than once that they'd send a different driver for it within 3 days of delivery. The process is online until you click "buy" and then everyone wants to spend just as much time with you on the phone as they would if you had walked into the dealer -- I spent most of the weekend on the phone. Their agents double as reps at a used car dealership in Houston and are frequently unavailable because they're out with an in-person client. It seems like someone goes out to the floor and drags them away from their physical customers when a Vroom customer calls in. Every time I sent an email about something, after an hour or so I'd get a reply asking me to call in to discuss. Once you're finally done with all that, they overnight a stack of about 50 papers to sign and return. As soon as the return label is scanned, you're considered sold and they do everything they can to ignore and avoid you. A few days after I finally got the car, I noticed a leak and took it to the dealer, where I paid to get it examined. Was informed that the water pump was going bad and would need replaced soon. I emailed Vroom about this while I was still within the return window, including a copy of the quote from the dealership, and they never replied. I didn't want to deal with the crap anymore, overall I was OK with the car, and the mechanical issues were non-urgent so I just let it go. The only reason I don't 100% regret the transaction is because there were no local dealers that had the vehicle I ordered from Vroom in stock for the entire duration of the delayed shipment. I'm sure, however, that I would've had a better experience if I had just done eBay Motors or something. Buyer beware.

59 points by prostoalex 8y ago

https://outline.com/DjHJdV https://outline.com/DjHJdV

Buying a car is such a horrible and archaic process still. I love this quote at the end... "For the vast majority of dealerships, in-store sales will continue to be the main way they sell cars. Delivering cars to customers can get expensive, and dealers see a benefit in getting them in showrooms, where they can be induced to spend more for features and add-ons, like paint protection and extended warranties, " That word "induced" made me laugh.

johnchristopher 8y ago
> Buying a car is such a horrible and archaic process still. Tell me about it. I bought a used car today and my stress level is through the roof.
- lotsofpulp 8y ago
  If you can afford to, go buy a car before absolutely needed, get a Costco quote, go to the dealer and tell them that’s what your willing to pay, and keep saying no to whatever the financing person says. If they get annoying, walk out and find another dealership and hand them the Costco quote, and repeat. Should be done with whole process in 2 to 3 hours with minimal stress. This is if you don’t want to play the haggling game. But I feel like most sought after cars don’t really have much haggle room anyway since they are so in demand, might as well save a few hours of your life and just walk in with the Costco quote the dealer has agreed to. I avoid trading in and all that nonsense, that’s when dealers get to start playing games. I just prefer to run the car into the ground, give it away to family, or if I want a luxury car just lease it and return it.
  - hbosch 8y ago
    Also, or alternatively, make sure you have your loan approval in hand as well. I recently bought a car and thought I got an okay rate at the dealer through CapitalOne, but they “figured out” a way to get my interest rate a whole point lower (much better than anticipated) if I went with the dealer warranty. So the price of my purchase went up, but my monthly payments went down. That’s okay with me in the end, but I really would have preferred my “real” rate and no extra warranty of course. Having a hard price and a solid loan letter in hand before you even step on to the lot is really the only sane way to deal with auto purchasing.
    - lowercased 8y ago
      i went in with a 3.64% approval rate. car guy says "oh, we can beat that!". Come back with "how does 3.5 sound?". "well... fine, I guess... not a huge difference, but if it makes it any easier... whatever". Mind you this was... $9k loan. I get their paperwork... reviewing it - 3.59%. .05% difference. I mean, yes, it's lower, but ... "damn, we can beat that!". He was so excited! It's about 40 cents per month cheaper.
      - stevehawk 8y ago
        40 cents per month cheaper for you, but he made money on the deal. If a car dealership sells you an extended warranty or financing then they get a cut of it. Se he went from making $0 on your third party financing to making some level of money on you. It's a plus for both of you when it works out.
        lowercased 8y ago
        that's what I figured - they had to be making some sort of kickback or referral fee or piece of that action.
        shostack 8y ago
        Not only that, but for many people, you should probably try to negotiate for the lower net cost vs. lower monthly payments with a higher total cost. If you can float the money, why pay more?
- moonka 8y ago
  Not wanted to deal with a dealership is the biggest reason I haven't bought a new car in a long time. Last time was such an awful experience.
  - PaulHoule 8y ago
    I bought a car recently, I was in a hurry and I got stuck with the extended service contract. When I got home I read the contract carefully and found that I could cancel it within 15 days, so I did.
- notyourday 8y ago
  If you want to buy a car without much ( if any ) haggling and you do not want a specific car with specific options you should (strangely it applies to both used and new cars in larger dealerships i.e. non Buy here/Pay here shops) 1. Only talk to someone at the dealership who does the fleet sales. Simply ask for "Feet sales" 2. Only buy a car that is already on the floor 3. Do it in the last 27-29th day of the month -- dealerships pay monthly floor plan financing fees and you want to take something off their hand at the last moment they can replace it with a new car and still have the entire 30 days clock to sell it. If you are buying the car on 30th or 31st, the replacement car probably won't be there before 2nd or 3rd of the month, meaning the dealership would pay for 2 or 3 days of a floor plan financing when there is no car that they can immediately sell. That in turn means they would attempt to either bake higher price into the car you are buying or kick the sale to the next month giving themselves another 30 days to sell it.
  - ec109685 8y ago
    Why would a dealer go through all this rigmarole about being worried about which day of the month the car was being purchased? Wouldn’t it be far more sane for the delay to just average things out and know that every day will eventually have a similar number of cars sold, so they should be priced accordingly?
    - notyourday 8y ago
      Because anyone who is not purchasing it on the worst day would overpay by a few bucks. The margins are very tight, if any.
christophilus 8y ago
Carmax feels a lot like dealing with Saturn dealerships. No haggling. Fairly simple process. Low pressure. I’m never buying from a dealership again.
- amyjess 8y ago
  Carmax still only sells used cars, don't they? I want a no-haggle dealer for new cars, especially if they sell economy cars like the Nissan Versa and Chevrolet Spark.
  - PaulHoule 8y ago
    I had the hardest time getting a Honda Fit when I wanted one this summer. Everybody wanted to push me to buy an S.U.V. though... I'm not sure if drivers really want S.U.V.'s or if carmakers really want to sell them.
    - christophilus 8y ago
      It’s the latter, I think. SUVs are more profitable than cars.
      - crooked-v 8y ago
        From what I understand, SUVs generally count as "trucks" rather than "cars" for regulation purposes, so they don't need to meet the same efficiency standards. I'm sure that's a big part of it.
        PaulHoule 8y ago
        See also https://en.wikipedia.org/wiki/Chicken_tax https://en.wikipedia.org/wiki/Chicken_tax
        argonaut 8y ago
        That's not necessarily true anymore, and is pretty inconsistent. Most crossover "SUVs" (which are the best selling segment of cars in America), for example, are classified as cars.
kazinator 8y ago
This must be all about new cars; I wouldn't buy a second hand car without seeing it first.

adamqureshi 8y ago

I am curious to know how many other EV carmakers will be going direct to consumer. I know Tesla is doing it but they can't be the only one? I read about Rivian and Bollinger but i don't know if they are going D2C

amyjess 8y ago

It's a shame that more dealerships aren't like this. The traditional car dealership needs to go away. While companies like Carvana are great, the vast majority of car dealers are just engaging in rent-seeking behavior. These dealers exist solely so they can inject their own markup into the supply chain. They only continue to exist because their lobbyists have bribed state legislatures into passing laws that prohibit automakers from selling cars directly and blue laws that prohibit dealerships from being open on Sundays. Yes, most of the blue laws that are still on the books are the direct result of lobbying by car dealerships: small businesses are terrified that they're going to be replaced by corporate-owned dealerships that can afford to hire employees to staff their dealerships seven days a week, so they bribe lawmakers to pass anti-consumer laws that make it illegal for dealerships to be open seven days a week. Can't compete with a company that offers better service? Outlaw them! They are actively trying to drag the standard of living for the entire state all the way down to the lowest common denominator. Small businesses cause more externalities than they're worth. We really need an aggressive push at the state level to overturn laws forbidding automakers selling cars and to overturn blue laws. And while we're at it, let's get rid of the archaic third-world practice of haggling over car prices. We don't haggle over anything else, and it's an emotionally draining process that discriminates against people who don't have natural tendencies towards aggression. Honestly, I'm really disappointed Saturn and Scion went away, because they were the best hopes for dealership reform. And if we are going to have dealers lobbying state legislatures for laws, then let's actually have them do something beneficial and make it illegal to buy or sell a new car for anything other than MSRP. Carvana is great, but ideally the automakers should be selling cars directly and adopting every single one of Carvana's innovations for themselves. We'd all benefit if every automaker in the country moved to the Apple Store model. No more blue laws. No more dealers extracting markup from an unnecessary step in the supply chain. No more haggling. No more lying to and hiding information from buyers. Online sales as a first-class citizen of the omnichannel.

ralph84 8y ago
> We don't haggle over anything else On the contrary, almost all big ticket items are negotiated. It's just cars are the most frequently encountered big ticket item for the average person.

izacus 8y ago

Can someone lift my european ignorance and tell me what's wrong with the dealers? How are they different from BestBuy, Target, etc - just essentially bringing the car to a showroom and selling it to you? Why are dealers such a huge problem and who would buy such an expensive thing as a car without trying it first?

pxeboot 8y ago
Historically there have been a lot of sketchy dealers who are very pushy and dishonest. If you go in with your own financing or cash, and say 'no' to all the upselling, it isn't much different than Best Buy. Most new car dealers make more money from their service center than sales.
- elliekelly 8y ago
  > Most new car dealers make more money from their service center than sales. And from the "finance reserve." If Toyota Financial Services approves you for an autoloan at 3% the dealer will tell you're eligible for 5% - and they keep the difference.[1] That can really add up over the life of the loan. And why it's important to read your TILA disclosures. [1] http://www.realcartips.com/carloans/220-how-much-dealers-make-car-financing.shtml http://www.realcartips.com/carloans/220-how-much-dealers-mak...
- criddell 8y ago
  If you go in with your own financing or cash, you are going to get a worse deal. I would use their financing then just pay it off after a month or two. If you don't do your homework ahead of time, a dealership is a tough place to navigate. When I bought a Toyota, the sales guy only wanted to talk about payment - what payment did I want because he could get me that payment. I wanted to talk about absolute numbers for trade-in and purchase and then talk about financing for the balance. They really resisted that. The last car I bought was a Subaru and that dealership felt even slimier. They handed me off from person-to-person-to-person and only the last guy could tell me the final numbers.
  - 8y ago

larrydag 8y ago

I work in auto finance for a lender. There are so many gimmicks used by a dealership to get a customer into a car with financing. A lot of it is the lenders too because they offer incentives like markup to the dealers. There is a lot that goes on behind the scenes as far as car market value, backend products like warranty and GAP, and dealer incentives from lenders. It is just too much to understand for the typical customer. My recommendation is to research the car you want and understand the market value. Then get pre-approved financing through a trusted lender. This will leave a lot of the confusion out of the car buying experience.

ced 8y ago
OT question: why does a car with financing cost less (summing up all the monthly payments) than a car paid cash?
- dangwu 8y ago
  I’ve never seen this before. With 0% APR they should be identical. Are you missing an initial down payment?
- larrydag 8y ago
  It shouldn't. In fact it should be more since there is interest. I'm guessing there are some fees involved.
- deleted 8y ago
  [deleted]
- toast0 8y ago
  Manufacturer financing is weird. You might be eligible for some rebates only if you take manufacturer financing. The financing arm may be trying to get more loans on the books in general, or specifically good credit loans, or ? Strange incentives all around.
  - larrydag 8y ago
    Great point. Manufacturers are interested in moving inventory. Not so much with making money on loans. So they will take a small margin or even a loss on the loan as long as it sells the car.

Casseres 8y ago

Is there a way for people to learn to be good negotiators? Below was my last negotiation. I think I did pretty well because I put a lot of research into it and had some background knowledge already. Most people won't have those luxuries, and I won't always be able to research or know everything before a negotiation. I would like to learn to be a better negotiator in general. --- I recently just bought a new vehicle. I found the VIN I wanted, called up the dealership and asked for the Internet Sales Manager's email address. Sent a very short email saying I'm ready to buy a 2019 MAKE/MODEL in City, State. The dealership's website shows VIN in stock, is it still available? And without incentives, what is their best offer on that vehicle? I got an email with a number, it was very close to invoice, and replied when I would be there to take a look at the vehicle. (Dealerships do need to make some profit to keep the lights on and pay salaries. Even if you pay invoice, the dealership still makes money on dealer holdbacks and dealer incentives. Additionally, you do not want the dealer to include customer incentives/rebates when giving you a quote, because that's money you'll be paying directly into the dealership's pocket otherwise. Agree on a price, then let the dealership know what incentives you're eligible for. Also check with your bank and organizations you're a member of for additional rebates, I got an additional $1000 just for being a member of my bank.) The only tricks the dealership tried to play on me was the waiting game, and the dealership's protection package that they "already applied" for $1500. I told them to take it off or I walk. They came back at $500. I said the VIN etching is a $20 kit that only takes a few minutes to apply, we're already breathing 78% nitrogen, and I'll offer them $100 because the anti-theft lug nuts actually cost some money. I was immediately offered $150 with no window tint (the 4th and last part of the package which I guess they didn't really apply yet). Later the salesperson said he looked up their cost for the VIN etching and it was $68 because they had a third party do it for them. I looked up the cost of the OEM anti-theft lug nuts, and they were about the same, so $150 does seem like the dealer's cost on what I got. I only realized after I took the vehicle home, that it didn't have the window sticker on it (illegal for the dealership not to display the Monroney Sticker). I did thoroughly inspect every part (including the engine compartment and undercarriage) of the vehicle and test all of the features to make sure they worked (and that the manufacturer didn't forget to install something - it's happened before), but somehow I overlooked that. I knew everything about the vehicle prior and got the PDF of the window sticker from the manufacturer.

jonbaer 8y ago

It's been rather hard to find others who might have used Fair before (https://www.fair.com https://www.fair.com) - or have an open opinion about it, short term leasing I guess would be best way to describe.

sahaskatta 8y ago
I've used Fair to lease a car. The entire experience has been a nightmare. Billing errors, really bad support, them losing records of giving me a car, charging me interest for not making a payment when their system had an error, their auto-pay system is broken, their mobile app not working, they forgot to register my car with the DMV, them not able to generate receipts for me, etc. The idea is great, but have had a really bad experience so far. I hope the resolve these issues. We need more competition/innovation in the space.
- ryan_j_naughton 8y ago
  Thanks for the honest feedback, Sahas. I'm a director of engineering at Fair, and we realize our ops and customer support need improvement (and we have directed significant resources in that regard). I'm curious when you used us, as we have resolved most of those issues. When trying to deconstruct the entirety of the car industry and re-invent it in an app, there are so many moving pieces and entrenched players. For example, our partners on wall street (with whom we pledge the assets and finance them through securitization agreements require us to use third party servicers so that these cashflows would still be serviceable if we happen to go bankrupt. Thus, our recurring billing is still through them and these old school finance companies are not paragons of modern technology (to say the least). We are moving a lot of this servicing and payments in house and focusing on core customer support experience as our top priorities for this year in order to ensure we can scale while providing an amazing experience. I'd be interested in talking to you more about your experience. E-mail me.
ravedave5 8y ago
That looks super interesting. I am not convinced a subaru hatchback will come close to replacing ur minivan, probably a good way to try for a few months.

davedx 8y ago

Yep, I work for Carnext.com, a spinoff of LeasePlan and we are doing this. Its very satisfying how hard everyone works to streamline the whole process from start of order to delivery of the car.

sixQuarks 8y ago
Is this like a Fair.com for europe? Any plans to come to the US with the service?

choward 8y ago

Since I can't view the article can someone tell me what Amazon is doing in the title?

CaliforniaKarl 8y ago
If you scroll down through the comments, by now someone would have posted an outline.com link that allows you to get around the paywall. That should get you to the article!

ctime 8y ago

For those looking to buy a new car and have a Costco in your area, I highly recommend looking into their Auto Purchase program. They negotiated great pricing below invoicing. I did a ton of work shopping around for a new car just before Thanksgiving and I couldn’t find a better price. For reference the 2017 Toyota Highlander XLE AWD was $1700 under invoice.

argonaut 8y ago
Just know that the Costco price will always be higher than the price you could achieve by negotiating, simply because dealers pay Costco a referral fee for each sale made through the program. It's great for getting quotes though.
- ec109685 8y ago
  Why do you think a dealer will sell you a car for X, just because Costco isn’t taking Y commission?

cujo 8y ago

I'll share my last car buying experience. We had done our homework and more or less knew within a couple within a couple of models, which car we wanted. After going through the test drives and the stupid dance with a couple of dealerships, the process smoothed out. I checked out a few regional dealers, and called 3 different ones for prices. 2 of them were willing to me prices over the phone. Great. I found another regional dealer which had this "amazon-style" process. I could configure the car I wanted on their website, and it showed me the price. It was the best of the 3 prices I was quoted, so I "placed my order". I got an auto-responder email email saying that paperwork was on the way and salesperson would be in touch. The guy called to discuss the trade in process, and tell me how the paperwork would be handled. In about 3 days I had a new car, delivered to my house, having never set foot in a dealership. They even did the trade in estimate remotely (I took some photos and sent them in). Hopefully that's the trend things move in the future. It was a breeze.

Someone1234 8y ago
Related to this I have the "best-worst" idea for a business... So everyone hates car dealerships. But we need to test drive vehicles (or physically look at them). Right now car demos are linked to buying, and therefore the dealership. What if there was a business that ONLY did car demos? You go in, and there's a row of SUVs from all the major manufacturers. This saves you from driving all over town for the different dealership, and because they aren't selling you vehicles it is a no-pressure situation. I'd pay money for this. But people are cheap and I doubt it would work as a concept, unless buying cars online became the norm.
- rticesterp 8y ago
  The carmax experience isn't too far off from this. Carmax specializes in used cars. However, most of their used cars are 3-5 years old. I've always used them as a starting point when I'm not sure which make or model I want for my next car.
- adtac 8y ago
  And the developers can call the process test driven development!

habosa 8y ago

Anything would be an improvement. I was looking into getting my first car recently. Narrowed it down to a few Honda models and walked into the SF Honda Dealership. Never seen anywhere so incompetent in my life. When I asked about car features the guy would just Google "honda fit sunroof on ex?" where I could clearly see. I finally asked for a price and he came back with something 3.0x the market rate for the car ... When I asked why it was so high he said computer error nothing he could do. So yeah, let's Amazon it up.

cookiecaper 8y ago

Article is paywalled so I'm just gonna assume my experience with Vroom is relevant. The long and short of it is that Vroom sold me a car, promised delivery by a certain date, and missed it by about 3 weeks ostensibly because they noticed a variety of maintenance issues with the vehicle during "final conditioning". In addition to being almost a month late, the delivery driver was expecting to pick up the trade-in at the same time, despite the Vroom rep telling us more than once that they'd send a different driver for it within 3 days of delivery. The process is online until you click "buy" and then everyone wants to spend just as much time with you on the phone as they would if you had walked into the dealer -- I spent most of the weekend on the phone. Their agents double as reps at a used car dealership in Houston and are frequently unavailable because they're out with an in-person client. It seems like someone goes out to the floor and drags them away from their physical customers when a Vroom customer calls in. Every time I sent an email about something, after an hour or so I'd get a reply asking me to call in to discuss. Once you're finally done with all that, they overnight a stack of about 50 papers to sign and return. As soon as the return label is scanned, you're considered sold and they do everything they can to ignore and avoid you. A few days after I finally got the car, I noticed a leak and took it to the dealer, where I paid to get it examined. Was informed that the water pump was going bad and would need replaced soon. I emailed Vroom about this while I was still within the return window, including a copy of the quote from the dealership, and they never replied. I didn't want to deal with the crap anymore, overall I was OK with the car, and the mechanical issues were non-urgent so I just let it go. The only reason I don't 100% regret the transaction is because there were no local dealers that had the vehicle I ordered from Vroom in stock for the entire duration of the delayed shipment. I'm sure, however, that I would've had a better experience if I had just done eBay Motors or something. Buyer beware.