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Manufacturers sell through dealer networks to the buyers of new cars, who are a very small fraction of the population, who tend to buy cars rather more often th

Manufacturers sell through dealer networks to the buyers of new cars, who are a very small fraction of the population, who tend to buy cars rather more often than the average person In other words, they primarily care about the first owner, and then primarily the first three years of the first owner. Everything outside that first owner's first three years is only baked-in as a matter of "resale value" -- if the entire industry adopts stuff that goes obsolete after two years, there is no competitive advantage in being err, less-obsolete.

fennecfoxen 5y ago
There’s a competitive advantage in being the brand that has the best resale value. The economics of pursuing that reputation aren’t always going to be a slam dunk, but it’s not worthless.
- mulmen 5y ago
  What's the benefit? If most new car buyers lease (a good decision if you want a perpetually new car) then who cares about resale value? I suppose it makes a difference on the residual but Chrysler is still in business so it can't be that important.
  - aahortwwy 5y ago
    ... whoever is leasing them the car?
    - mulmen 5y ago
      The car will be sold as pre-owned after the initial lease. The resale value only matters in that first re-sale when it is 3-5 years old and still desirable. Why would the bank or the manufacturer (sometimes the same entity) care about the resale value 15 years out from manufacture? e: also, whoever finances the car doesn't really care either, the financing will just be more expensive.
      - aahortwwy 5y ago
        Subsequent owners care about resale value and it informs their purchasing decisions.
        mulmen 5y ago
        But why would the brand care about having the perception of high resale value 15 years after sale? How does that benefit them?
        jankyxenon 5y ago
        You get to sell an “investment” with a higher return. Albeit negative.
        1123581321 5y ago
        Resale value makes the initial purchase price higher, and as a consequence makes lease payments higher since leasing is priced as an alternative to buying and selling the car and the car is sold after the lease period. Resale value also affects the quality of the car as experienced in the first few years. For these reasons, the brand is positively affected by being associated with a high resale value, assuming it wants to stand for quality.
        stickfigure 5y ago
        The people buying a new car every 3-5 years are doing it because they can sell it at the end of that period to recoup some of that value. If the resale value goes down, the calculus on buying new cars changes. Clog up downstream and it will affect upstream.
        fennecfoxen 5y ago
        Exactly. If you have a car that’s worth $10,000 more after five years, then that car can be priced such that it sells for more when you sell it the first time. How much more? Not the full $10,000; it depends on the discount rate - a 4% (real) rate, competitive with the stock market, suggests about $8000 more. And the reason the car has value 5 years out is that it’s still good for another 5-10 years. that driving value is the ultimate reason people buy cars at all. No, a consumer won’t do that kind of calculus, not directly, but a leasing firm sure will.
johnnyApplePRNG 5y ago
Ain't that the truth. It hit me like a brick when I walked into a Toyota dealership to get some transmission oil from the parts department recently. The saleroom was luxurious. You could eat off of the floor and check your teeth in it afterward, it was so shiny. All of the sales people looked tip top. I felt like I had just walked into a casino. Then I found the parts desk... a dingy, tiny window in a cramped area in the back of the dealership where I had to stand (no chairs) for literally 10 minutes until somebody was able to even notice I was there. Seemed pretty clear what their main goal was.
- syshum 5y ago
  Dealership makes money selling you parts via their mechanic services, not selling you parts to DIY your repairs. The parts dept does not want to sell to you directly, like autozone, they want to sell to you via your "service advisor" when you bring your car in for them to change your fluids for you
  - mkhpalm 5y ago
    As a bit of a recent convert to US makes from Japanese makes I think this should be clarified. US makes (big 3, not Tesla) are just fine selling you parts. Not only are they fine with it they aren't marked up as insanely high as I remember with decades of Honda and Toyota ownership. In fact you can go to AC/Delco, Ford, or Mopar's website and just buy parts directly with lots of diagrams and cheap prices sent right to your home. If you go to the dealer parts dept desk its usually right behind the sales area and they share the same space for the most part. Displaying lots of fancy part upgrades and options you could be purchasing from their parts department. Its a pretty different experience after 25 years of Japanese vehicles.
    - DocTomoe 5y ago
      Completely agree, Japanese parts are more expensive than Western parts ... but then, having driven Toyota for most of my adult life, and now having switched to a domestic brand: They just do not seem to NEED as many replacement parts. My Toyotas were built like tanks, they were virtually indestructible, in over 15 years, I had one major repair that I needed a shop for (and that was related to the seatbelt). Now, with my Ford (and arguably in homeoffice, meaning I do not drive that much anymore), it feels the car's more in the repair shop than on the road.

fennecfoxen 5y ago

There’s a competitive advantage in being the brand that has the best resale value. The economics of pursuing that reputation aren’t always going to be a slam dunk, but it’s not worthless.

mulmen 5y ago
What's the benefit? If most new car buyers lease (a good decision if you want a perpetually new car) then who cares about resale value? I suppose it makes a difference on the residual but Chrysler is still in business so it can't be that important.
- aahortwwy 5y ago
  ... whoever is leasing them the car?
  - mulmen 5y ago
    The car will be sold as pre-owned after the initial lease. The resale value only matters in that first re-sale when it is 3-5 years old and still desirable. Why would the bank or the manufacturer (sometimes the same entity) care about the resale value 15 years out from manufacture? e: also, whoever finances the car doesn't really care either, the financing will just be more expensive.
    - aahortwwy 5y ago
      Subsequent owners care about resale value and it informs their purchasing decisions.
      - mulmen 5y ago
        But why would the brand care about having the perception of high resale value 15 years after sale? How does that benefit them?
        jankyxenon 5y ago
        You get to sell an “investment” with a higher return. Albeit negative.
        1123581321 5y ago
        Resale value makes the initial purchase price higher, and as a consequence makes lease payments higher since leasing is priced as an alternative to buying and selling the car and the car is sold after the lease period. Resale value also affects the quality of the car as experienced in the first few years. For these reasons, the brand is positively affected by being associated with a high resale value, assuming it wants to stand for quality.
        stickfigure 5y ago
        The people buying a new car every 3-5 years are doing it because they can sell it at the end of that period to recoup some of that value. If the resale value goes down, the calculus on buying new cars changes. Clog up downstream and it will affect upstream.
        fennecfoxen 5y ago
        Exactly. If you have a car that’s worth $10,000 more after five years, then that car can be priced such that it sells for more when you sell it the first time. How much more? Not the full $10,000; it depends on the discount rate - a 4% (real) rate, competitive with the stock market, suggests about $8000 more. And the reason the car has value 5 years out is that it’s still good for another 5-10 years. that driving value is the ultimate reason people buy cars at all. No, a consumer won’t do that kind of calculus, not directly, but a leasing firm sure will.

johnnyApplePRNG 5y ago

Ain't that the truth. It hit me like a brick when I walked into a Toyota dealership to get some transmission oil from the parts department recently. The saleroom was luxurious. You could eat off of the floor and check your teeth in it afterward, it was so shiny. All of the sales people looked tip top. I felt like I had just walked into a casino. Then I found the parts desk... a dingy, tiny window in a cramped area in the back of the dealership where I had to stand (no chairs) for literally 10 minutes until somebody was able to even notice I was there. Seemed pretty clear what their main goal was.

syshum 5y ago
Dealership makes money selling you parts via their mechanic services, not selling you parts to DIY your repairs. The parts dept does not want to sell to you directly, like autozone, they want to sell to you via your "service advisor" when you bring your car in for them to change your fluids for you
- mkhpalm 5y ago
  As a bit of a recent convert to US makes from Japanese makes I think this should be clarified. US makes (big 3, not Tesla) are just fine selling you parts. Not only are they fine with it they aren't marked up as insanely high as I remember with decades of Honda and Toyota ownership. In fact you can go to AC/Delco, Ford, or Mopar's website and just buy parts directly with lots of diagrams and cheap prices sent right to your home. If you go to the dealer parts dept desk its usually right behind the sales area and they share the same space for the most part. Displaying lots of fancy part upgrades and options you could be purchasing from their parts department. Its a pretty different experience after 25 years of Japanese vehicles.
  - DocTomoe 5y ago
    Completely agree, Japanese parts are more expensive than Western parts ... but then, having driven Toyota for most of my adult life, and now having switched to a domestic brand: They just do not seem to NEED as many replacement parts. My Toyotas were built like tanks, they were virtually indestructible, in over 15 years, I had one major repair that I needed a shop for (and that was related to the seatbelt). Now, with my Ford (and arguably in homeoffice, meaning I do not drive that much anymore), it feels the car's more in the repair shop than on the road.