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Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers [pdf]
- underseacables 3y agoThis is from 2009. A more recent analysis can be found in the work of Professor Dan Crane of U. Michigan https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3796359 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3796359 https://profdancrane.com/direct-distribution/ https://profdancrane.com/direct-distribution/ And the Federal Trade Commission from 2015. https://www.ftc.gov/enforcement/competition-matters/2015/05/direct-consumer-auto-sales-its-not-just-about-tesla https://www.ftc.gov/enforcement/competition-matters/2015/05/...
- ratsmack 3y agoI hope I can live long enough to see dealers eliminated from the car trade.
- solarman5000 3y agoI hope I live long enough to see sales people eliminated. In solar, they contribute the least to the process yet gobble up 30% of the money. It is a total waste of taxpayer money, adoption would be a lot faster if we got rid of the greedy freeloaders
- chrismcb 3y agoHow is a salesman a waste of taxpayer money? I'm not a big fan of fakes people. But some do add value. There are a lot of cases were the middleman is important.
- solarman5000 3y agoIn USA people get tax credits for installing solar. The cost of solar has gone down, the cost to the consumer has remained the same or increased. It is sales people eating up that margin, which is being paid for by tax payers
- 1123581321 3y agoWhere did you find the 30% stat?
- networkchad 3y ago[dead]
- otteromkram 3y agoWithout sales and marketing it doesn't matter how amazing your product is; if people don't know about it, they won't buy it. One could argue that sales adds the most value to the process.
- kaptainscarlet 3y agoSpot on. This statement is true in a lot of industries. It is difficult if not nigh impossible to get a product of the door without a good sales team.
- gnicholas 3y agoI don't think anyone is suggesting that salesmen be forbidden, only that it should also be allowable to sell directly. Tesla, for example, has showrooms where people can learn about vehicles and try them out. But they don't order via a salesman whose comp depends directly on how many upsells are made.
- pbourke 3y agoI think it depends on the industry. In a specialized niche (B2B), sure. In something like new auto sales, all of the information is available online and is usually more comprehensive and accurate than that offered by a car salesman. YouTube probably sells more cars than car salesmen these days (in terms of locating a product that meets your needs and convincing you to buy it)
- underseacables 3y agoIt is illegal for a manufacturer to sell you a car directly in about 30 states. Since it's based on anticompetitive state dealer laws, it is unlikely anytime soon; separate legislation in each state. My brother, ironically a lobbyist, tells me it's possible with federal legislation but congress is not brave enough, and the auto industry too powerful, for them to even try. Alas. It is likely to be this way for the foreseeable future.
- idontwantthis 3y agoDoes the auto industry like dealers? One of Tesla’s two best differentators is its direct sales model. If I could buy a Mach E directly from Ford that would raise its value like 20% for me.
- AlexandrB 3y agoYou're saying you'd be willing to pay 20% more for a Mach E straight from Ford than from a dealer?
- idontwantthis 3y agoYes because I’ll avoid markups raising the price and save days or weeks searching for the model I want, comparison shopping, negotiating. I won’t necessarily stand by 20 if I actually ran the numbers, but if I had an option between a dealer’s 50k and Ford’s 50k+ the dealer would need to get me that car on day one before I would give up and pay extra to Ford. Same deal with CarMax: Oh you have the car you say you have and it’s the price you say it is and it costs a bit more?
- shepherdjerred 3y agoI would definitely pay $1000-$2000 more for a car if it meant I could just click a button and not spend a day negotiating with a dealer
- deleted 3y ago
- the_doctah 3y agoEvery person I've known who's family owned a car dealership was mega rich, and I've known a few.
- citrin_ru 3y agoIf dealers actually add a value they don’t need a law to protect them from direct sales. And if they don’t it’s just a lawful money extortion. Why such laws do exist?
- CPLX 3y agoYour comment contains the unstated premise that market forces always produce efficient outcomes. That premise is false. If you want to assess the value of car dealers you’ll have to use evidence rather than ideology.
- creer 3y agoThe problem is (also) laws that will "just solve the problem right up". The premise that laws solve problems is false. A perhaps reasonable compromise would be to (1) not "solve the problem right up" until there is some solid evidence of both the problem and that the law would help it. In general that would require waiting for, indeed, evidence, before passing laws. Which would require not passing laws when the issue is still hot. And (2) making these laws temporary so that they might actually require evidence before becoming entrenched. Including preventing rubber-stamping a law into its next 10 years. Probably none of which makes sense anyway as long as "riders" exist. The current system is ridiculously corrupt and broken.
- sgregnt 3y agoThe premise is not "always"... if anything, the premise is rathar that in this case it produces better outcome for the costomers? Also, the mechanism is explicitly outlined (of cause very briefly) in the comment, so no need to resolve to premises. If you do have something concrete to counteract and add for the discussion, that would be awesome!
- CPLX 3y agoThe mechanism of cause is what has the premise right in it. The premise basically states that those who add value cannot be exploited, marginalized, or excluded from the system. In real life of course they can, via market power, political power, violence, deception, or many other forces. It happens daily, probably to you or your family.
- malshe 3y agoCar dealers generate tremendous profits for themselves due to regulatory capture. As an example, UT Austin's McCombs school of business is named after a car dealer in San Antonio. https://www.mccombs.utexas.edu/about/the-mccombs-difference/our-history/#:~:text=In%20the%20largest%20single%20donation,top%20students%2C%20and%20dream%20big https://www.mccombs.utexas.edu/about/the-mccombs-difference/....
- shmerl 3y agoDealers are just middlemen parasites who got legislative corruption to back them. Such laws shouldn't exist.
- Proven 3y ago[dead]
- elromulous 3y agoIt really says something about how broken US politics are. Removing these bans would benefit basically everyone who doesn't own or work for a dealership. A quick google search says roughly 1M people work for car dealerships (a number that is kind of staggering actually, and is likely that large because of how much money is artificially funnelled into it due to the regulation). I suspect we can neglect the number of people who own dealerships. With 300M people in the US, that's 1:300 in favor vs against this regulation. And yet because the real votes in the US are cast with dollars, not ballots, this will likely never change.
- Gunax 3y agoUS laws and constitutions were created to stop tyranny by making it very difficult to change anything. The result is most laws need a supermajority to pass. That's probably good at stopping bad laws, but it really stops all laws. IMO a sideeffect of this is that because courts create law by simple majority, they are often the only body capable of changing anything. As a result, we have politicized courts deciding things that should really just be legislated. If there was one thing I could change about American law it would be to make it easier to change the law, including constitutional amendments.
- UberFly 3y agoWhy would car makers want to deal with Joe and Jane public? Sounds like a massive headache that they'd like to keep one dealership away.
- hellisothers 3y agoSo enable them to make that decision because currently they’re actively prevented from doing so.
- taylorius 3y agoYour honour, I would like to submit Exhibit A into evidence. https://www.youtube.com/watch?v=wnbTem-8q8U https://www.youtube.com/watch?v=wnbTem-8q8U
- maged 3y agoTIL Tesla opens their service centers on Native American land to get around these rules in New Mexico. New Mexico doesn't allow dealerships or service centers that are manufacturer owned. https://en.wikipedia.org/wiki/Namb%C3%A9_Pueblo,_New_Mexico#Economy https://en.wikipedia.org/wiki/Namb%C3%A9_Pueblo,_New_Mexico#...