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Dealerships should not exist and only exist due to terrible laws making it illegal for most automakers to sell direct. And there is a reason the dealer lobby ha

Dealerships should not exist and only exist due to terrible laws making it illegal for most automakers to sell direct. And there is a reason the dealer lobby has fought Tesla's direct selling model tooth and nail. My rule when buying a car from a dealer is refuse everything they try to sell you. They will basically hold you hostage up to and including telling you that you are being foolish and irresponsible for refusing warranties and gap insurance and whatever else. (I even have had them take my wife aside to tell her how irresponsible I was being). But you have to ride it out.

bradknowles 2y ago
My wife has a negotiation technique that has worked well for her: “I’m a lawyer. I have a pre-approved loan. Give me your best and final offer.” And that worked! We were in and done in less than five minutes. Sadly, not everyone can use that technique.
mdgrech23 2y ago
I wouldn't put the blame entirely on the dealerships. The automakers are complicit in this whole thing too. Without the dealers there is no service model.
- eppp 2y ago
  What do the millions of independent mechanics do all day?
- somerandomqaguy 2y ago
  It's mostly on the car manufacturers. Most of them seem to want the dealership model nowadays. There's no such laws in place requiring independent dealerships in Canada. Aside from the usual direct sales car companies, Genesis dealerships in Canada are all owned by Genesis Canada and I can order a car direct from Genesis. Yet most of the big names in cars operate with independent dealerships, as well as practically every motorcycle manufacturer as far as I know. In fact, Mercedes-Benz Canada just sold off all their Toronto dealerships to a AWIN/Zanchin [1] and AFAIK it wasn't because they were forced to. I don't have any real insight into why this is the case. Most I can say is that if direct sales was so lucrative for car makers, one has to wonder why they didn't take advantage of it here. That being said, FortNine released a video on why motorcycle dealerships work this way; I suspect a lot of it applies to cars as well: https://www.youtube.com/watch?v=meHYBhcpdvQ https://www.youtube.com/watch?v=meHYBhcpdvQ [1]https://media.mercedes-benz.ca/releases/release-048f50ed0ac9d2b483c7d3e9bd03f3cf-mercedes-benz-canada-announces-completion-of-toronto-retail-group-sale-to-strong-new-ownership-team https://media.mercedes-benz.ca/releases/release-048f50ed0ac9...
  - datavirtue 2y ago
    If manufacturers sold direct they would have to book all inventory until it sold. Right now, dealerships work with the banks to finance inventory until it sells. Part of the reason they are so aggressive...they are paying interest on each vehicle daily. The manufacturer gets cold hard cash for the vehicles, now. They are off the books except for the warrantee.
7e 2y ago
No, dealerships exist so that the manufacturer doesn’t have a monopoly on the sales, and especially post-sale warranty service, of your car. Witness Tesla’s service deception and customer abuse along the Rivian shit show as plain evidence that monopolies are bad.
- amluto 2y ago
  It’s certainly the case that the Tesla service centers suck, and perhaps they would be better if they were independent and competed with each other. But I’m not sure what this has to do with new car sales. I think my personal preference would be to buy a car from the manufacturer (the actual thing I want to buy, i.e. the car, is identical no matter what route it takes from a manufacturer to me), but perhaps service should be a competitive market. After all, a Tesla owner is not buying corporate Tesla service — they’re buying service from a specific customer service operation and a specific set of technicians. I’m not familiar with the “Rivian shit show”.
grecy 2y ago
> Dealerships should not exist Don't fret too much, they won't survive much longer.
- brandonmenc 2y ago
  I've been hearing this for like a decade now on hn.
  - readthenotes1 2y ago
    We have it on good authority that global climate change is going to destroy civilization soon enough
nradov 2y ago
I think automakers should be allowed to sell direct but most prefer to sell through franchised dealers. Building out a nationwide dealer network and holding inventory takes an enormous amount of capital.
- AnotherGoodName 2y ago
  The dealership service centre's are only good for oil changes that cost a premium. They don’t the time to care about anything other than routine servicing at a huge markup. Got an oddball issue? Your average self run mechanic is a much better option.
  - D13Fd 2y ago
    Too bad the independent car mechanics are as good as scamming repair customers as the car dealerships are at scamming car buyers.
newsclues 2y ago
Dealerships should exist, their exclusive right to sell cars should not. Customers should have the option to buy from a factory and to buy from a dealership. Maybe I need a car now or want a curated selection instead of infinite choice, but I also want to buy from the factory and get my dream car or work truck in the exact specification I need without the dealer markup. By allowing the choice they would be forced to compete and that should be good for the customer!
datavirtue 2y ago
Don't go to dealerships that play these games. Seek out dealers that focus on business sales where the direct to consumer is not the bulk of their business. A lot of countryside dealers (deep country) have the same attitude. They let you drive the vehicle, if you want it they will find financing if you need them to. Sign the papers and leave. They will probably pitch some accessories and a warrantee extension. Zero drama. At those dealerships if they try that shit (sneaking in charges or playing any games) they could lose generations of business from a person. City dealerships are a pressure cooker because they have so much competition. If someone leaves they are never coming back. There is no philosophy of repeat business from a particular customer. If that happens it's just gravy.
dangrossman 2y ago
> Dealerships should not exist and only exist due to terrible laws making it illegal for most automakers to sell direct. Dealerships exist because the automakers wanted them, and those laws exist due to the automakers' foul play. Automakers want to make cars. They don't want to manage stores, deal with thousands of different municipalities' rules for selling and registering vehicles, repair vehicles they've already sold, or store millions of cars in inventory until they're sold. They let someone else do all that, and it lets them run their factories at a nice even pace with essentially guaranteed buyers for their output. Automakers did, in the 1990s, start to get jealous of the money their dealerships were making on the back of their products. Ford and GM both opened factory stores competing directly with their own dealers. They knew just where to open those stores and what to sell at them, because they had full knowledge of where their successful dealers were, and what they were best at selling at those dealerships. The franchisees were taking all the risk in selecting sites and financing inventory just for their franchisor to swoop in and undercut their business with their own store next door. That unfairness is what led the dealers to lobby for those state laws banning the automaker from competing with its own franchisees.
- deleted 2y ago
  [deleted]
- survirtual 2y ago
  Unfairness? It is completely fair. If the dealerships don't like it, they should learn advanced engineering and industrial manufacturing, and make their own cars. If they can't, then they should have been let to fail since they couldn't adapt.
  - dangrossman 2y ago
    I don't understand how you can say that. If McDonalds opened a new restaurant next door to each of their highest grossing existing restaurants, and charged lower prices there, do you think that would be completely fair to the franchisees that spent millions of dollars building and operating those restaurants for McDonalds? Why would it ever be fair for a franchisor to act like that?
xarope 2y ago
The last time I bought a car I wanted to pay cash, and the sales person gave me this wet puppy look. So I negotiated a 5 year finance rate where I calculated it would be net-zero in difference to me, literally; let's say it was 50K in cash, so I would pay $25K now, and finance $25K over the next 5 years, and they would get ~2% more, which in the grand scheme of inflation, meant a net-zero loss on my purchasing power. I considered it a win-win situation, since it left me with more money in the bank, the sale person got their kick backs from the finance company (they proceeded to give me the free replacement car mats and other freebies associated with the finance deal), and I got positive credit ratings. But yes, what a pain.
- etrautmann 2y ago
  Isn’t the pain of even thinking about the existence of a monthly payment a true cost? I’d so much rather just pay upfront and never think about it again.
  - ghaff 2y ago
    When I bought my current car, the financing deal was probably at least neutral to me. But I just didn't want to deal with it.
  - fragmede 2y ago
    With today's technology, if you can afford to buy it outright, you can setup the right autopay so you don't have to think about it.
    - etrautmann 2y ago
      I only sort of agree. Yes you can setup autopay but it's still there, and you still see charges on your account. Perhaps this is minor, but I still prefer to have no additional things out there floating around that require any thought.
  - Volundr 2y ago
    I've never had an auto loan, is there a reason they couldn't just take the financing to get the incentives and then just pay it in full the next month?

bradknowles 2y ago

My wife has a negotiation technique that has worked well for her: “I’m a lawyer. I have a pre-approved loan. Give me your best and final offer.” And that worked! We were in and done in less than five minutes. Sadly, not everyone can use that technique.

mdgrech23 2y ago

I wouldn't put the blame entirely on the dealerships. The automakers are complicit in this whole thing too. Without the dealers there is no service model.

eppp 2y ago
What do the millions of independent mechanics do all day?
somerandomqaguy 2y ago
It's mostly on the car manufacturers. Most of them seem to want the dealership model nowadays. There's no such laws in place requiring independent dealerships in Canada. Aside from the usual direct sales car companies, Genesis dealerships in Canada are all owned by Genesis Canada and I can order a car direct from Genesis. Yet most of the big names in cars operate with independent dealerships, as well as practically every motorcycle manufacturer as far as I know. In fact, Mercedes-Benz Canada just sold off all their Toronto dealerships to a AWIN/Zanchin [1] and AFAIK it wasn't because they were forced to. I don't have any real insight into why this is the case. Most I can say is that if direct sales was so lucrative for car makers, one has to wonder why they didn't take advantage of it here. That being said, FortNine released a video on why motorcycle dealerships work this way; I suspect a lot of it applies to cars as well: https://www.youtube.com/watch?v=meHYBhcpdvQ https://www.youtube.com/watch?v=meHYBhcpdvQ [1]https://media.mercedes-benz.ca/releases/release-048f50ed0ac9d2b483c7d3e9bd03f3cf-mercedes-benz-canada-announces-completion-of-toronto-retail-group-sale-to-strong-new-ownership-team https://media.mercedes-benz.ca/releases/release-048f50ed0ac9...
- datavirtue 2y ago
  If manufacturers sold direct they would have to book all inventory until it sold. Right now, dealerships work with the banks to finance inventory until it sells. Part of the reason they are so aggressive...they are paying interest on each vehicle daily. The manufacturer gets cold hard cash for the vehicles, now. They are off the books except for the warrantee.

7e 2y ago

No, dealerships exist so that the manufacturer doesn’t have a monopoly on the sales, and especially post-sale warranty service, of your car. Witness Tesla’s service deception and customer abuse along the Rivian shit show as plain evidence that monopolies are bad.

amluto 2y ago
It’s certainly the case that the Tesla service centers suck, and perhaps they would be better if they were independent and competed with each other. But I’m not sure what this has to do with new car sales. I think my personal preference would be to buy a car from the manufacturer (the actual thing I want to buy, i.e. the car, is identical no matter what route it takes from a manufacturer to me), but perhaps service should be a competitive market. After all, a Tesla owner is not buying corporate Tesla service — they’re buying service from a specific customer service operation and a specific set of technicians. I’m not familiar with the “Rivian shit show”.

grecy 2y ago

> Dealerships should not exist Don't fret too much, they won't survive much longer.

brandonmenc 2y ago
I've been hearing this for like a decade now on hn.
- readthenotes1 2y ago
  We have it on good authority that global climate change is going to destroy civilization soon enough

nradov 2y ago

I think automakers should be allowed to sell direct but most prefer to sell through franchised dealers. Building out a nationwide dealer network and holding inventory takes an enormous amount of capital.

AnotherGoodName 2y ago
The dealership service centre's are only good for oil changes that cost a premium. They don’t the time to care about anything other than routine servicing at a huge markup. Got an oddball issue? Your average self run mechanic is a much better option.
- D13Fd 2y ago
  Too bad the independent car mechanics are as good as scamming repair customers as the car dealerships are at scamming car buyers.

newsclues 2y ago

Dealerships should exist, their exclusive right to sell cars should not. Customers should have the option to buy from a factory and to buy from a dealership. Maybe I need a car now or want a curated selection instead of infinite choice, but I also want to buy from the factory and get my dream car or work truck in the exact specification I need without the dealer markup. By allowing the choice they would be forced to compete and that should be good for the customer!

datavirtue 2y ago

Don't go to dealerships that play these games. Seek out dealers that focus on business sales where the direct to consumer is not the bulk of their business. A lot of countryside dealers (deep country) have the same attitude. They let you drive the vehicle, if you want it they will find financing if you need them to. Sign the papers and leave. They will probably pitch some accessories and a warrantee extension. Zero drama. At those dealerships if they try that shit (sneaking in charges or playing any games) they could lose generations of business from a person. City dealerships are a pressure cooker because they have so much competition. If someone leaves they are never coming back. There is no philosophy of repeat business from a particular customer. If that happens it's just gravy.

dangrossman 2y ago

> Dealerships should not exist and only exist due to terrible laws making it illegal for most automakers to sell direct. Dealerships exist because the automakers wanted them, and those laws exist due to the automakers' foul play. Automakers want to make cars. They don't want to manage stores, deal with thousands of different municipalities' rules for selling and registering vehicles, repair vehicles they've already sold, or store millions of cars in inventory until they're sold. They let someone else do all that, and it lets them run their factories at a nice even pace with essentially guaranteed buyers for their output. Automakers did, in the 1990s, start to get jealous of the money their dealerships were making on the back of their products. Ford and GM both opened factory stores competing directly with their own dealers. They knew just where to open those stores and what to sell at them, because they had full knowledge of where their successful dealers were, and what they were best at selling at those dealerships. The franchisees were taking all the risk in selecting sites and financing inventory just for their franchisor to swoop in and undercut their business with their own store next door. That unfairness is what led the dealers to lobby for those state laws banning the automaker from competing with its own franchisees.

deleted 2y ago
[deleted]
survirtual 2y ago
Unfairness? It is completely fair. If the dealerships don't like it, they should learn advanced engineering and industrial manufacturing, and make their own cars. If they can't, then they should have been let to fail since they couldn't adapt.
- dangrossman 2y ago
  I don't understand how you can say that. If McDonalds opened a new restaurant next door to each of their highest grossing existing restaurants, and charged lower prices there, do you think that would be completely fair to the franchisees that spent millions of dollars building and operating those restaurants for McDonalds? Why would it ever be fair for a franchisor to act like that?

xarope 2y ago

The last time I bought a car I wanted to pay cash, and the sales person gave me this wet puppy look. So I negotiated a 5 year finance rate where I calculated it would be net-zero in difference to me, literally; let's say it was 50K in cash, so I would pay $25K now, and finance $25K over the next 5 years, and they would get ~2% more, which in the grand scheme of inflation, meant a net-zero loss on my purchasing power. I considered it a win-win situation, since it left me with more money in the bank, the sale person got their kick backs from the finance company (they proceeded to give me the free replacement car mats and other freebies associated with the finance deal), and I got positive credit ratings. But yes, what a pain.

etrautmann 2y ago
Isn’t the pain of even thinking about the existence of a monthly payment a true cost? I’d so much rather just pay upfront and never think about it again.
- ghaff 2y ago
  When I bought my current car, the financing deal was probably at least neutral to me. But I just didn't want to deal with it.
- fragmede 2y ago
  With today's technology, if you can afford to buy it outright, you can setup the right autopay so you don't have to think about it.
  - etrautmann 2y ago
    I only sort of agree. Yes you can setup autopay but it's still there, and you still see charges on your account. Perhaps this is minor, but I still prefer to have no additional things out there floating around that require any thought.
- Volundr 2y ago
  I've never had an auto loan, is there a reason they couldn't just take the financing to get the incentives and then just pay it in full the next month?