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Having bought a new car recently, and having to drive 100 miles, past 4 dealerships, just to get to a dealership that was willing to give me a reasonable price

by chisleu 11y ago

Having bought a new car recently, and having to drive 100 miles, past 4 dealerships, just to get to a dealership that was willing to give me a reasonable price (still high, but reasonable) for a car that is in low demand, I support every company's right to go around the dealerships. They are disgusting. While sitting around waiting for 20 minutes "cooking" in a dealership waiting for the man to come back with a price for a used car, I heard 4 other salesman standing around, pretending to be customers, laughing and making fun of people who had come in to buy a car. Some pretended to be gangsters who had to "go geyt sum monnah frum muh baby mommah's couch". Another pretended to be school teachers who had to pay the down payment with 3 different checks. It was disgusting. I left after it was obvious that the man was making me wait for no reason, and when I left, he sent me a text message with a price for a base model, used car, for ABOVE the new price not 100 feet away from his desk, at the dealership next door. It was a very abusive process. I've never been in another situation where you ask how much something costs, and they say "make an offer!" That's like going into Walmart and asking how much a TV is, and they say "What's it worth to you?" Gross. I felt like I was dealing with conmen from the start. I will never buy another car from a dealer. Tesla has the power to lead the way into eliminating these middlemen monsters and I hope they see more support in that regard. Note: I needed a pretty specific car because I'm extremely tall and I'm having back problems from having to slouch in normal sized cars. Because of this, I had limited options in the way of dealers.

bitJericho 11y ago
I only buy privately now. If I'm ever in the market for a new car not sure what I'd do. Maybe I'll go tesla lol.
yuhong 11y ago
I wonder why this model was created in the first place.
- CamperBob2 11y ago
  Regulatory capture is a thing.
- InclinedPlane 11y ago
  Because it's highly lucrative. Selling an automobile based on a list price offers less potential for profit than all of the other things that dealerships do. They find numerous ways to milk customers out of money during a sale by jacking up the price of the car or shafting people on trade-in value. Aside from that there's financing and dealership servicing, both of which can come show high profit margins.
- rodgerd 11y ago
  Given there was a time when cars were (proportionately) more expensive, much less reliable, and mergers of companies were more common, requiring a dealer network to avoid you getting a very expensive dud probably seemed an attractive idea to the public.
  - dylanjermiah 11y ago
    And now vehicles cost almost 10% more [1] due to the banning of direct sales. [1] http://www.justice.gov/atr/public/eag/246374.htm http://www.justice.gov/atr/public/eag/246374.htm
    - ghaff 11y ago
      More precisely though, those potential cost savings are primarily attributed to shifting from a build-to-stock to a build-to-order model, which at least in principle could be done with existing franchised dealerships. That paper also found that dealerships didn't consistently make money on new car sales. They make a lot more from service and parts.
  - yuhong 11y ago
    I am talking about the pricing model in particular though.
- prostoalex 11y ago
  Here's the industry voice defending it (with admittedly weak arguments) http://wardsauto.com/industry-voices/answers-faqs-about-why-dealers-exist http://wardsauto.com/industry-voices/answers-faqs-about-why-... Manufacturer, in theory, could pull out and close down the shops during financial downturns (which with US companies seems to happen every few years), leaving a bunch of owners stranded on service and spare parts (in pre-Internet days). A local dealer would be financially independent from the manufacturer, and provide needed liquidity for the car maker, the theory goes.
  - cheald 11y ago
    This made sense when automobiles were new and the infrastructure wasn't heavily established, but that's no longer the case. Now, car support infrastructure is so ubiquitous that you could wipe every dealership off the face of the planet and people would still be able to get their cars repaired. Even ignoring the independent mechanics, it's in the manufacturer's long-term interest to ensure that their customers have support for their product, since a customer who can't get their $MAKE repaired isn't going to buy another $MAKE in the future. Even if they pulled out of a market, they would almost certainly ensure some form of continuing support.
    - prostoalex 11y ago
      Yep, even the longevity argument is no longer valid - where are the local guys who will support my Mitsubishi and Suzuki after the respective manufacturers pulled out of the US market?
ianlevesque 11y ago
The least evil option I found was a no-negotiations dealer. I'm sure I lost out by some percent but my sanity is worth it to me.
matwood 11y ago
Unless you're being forced to buy a car because of a wreck or something similar, you have to remember that you have 100% of the power. I've had salesman and "sales managers" laugh at my price and then chase me out as I walked out, only to call me a week later offering my price to which I told them was no longer good so it needed to be lower. I've had the finance guy literally not shaking my hand at the end of the deal and telling me never to buy a car there again (I had to correct his mistakes over and over). Buying a car is war, and if you approach it that way it can be quite amusing. Some other stories, I had a friend when buying one of his cars it was a month long negotiation. I would be in his office, the phone would ring he would pick up say "No" and just hang up on the sales guy. Pretty hilarious actually. Another friend walked into the dealership, money in hand and told the guy a price and that he had 45 minutes before he had to go back to work. He said it was awesome watching the salesman run all over the lot in the heat, but the deal got done. If someone does not want to negotiate, CarMax is okay. The prices are not the best, but they are clearly shown online and the buying process is dead simple.
- jfoutz 11y ago
  Yeah. As someone who's not used to negotiating regularly, especially at car level stakes (what else do people buy that's expensive, houses?) buying a car from a dealer was an experience. The war analogy is apt. Burn every bridge. Don't just be ready to walk, walk. It's an all day process, but it can save you literally thousands of dollars. One of my old managers went to the lot, looked around for the least saleable car, and made a standing offer for it. They called back a couple of times with higher prices, he declined. Turns out at the end of the month, they have to make a quota and would take his deal.
- toomuchtodo 11y ago
  > If someone does not want to negotiate, CarMax is okay. The prices are not the best, but they are clearly shown online and the buying process is dead simple. You should revisit your first three paragraphs to understand why people are okay with Carmax's prices. Buying a car should not be war, it should not be a hassle, and you should not have to wonder the entire time how you're going to get screwed. Disclaimer: I have bought over 11 cars from Carmax for myself and family; never once have I been dissatisfied. Next car is a Model S or X.
ComputerGuru 11y ago
Did you have to go to a dealer? I've stopped buying from dealers almost entirely, and have shifted to purchasing used directly from other owners via craigslist. (I'm a little confused because you talked about used and new in your post.) Of the past 5 cars I've bought, only one was from a dealership: a certified pre-owned Audi, that was two years old at the time I got it. Still sure I got robbed, but it wasn't by too much.
- ams6110 11y ago
  This is the best way. New cars, even when you negotiate a great price, are a terrible value when you consider depreciation. I buy used always now, generally at least 5 years old. The majority of the depreciation had been realized, insurance is cheaper, in many states registration is cheaper also. Never been unhappy.
  - dangrossman 11y ago
    Lucking out with repairs? A 5+ year old car won't be offered under a certified pre-owned program, but a 2-3 year old one will. That gets you another 5 years (7 years from the in-service date) and 100K miles under warranty. My last used car needed a new transmission, serpentine belt, water pump and alternator... and all of it was replaced under warranty, with door-to-door pickup and rental cars. When that 7 year warranty came to an end, I sold the car, took $2K and bought another 2-year-old car with the fully loaded trim. That works out to ~$400/year, with the same benefits of buying used versus new, but having a factory warranty brings a lot of peace of mind.
    - JohnTHaller 11y ago
      Certified pre-owned may have a warranty, but the "certified pre-owned" part is just a fancy way of saying used. And there's often nothing "certified" about them at all. A friend of mine in CA just purchased a "certified pre-owned" Honda 2 days ago... quite a bit of extra cash for a "182 point rigorous checklist" they do to ensure the car is in great working order. Over a dozen of those 182 points were skipped. So, all kinds of things marked as verified working that are just broken.
meritt 11y ago
So build the alternative. Build a way for consumers to make bids/offers (put the money in escrow) and allow verified dealers to bid for your offer. You want a 2010 Honda Accord for $8500? Put up the cash and let reputable dealers compete.
cheald 11y ago
Unrelated to the discussion on dealerships, but a note on your height - I'm 6'10" with a 39" inseam and three kids. As you can imagine, my options are limited. The wife and I bought a Kia Soul a couple of years ago, and it's been wonderful. It's not astoundingly roomy overall, but I have plenty of head and leg room, and it's comfortable even with three car seats in the back. Good gas mileage, not very expensive, and trivial to maintain.
Osiris 11y ago
The other industry that's even worse at pricing is health care. Nearly every time I go in for something I'm either told it's covered, when it's not, or given a price that's completely wrong. My wife ends up spending 3 months after any medical procedure more than just a checkup fighting with billing departments and insurance.
- cheald 11y ago
  The real tragedy of the health care industry is that as a consumer, you have practically zero ability to price procedures and materials and to select a competitive provider based on that price. Instead, you select a provider based on "does my insurance cover them yes/no". At least with car dealerships, you can make them fight to give you a better price than the guy across the street. The insurance industry has practically eliminated the pressure of competition from the part of the medical industry that they care about, which allows them to effectively fix prices.
- ashark 11y ago
  100% agreed. The time/money/stress burden this places on people is incredible. IMO health care providers should be forced to charge one price, regardless of who's paying. That way it wouldn't take a lawyer and a quant to figure out with even 99% certainty what something will actually cost, and the insurance companies would each fight to lower prices for everyone. It's totally nuts that there is no-one in, say, a hospital, who can tell you what you're going to pay for a given procedure. They can (sometimes) give you numbers, but they'll practically never even be what ends up on the bill, let alone what you'll personally pay.
superuser2 11y ago
CarMax. CarMax's entire purpose is to sell cars without this bullshit. Their prices are on average higher than what you could get by negotiating with a dealership, but if you don't want to play these games, CarMax is for you. They'll also move cars around between their locations (for a fee) if you're looking for something obscure.
derefr 11y ago
> I've never been in another situation where you ask how much something costs, and they say "make an offer!" I'm vaguely aware of one single other place this happens: street-walker prostitutes. The parallel is pretty solid, actually.
- cheald 11y ago
  The big difference, of course, being that when you get screwed by a prostitute, you leave happy.
- tzs 11y ago
  What about auctions? Or lunch trades among school children? I believe that in both of those it is common for the seller to ask the buyer to make the first price offer.
- idlewords 11y ago
  This happened to me all the time when I was looking for a server colocation facility, except the phrasing was slightly different - "what's your budget?"
- TeMPOraL 11y ago
  That's why I, in all honesty, consider prostitution a more respectable occupation than telemarketing - in the former case, both parties engage in voluntary trade and leave happy. In the latter, one party preys on unwilling and gullible, trying to take their money while giving them suboptimal-to-useless crap.
marincounty 11y ago
It's a game. I think some dealerships, in some areas, secretly set prices? Most of my vechicle purchases have been under stress--I need a car for my commute Monday. All the stereotypes in buying a vechicle are correct. Personally, I stay away from dealerships, and used car lots. The only time I ever got a good deal at a dealerships is when I walked into a dealership on Van Ness Ave. There were all the usual cast of characters(Sales personnel). They were all checking out my friend. Yes--she is attractive, but they were like Wolfs. We were both hung over, and she needed a car for Monday. She has 20 grand she could spend. I used to sell cars in college, so I kinda knew the game. I told her we need to split up. While they were fawning over my friend, I overheard a small fight in the back. A disgruntled guy came out and walked right over to me and said, "I hate this fu--ing place. I moving to Oregon tomorrow with my girlfriend." I called my friend over. The $22,000 black Honda she was about to buy was dropped down to 15,000 out the door with the assistance of the disgruntled salesman. The car was stolen a month later. She ended up paying $25,000 for the same car at a different dealership. I sometimes wonder if I was conned with the fight in the back room, but it was a good deal? And the guy should go into acting--if it was all set up? (I miss you WH! I wish we were still friends! My email is on the Internet.)
ams6110 11y ago
I felt like I was dealing with conmen from the start. You were. Salesmen, especially car salesmen, are bullshitters in the Harry G Frankfurt sense. They are indifferent to the truth. They will say whatever they need to say to get you to buy a car. Know this going in. I don't understand, though, why there is this idea that direct sales would result in a better deal.
- colechristensen 11y ago
  >I don't understand, though, why there is this idea that direct sales would result in a better deal. Middle-men are expensive. Using them, a few people will get better deals and a lot of people will get screwed.
- patmcc 11y ago
  >>I don't understand, though, why there is this idea that direct sales would result in a better deal. If direct sales were possible, dealerships would have to offer better prices or go out of business. If I could order a Honda Civic from honda.com directly for $20k, that gives me a good base bargaining position in the dealership. As it is we have the nebulous concept of the MSRP, which isn't very helpful.
- mikeash 11y ago
  Direct sales are better because the incentives are different. A bullshitting salesman who doesn't care about the truth can still make a big pile of money because there are a lot of car buyers out there, and for every customer he screws over, a new victim will walk in the door who doesn't know him from Adam. Further, people understand that car dealers are independent entities, and that car salesmen are relatively independent actors within them. So if you get screwed over buying a car, you'll think "I'm never going back to Bob the salesman again" which he couldn't care less about because you're probably not buying another car for years, and he has plenty of fresh meat to feast on. At worst you'll think "I'm never going back to Steve's Honest Honda Sales again" which is a bit of a hit to Steve (assuming you tell your friends) but not a big deal. If you bought directly from Honda they have a much greater interest in making your experience a good one. They want you to come back to them for your next car in five or ten years. They want you to recommend Honda to your friends and family. Even if those friends and family are in another city or even another country, your recommendation directly affects Honda's bottom line. This won't eliminate scumbaggery, obviously. But it's bound to improve things.
carrotleads 11y ago
That sounds very much like some of the recruiters or HR folks asking "what will you work for" while sounding all shocked if you ask them to pay market rate or even worse if you ask what their budget is.. There must be some sort of way to disrupt this whole price negotiation shenanigans. Whoever has more information should be obliged to name the price.
IndianAstronaut 11y ago
The worst is when I get taken to the back room and they beg and plead for me to get some extra insurance on the car for $1000 or so. Hate the process of having to buy cars.
mkramlich 11y ago
> Tesla has the power to lead the way into eliminating these middlemen monsters and I hope they see more support in that regard. arguably... Craiglist has led the way, and earlier. do you want to see ads from dealers? or from private owners? or both? your choice
mkramlich 11y ago
> Tesla has the power to lead the way into eliminating these middlemen monsters and I hope they see more support in that regard. arguably... Craiglist has led the way, and earlier. do you want to see ads from dealers? or from private owners? or both? your choice
DrStalker 11y ago
Do US dealers not display starting prices on the vehicle? The standard way of doing things in Australia is every car has a clearly marked price and then you see how much you can knock that down in negotiations, or you could just pay that listed price.
- cheald 11y ago
  There are starting prices, but the negotiating process is so arcane and twisted that it really only establishes a rough ballpark. Car salesmen are notorious for slipping in extra charges and making "math mistakes" that they benefit from if you don't catch them before signing your agreement to them. They will push very hard to let their lending partners finance a car loan for you, offering incentives which lower the apparent price, but which generally end up costing the buyer more in the long end. Their business is built on cheating their customers, and it's disgusting. They can get away with it because many buyers don't have much in the way of alternatives. Car buying in the US is a really miserable experience. I'd be cheering for Tesla to succeed if for no other reason than that it helps to put the existing dealerships out of business.
- ghshephard 11y ago
  Yes, they have a "Starting Price", and it is just complete fiction that you can safely ignore. Even the dealer invoice is a number that isn't particularly relevant to the conversation, because it doesn't take into account dealer incentives/kickbacks/bonus kickers. A dealer can sell a car they paid $30,000 for for $25,000 and still make $5,000 on the deal once everything is considered - it's just a lot of the additional revenue is very indirect, and not at all easy to associate with any particular vehicle. And, negotiations with car dealers is frustrating, because they will waste your time, and frequently insist they have to go talk with their "Manager", or "The VP of Sales", or "Call the head office to get permission to make an exception on this deal, because they need it to make quota" or whatever bullshit they are spinning that particular day. If you want to make your life simple, just go to CarMax. Alternatively, if you really like playing this idiotic car dealer game, then do a couple days research on the net, research the best prices that other people have paid, taking into account timing around end of month/quarter/year, factor in when the new model may be coming out as well - set your price - and then just offer it with a yes/no to dealers, starting with your favorite dealer, and working your way down.
jpatokal 11y ago
This story about life on the other side of the fence has been posted on HN a few times, and it's still a good read: http://www.edmunds.com/car-buying/confessions-of-a-car-salesman.html http://www.edmunds.com/car-buying/confessions-of-a-car-sales... (2000) http://www.edmunds.com/car-buying/confessions-of-a-car-salesman-updated-for-2009.html http://www.edmunds.com/car-buying/confessions-of-a-car-sales... (2009 update)
MichaelApproved 11y ago
> It was a very abusive process. I've never been in another situation where you ask how much something costs, and they say "make an offer!" What you're describing is a problem with sales people, not the dealership model. Generally, when you have sales people who make commission and who have price flexibility, you will get this type of attitude. Assume we cut dealerships out of the equation tomorrow, what makes you think the manufacturer won't have the same sales people on the floor pushing the product? What you're looking for is a fixed retail price on the product, so you don't have to worry about negotiations. Tesla happens to have that but not all manufacturers would necessarily make the same choice.
deleted 11y ago
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lostlogin 11y ago
Your story exactly covers the house buying process in Auckland, New Zealand. "What's do you think it is worth" is usually the first thing that is said. This is in a market with 20% appreciation in the last year, and still the agents behave disgustingly. Who else can say their industry has that sort of price inflation?
- sneak 11y ago
  VCs.
deleted 11y ago
[deleted]
rebootthesystem 11y ago
Well, perhaps you haven't lived in another country where negotiation is behind nearly every transaction, even down to when the cops pull you over. I remember my Dad getting pulled over for driving with one hand in Argentina. The car had a manual transmission and there was no such law. After a short negotiation the cop got a few bucks and we where back on the road. I love negotiating with car dealers. I know their game and can be as much of an asshole as they are. A few rules: - Always tell them you have two hours to get out of there - Set an alarm for 1 hour - Give them hell if things are not moving by the hour mark get up and get out of the office. You need to be angry (non violent) - I prefer to have 30% to 50% down payment if financing. Things move much faster this way. - Do your research - Do NOT EVER be in love with a particular car - Do not inject emotion into the process. Think Jedi Knight. - Do not tolerate delay techniques. Demand that the manager come out and close the deal, no stupid back and forth - Be a bigger asshole, imagine you care about cockroaches more than them - have fun - Sorry ladies: Don't go in ther with your wife or girlfriends unless they agree to the rules of the game and not to inject emotion into the negotiations - Drill it into your head: You don't have to buy that car that day. It really sucks that this is the culture. It is what it is. You can either have fun with it or be a victim.
Shivetya 11y ago
I don't. With a manufacturer direct sale you don't know what a reasonable price because they would never have to tiers of pricing which could be found out and exposed as so called "invoice" and similar pricing is done with regular car dealers. I also do not support direct sales where dealerships have throughout the years established the brand in question. Now for new brands who are wholly unrelated to a current established brand I take no issue with. However to say that GM or Ford should be able to bypass the dealership model which they already abuse with must carry and demo rules would not be remotely fair as the customer relationships were established not by GM or Ford but instead by the dealers. However I do not support the idea that manufacturers or their assigned dealerships should be the only businesses who can repair or service any part of a vehicle. As for car buying, doing it this week. Never once in thirty years and a dozen cars or motorcycles have I ever had an issue buying or selling car. The majority of horror stories come from used dealerships serving people who cannot afford down payments or the like. tl;dr dealerships helped establish brand loyalty for older car makers and that investment needs some protection from poaching of customers with a manufacturer direct model you never know if you are getting a deal and have convince yourself irrationally that you are
- technofiend 11y ago
  I don't consider it a "horror story" but I did end up shopping around for my last car, including a trip to the closest dealership. Selling me a car would have been a great deal for those guys as my wife insisted that we do every repair at the dealership. Trust me the purchase price was nothing next to the maintenance outlay over the following decade for that lemon. Still the guys closest to me when presented with the paperwork from another dealership for an already closed deal and the question "Would you care to match this price for another one?" started the "OK, cool your jets here while we go talk about nothing in the ``manager's'' office for twenty minutes" game. I walked out and bought at the next closest dealership which gladly accepted the deal. It was simple math. As an hourly contractor those guys were literally taking money out of my pocket every minute they wasted.
- mikeash 11y ago
  Price discovery for directly sold cars would work as it does in any other industry, through competition. If Brand X sells a car for $PRICE while Brand Y sells a basically identical car for $PRICE * 0.75, that discrepancy won't last long. And really, that's how it works now, it's just more difficult. "Invoice" price is a lie that the car manufacturers and dealers collaborate on to screw you. It does not reflect the actual cost to the dealer in any way. The only reason that number exists is to make you feel like you got such a good deal that you fleeced the dealer, while they laugh all the way to the bank.
dec0dedab0de 11y ago
It was a very abusive process. I've never been in another situation where you ask how much something costs, and they say "make an offer!" Corporate IT sales. Try to get a straight answer for buying 100 + Switches, Servers, etc. It's ridiculous. The only reason someone hides their pricing structure, is so they can over charge some people. Very similar to the grocery store leaving bad fruit hidden out with the good fruit in hopes someone will buy it without checking.
- Brian-Puccio 11y ago
  > Corporate IT sales. To the point where there's a /r/sysadmin weekly "Am I Getting Fucked Friday" thread where people can post quotes they're being given for hardware because there is no truecar.com for corp IT sales. http://www.reddit.com/r/sysadmin/comments/35aipe/am_i_getting_fucked_friday_may_8th_2015/ http://www.reddit.com/r/sysadmin/comments/35aipe/am_i_gettin...
- freehunter 11y ago
  Heck, I work at a vendor (professional services) and trying to get pricing for my own company's offerings is next to impossible. The best I can find is list price, but of course no one pays the list price so that's useless. The sales folks hesitate to state a price as well, saying that it varies. Of course it does.
chrisBob 11y ago
If you don't want to deal with the haggling then I have found two good options: My bank offers pre negotiated prices on new cars that are decent and well under the sticker price. You can also get the current Consumer Reporte car guide and walk in with that in your hand. It has the invoice price and recommends a fair price for each model. This gives you a much stronger position.
- jstelly 11y ago
  Costco offers a similar negotiation service. The prices are good, but it is limited to fairly popular models and specific dealers. It seems like a good tradeoff if you find the usual negotiation painful.
jmilloy 11y ago
I think this is, happily, becoming a myth. The transparency of the internet and the ease of owner to owner sales is making the used-car market more efficient. It is easier now for consumers to know the value of a vehicle. If you are treated poorly or over-quoted at a dealership, hopefully you are in a position to just leave (like the parent). Fighting the "war", even if you win, is still supporting the old model. Keep in mind that it sucks for the salesperson, too, at these sorts of dealerships. I recently bought my first used car since 2007. The first dealership I went to is still in the past: "You know, before you go, I've just remembered I've got another one in the back that would be perfect for you....", overpriced, etc. The second dealership I went to simply pointed us toward the computer with a searchable inventory with all the information about the cars, prices, and additional fees explained. The way a purchase should be. Knowing the value of the vehicle beforehand made it easy know the additional cost due to the convenience of not searching on craigslist for weeks and weeks for some random "best deal", and driving out of the lot that day with a clean, serviced vehicle.
technofiend 11y ago
I have a friend who wanted a new BMW at a given price. He faxed his offer to every dealership in the state. He didn't hear back from most, he got a counter offer from a few and one in El Paso, TX accepted his deal. And then there was the dealership in Houston (his town) that took the time to write "HA HA HA!!" and fax his offer back. Despite the distance he drove to El Paso.
mzs 11y ago
I think it's pretty nice that there are all these stores I can drive to where I can sell and buy a car in couple hours. That's risky buisiness-wise and most manufactures enjoy not taking that on directly. There are no haggle dealerships out there, you might like those more, and if the car you are interested in is low demand you should get a decent price there for one. Might be worth the less stress to you, won't make much of a difference month to month.
- ghaff 11y ago
  I'm no particular fan of the car buying experience although if you can take both financing and trade-in totally out of the equation--and have done your research--it gets a lot easier. You're also right that there are no haggle dealers and brands. When I bought one of my current vehicles (about 15 years ago now!) I test drove a couple different variants and the purchase process probably took less than an hour at a no haggle dealer that was selling the car at just about dealer cost according to Consumer Reports.

by chisleu 11y ago

bitJericho 11y ago

I only buy privately now. If I'm ever in the market for a new car not sure what I'd do. Maybe I'll go tesla lol.

yuhong 11y ago

I wonder why this model was created in the first place.

CamperBob2 11y ago
Regulatory capture is a thing.
InclinedPlane 11y ago
Because it's highly lucrative. Selling an automobile based on a list price offers less potential for profit than all of the other things that dealerships do. They find numerous ways to milk customers out of money during a sale by jacking up the price of the car or shafting people on trade-in value. Aside from that there's financing and dealership servicing, both of which can come show high profit margins.
rodgerd 11y ago
Given there was a time when cars were (proportionately) more expensive, much less reliable, and mergers of companies were more common, requiring a dealer network to avoid you getting a very expensive dud probably seemed an attractive idea to the public.
- dylanjermiah 11y ago
  And now vehicles cost almost 10% more [1] due to the banning of direct sales. [1] http://www.justice.gov/atr/public/eag/246374.htm http://www.justice.gov/atr/public/eag/246374.htm
  - ghaff 11y ago
    More precisely though, those potential cost savings are primarily attributed to shifting from a build-to-stock to a build-to-order model, which at least in principle could be done with existing franchised dealerships. That paper also found that dealerships didn't consistently make money on new car sales. They make a lot more from service and parts.
- yuhong 11y ago
  I am talking about the pricing model in particular though.
prostoalex 11y ago
Here's the industry voice defending it (with admittedly weak arguments) http://wardsauto.com/industry-voices/answers-faqs-about-why-dealers-exist http://wardsauto.com/industry-voices/answers-faqs-about-why-... Manufacturer, in theory, could pull out and close down the shops during financial downturns (which with US companies seems to happen every few years), leaving a bunch of owners stranded on service and spare parts (in pre-Internet days). A local dealer would be financially independent from the manufacturer, and provide needed liquidity for the car maker, the theory goes.
- cheald 11y ago
  This made sense when automobiles were new and the infrastructure wasn't heavily established, but that's no longer the case. Now, car support infrastructure is so ubiquitous that you could wipe every dealership off the face of the planet and people would still be able to get their cars repaired. Even ignoring the independent mechanics, it's in the manufacturer's long-term interest to ensure that their customers have support for their product, since a customer who can't get their $MAKE repaired isn't going to buy another $MAKE in the future. Even if they pulled out of a market, they would almost certainly ensure some form of continuing support.
  - prostoalex 11y ago
    Yep, even the longevity argument is no longer valid - where are the local guys who will support my Mitsubishi and Suzuki after the respective manufacturers pulled out of the US market?

ianlevesque 11y ago

The least evil option I found was a no-negotiations dealer. I'm sure I lost out by some percent but my sanity is worth it to me.

matwood 11y ago

Unless you're being forced to buy a car because of a wreck or something similar, you have to remember that you have 100% of the power. I've had salesman and "sales managers" laugh at my price and then chase me out as I walked out, only to call me a week later offering my price to which I told them was no longer good so it needed to be lower. I've had the finance guy literally not shaking my hand at the end of the deal and telling me never to buy a car there again (I had to correct his mistakes over and over). Buying a car is war, and if you approach it that way it can be quite amusing. Some other stories, I had a friend when buying one of his cars it was a month long negotiation. I would be in his office, the phone would ring he would pick up say "No" and just hang up on the sales guy. Pretty hilarious actually. Another friend walked into the dealership, money in hand and told the guy a price and that he had 45 minutes before he had to go back to work. He said it was awesome watching the salesman run all over the lot in the heat, but the deal got done. If someone does not want to negotiate, CarMax is okay. The prices are not the best, but they are clearly shown online and the buying process is dead simple.

jfoutz 11y ago
Yeah. As someone who's not used to negotiating regularly, especially at car level stakes (what else do people buy that's expensive, houses?) buying a car from a dealer was an experience. The war analogy is apt. Burn every bridge. Don't just be ready to walk, walk. It's an all day process, but it can save you literally thousands of dollars. One of my old managers went to the lot, looked around for the least saleable car, and made a standing offer for it. They called back a couple of times with higher prices, he declined. Turns out at the end of the month, they have to make a quota and would take his deal.
toomuchtodo 11y ago
> If someone does not want to negotiate, CarMax is okay. The prices are not the best, but they are clearly shown online and the buying process is dead simple. You should revisit your first three paragraphs to understand why people are okay with Carmax's prices. Buying a car should not be war, it should not be a hassle, and you should not have to wonder the entire time how you're going to get screwed. Disclaimer: I have bought over 11 cars from Carmax for myself and family; never once have I been dissatisfied. Next car is a Model S or X.

ComputerGuru 11y ago

Did you have to go to a dealer? I've stopped buying from dealers almost entirely, and have shifted to purchasing used directly from other owners via craigslist. (I'm a little confused because you talked about used and new in your post.) Of the past 5 cars I've bought, only one was from a dealership: a certified pre-owned Audi, that was two years old at the time I got it. Still sure I got robbed, but it wasn't by too much.

ams6110 11y ago
This is the best way. New cars, even when you negotiate a great price, are a terrible value when you consider depreciation. I buy used always now, generally at least 5 years old. The majority of the depreciation had been realized, insurance is cheaper, in many states registration is cheaper also. Never been unhappy.
- dangrossman 11y ago
  Lucking out with repairs? A 5+ year old car won't be offered under a certified pre-owned program, but a 2-3 year old one will. That gets you another 5 years (7 years from the in-service date) and 100K miles under warranty. My last used car needed a new transmission, serpentine belt, water pump and alternator... and all of it was replaced under warranty, with door-to-door pickup and rental cars. When that 7 year warranty came to an end, I sold the car, took $2K and bought another 2-year-old car with the fully loaded trim. That works out to ~$400/year, with the same benefits of buying used versus new, but having a factory warranty brings a lot of peace of mind.
  - JohnTHaller 11y ago
    Certified pre-owned may have a warranty, but the "certified pre-owned" part is just a fancy way of saying used. And there's often nothing "certified" about them at all. A friend of mine in CA just purchased a "certified pre-owned" Honda 2 days ago... quite a bit of extra cash for a "182 point rigorous checklist" they do to ensure the car is in great working order. Over a dozen of those 182 points were skipped. So, all kinds of things marked as verified working that are just broken.

meritt 11y ago

So build the alternative. Build a way for consumers to make bids/offers (put the money in escrow) and allow verified dealers to bid for your offer. You want a 2010 Honda Accord for $8500? Put up the cash and let reputable dealers compete.

cheald 11y ago

Unrelated to the discussion on dealerships, but a note on your height - I'm 6'10" with a 39" inseam and three kids. As you can imagine, my options are limited. The wife and I bought a Kia Soul a couple of years ago, and it's been wonderful. It's not astoundingly roomy overall, but I have plenty of head and leg room, and it's comfortable even with three car seats in the back. Good gas mileage, not very expensive, and trivial to maintain.

Osiris 11y ago

The other industry that's even worse at pricing is health care. Nearly every time I go in for something I'm either told it's covered, when it's not, or given a price that's completely wrong. My wife ends up spending 3 months after any medical procedure more than just a checkup fighting with billing departments and insurance.

cheald 11y ago
The real tragedy of the health care industry is that as a consumer, you have practically zero ability to price procedures and materials and to select a competitive provider based on that price. Instead, you select a provider based on "does my insurance cover them yes/no". At least with car dealerships, you can make them fight to give you a better price than the guy across the street. The insurance industry has practically eliminated the pressure of competition from the part of the medical industry that they care about, which allows them to effectively fix prices.
ashark 11y ago
100% agreed. The time/money/stress burden this places on people is incredible. IMO health care providers should be forced to charge one price, regardless of who's paying. That way it wouldn't take a lawyer and a quant to figure out with even 99% certainty what something will actually cost, and the insurance companies would each fight to lower prices for everyone. It's totally nuts that there is no-one in, say, a hospital, who can tell you what you're going to pay for a given procedure. They can (sometimes) give you numbers, but they'll practically never even be what ends up on the bill, let alone what you'll personally pay.

superuser2 11y ago

CarMax. CarMax's entire purpose is to sell cars without this bullshit. Their prices are on average higher than what you could get by negotiating with a dealership, but if you don't want to play these games, CarMax is for you. They'll also move cars around between their locations (for a fee) if you're looking for something obscure.

derefr 11y ago

> I've never been in another situation where you ask how much something costs, and they say "make an offer!" I'm vaguely aware of one single other place this happens: street-walker prostitutes. The parallel is pretty solid, actually.

cheald 11y ago
The big difference, of course, being that when you get screwed by a prostitute, you leave happy.
tzs 11y ago
What about auctions? Or lunch trades among school children? I believe that in both of those it is common for the seller to ask the buyer to make the first price offer.
idlewords 11y ago
This happened to me all the time when I was looking for a server colocation facility, except the phrasing was slightly different - "what's your budget?"
TeMPOraL 11y ago
That's why I, in all honesty, consider prostitution a more respectable occupation than telemarketing - in the former case, both parties engage in voluntary trade and leave happy. In the latter, one party preys on unwilling and gullible, trying to take their money while giving them suboptimal-to-useless crap.

marincounty 11y ago

It's a game. I think some dealerships, in some areas, secretly set prices? Most of my vechicle purchases have been under stress--I need a car for my commute Monday. All the stereotypes in buying a vechicle are correct. Personally, I stay away from dealerships, and used car lots. The only time I ever got a good deal at a dealerships is when I walked into a dealership on Van Ness Ave. There were all the usual cast of characters(Sales personnel). They were all checking out my friend. Yes--she is attractive, but they were like Wolfs. We were both hung over, and she needed a car for Monday. She has 20 grand she could spend. I used to sell cars in college, so I kinda knew the game. I told her we need to split up. While they were fawning over my friend, I overheard a small fight in the back. A disgruntled guy came out and walked right over to me and said, "I hate this fu--ing place. I moving to Oregon tomorrow with my girlfriend." I called my friend over. The $22,000 black Honda she was about to buy was dropped down to 15,000 out the door with the assistance of the disgruntled salesman. The car was stolen a month later. She ended up paying $25,000 for the same car at a different dealership. I sometimes wonder if I was conned with the fight in the back room, but it was a good deal? And the guy should go into acting--if it was all set up? (I miss you WH! I wish we were still friends! My email is on the Internet.)

ams6110 11y ago

I felt like I was dealing with conmen from the start. You were. Salesmen, especially car salesmen, are bullshitters in the Harry G Frankfurt sense. They are indifferent to the truth. They will say whatever they need to say to get you to buy a car. Know this going in. I don't understand, though, why there is this idea that direct sales would result in a better deal.

colechristensen 11y ago
>I don't understand, though, why there is this idea that direct sales would result in a better deal. Middle-men are expensive. Using them, a few people will get better deals and a lot of people will get screwed.
patmcc 11y ago
>>I don't understand, though, why there is this idea that direct sales would result in a better deal. If direct sales were possible, dealerships would have to offer better prices or go out of business. If I could order a Honda Civic from honda.com directly for $20k, that gives me a good base bargaining position in the dealership. As it is we have the nebulous concept of the MSRP, which isn't very helpful.
mikeash 11y ago
Direct sales are better because the incentives are different. A bullshitting salesman who doesn't care about the truth can still make a big pile of money because there are a lot of car buyers out there, and for every customer he screws over, a new victim will walk in the door who doesn't know him from Adam. Further, people understand that car dealers are independent entities, and that car salesmen are relatively independent actors within them. So if you get screwed over buying a car, you'll think "I'm never going back to Bob the salesman again" which he couldn't care less about because you're probably not buying another car for years, and he has plenty of fresh meat to feast on. At worst you'll think "I'm never going back to Steve's Honest Honda Sales again" which is a bit of a hit to Steve (assuming you tell your friends) but not a big deal. If you bought directly from Honda they have a much greater interest in making your experience a good one. They want you to come back to them for your next car in five or ten years. They want you to recommend Honda to your friends and family. Even if those friends and family are in another city or even another country, your recommendation directly affects Honda's bottom line. This won't eliminate scumbaggery, obviously. But it's bound to improve things.

carrotleads 11y ago

That sounds very much like some of the recruiters or HR folks asking "what will you work for" while sounding all shocked if you ask them to pay market rate or even worse if you ask what their budget is.. There must be some sort of way to disrupt this whole price negotiation shenanigans. Whoever has more information should be obliged to name the price.

IndianAstronaut 11y ago

The worst is when I get taken to the back room and they beg and plead for me to get some extra insurance on the car for $1000 or so. Hate the process of having to buy cars.

mkramlich 11y ago

> Tesla has the power to lead the way into eliminating these middlemen monsters and I hope they see more support in that regard. arguably... Craiglist has led the way, and earlier. do you want to see ads from dealers? or from private owners? or both? your choice

mkramlich 11y ago

DrStalker 11y ago

Do US dealers not display starting prices on the vehicle? The standard way of doing things in Australia is every car has a clearly marked price and then you see how much you can knock that down in negotiations, or you could just pay that listed price.

cheald 11y ago
There are starting prices, but the negotiating process is so arcane and twisted that it really only establishes a rough ballpark. Car salesmen are notorious for slipping in extra charges and making "math mistakes" that they benefit from if you don't catch them before signing your agreement to them. They will push very hard to let their lending partners finance a car loan for you, offering incentives which lower the apparent price, but which generally end up costing the buyer more in the long end. Their business is built on cheating their customers, and it's disgusting. They can get away with it because many buyers don't have much in the way of alternatives. Car buying in the US is a really miserable experience. I'd be cheering for Tesla to succeed if for no other reason than that it helps to put the existing dealerships out of business.
ghshephard 11y ago
Yes, they have a "Starting Price", and it is just complete fiction that you can safely ignore. Even the dealer invoice is a number that isn't particularly relevant to the conversation, because it doesn't take into account dealer incentives/kickbacks/bonus kickers. A dealer can sell a car they paid $30,000 for for $25,000 and still make $5,000 on the deal once everything is considered - it's just a lot of the additional revenue is very indirect, and not at all easy to associate with any particular vehicle. And, negotiations with car dealers is frustrating, because they will waste your time, and frequently insist they have to go talk with their "Manager", or "The VP of Sales", or "Call the head office to get permission to make an exception on this deal, because they need it to make quota" or whatever bullshit they are spinning that particular day. If you want to make your life simple, just go to CarMax. Alternatively, if you really like playing this idiotic car dealer game, then do a couple days research on the net, research the best prices that other people have paid, taking into account timing around end of month/quarter/year, factor in when the new model may be coming out as well - set your price - and then just offer it with a yes/no to dealers, starting with your favorite dealer, and working your way down.

jpatokal 11y ago

This story about life on the other side of the fence has been posted on HN a few times, and it's still a good read: http://www.edmunds.com/car-buying/confessions-of-a-car-salesman.html http://www.edmunds.com/car-buying/confessions-of-a-car-sales... (2000) http://www.edmunds.com/car-buying/confessions-of-a-car-salesman-updated-for-2009.html http://www.edmunds.com/car-buying/confessions-of-a-car-sales... (2009 update)

MichaelApproved 11y ago

> It was a very abusive process. I've never been in another situation where you ask how much something costs, and they say "make an offer!" What you're describing is a problem with sales people, not the dealership model. Generally, when you have sales people who make commission and who have price flexibility, you will get this type of attitude. Assume we cut dealerships out of the equation tomorrow, what makes you think the manufacturer won't have the same sales people on the floor pushing the product? What you're looking for is a fixed retail price on the product, so you don't have to worry about negotiations. Tesla happens to have that but not all manufacturers would necessarily make the same choice.

deleted 11y ago

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lostlogin 11y ago

Your story exactly covers the house buying process in Auckland, New Zealand. "What's do you think it is worth" is usually the first thing that is said. This is in a market with 20% appreciation in the last year, and still the agents behave disgustingly. Who else can say their industry has that sort of price inflation?

sneak 11y ago
VCs.

deleted 11y ago

[deleted]

rebootthesystem 11y ago

Well, perhaps you haven't lived in another country where negotiation is behind nearly every transaction, even down to when the cops pull you over. I remember my Dad getting pulled over for driving with one hand in Argentina. The car had a manual transmission and there was no such law. After a short negotiation the cop got a few bucks and we where back on the road. I love negotiating with car dealers. I know their game and can be as much of an asshole as they are. A few rules: - Always tell them you have two hours to get out of there - Set an alarm for 1 hour - Give them hell if things are not moving by the hour mark get up and get out of the office. You need to be angry (non violent) - I prefer to have 30% to 50% down payment if financing. Things move much faster this way. - Do your research - Do NOT EVER be in love with a particular car - Do not inject emotion into the process. Think Jedi Knight. - Do not tolerate delay techniques. Demand that the manager come out and close the deal, no stupid back and forth - Be a bigger asshole, imagine you care about cockroaches more than them - have fun - Sorry ladies: Don't go in ther with your wife or girlfriends unless they agree to the rules of the game and not to inject emotion into the negotiations - Drill it into your head: You don't have to buy that car that day. It really sucks that this is the culture. It is what it is. You can either have fun with it or be a victim.

Shivetya 11y ago

I don't. With a manufacturer direct sale you don't know what a reasonable price because they would never have to tiers of pricing which could be found out and exposed as so called "invoice" and similar pricing is done with regular car dealers. I also do not support direct sales where dealerships have throughout the years established the brand in question. Now for new brands who are wholly unrelated to a current established brand I take no issue with. However to say that GM or Ford should be able to bypass the dealership model which they already abuse with must carry and demo rules would not be remotely fair as the customer relationships were established not by GM or Ford but instead by the dealers. However I do not support the idea that manufacturers or their assigned dealerships should be the only businesses who can repair or service any part of a vehicle. As for car buying, doing it this week. Never once in thirty years and a dozen cars or motorcycles have I ever had an issue buying or selling car. The majority of horror stories come from used dealerships serving people who cannot afford down payments or the like. tl;dr dealerships helped establish brand loyalty for older car makers and that investment needs some protection from poaching of customers with a manufacturer direct model you never know if you are getting a deal and have convince yourself irrationally that you are

technofiend 11y ago
I don't consider it a "horror story" but I did end up shopping around for my last car, including a trip to the closest dealership. Selling me a car would have been a great deal for those guys as my wife insisted that we do every repair at the dealership. Trust me the purchase price was nothing next to the maintenance outlay over the following decade for that lemon. Still the guys closest to me when presented with the paperwork from another dealership for an already closed deal and the question "Would you care to match this price for another one?" started the "OK, cool your jets here while we go talk about nothing in the ``manager's'' office for twenty minutes" game. I walked out and bought at the next closest dealership which gladly accepted the deal. It was simple math. As an hourly contractor those guys were literally taking money out of my pocket every minute they wasted.
mikeash 11y ago
Price discovery for directly sold cars would work as it does in any other industry, through competition. If Brand X sells a car for $PRICE while Brand Y sells a basically identical car for $PRICE * 0.75, that discrepancy won't last long. And really, that's how it works now, it's just more difficult. "Invoice" price is a lie that the car manufacturers and dealers collaborate on to screw you. It does not reflect the actual cost to the dealer in any way. The only reason that number exists is to make you feel like you got such a good deal that you fleeced the dealer, while they laugh all the way to the bank.

dec0dedab0de 11y ago

It was a very abusive process. I've never been in another situation where you ask how much something costs, and they say "make an offer!" Corporate IT sales. Try to get a straight answer for buying 100 + Switches, Servers, etc. It's ridiculous. The only reason someone hides their pricing structure, is so they can over charge some people. Very similar to the grocery store leaving bad fruit hidden out with the good fruit in hopes someone will buy it without checking.

Brian-Puccio 11y ago
> Corporate IT sales. To the point where there's a /r/sysadmin weekly "Am I Getting Fucked Friday" thread where people can post quotes they're being given for hardware because there is no truecar.com for corp IT sales. http://www.reddit.com/r/sysadmin/comments/35aipe/am_i_getting_fucked_friday_may_8th_2015/ http://www.reddit.com/r/sysadmin/comments/35aipe/am_i_gettin...
freehunter 11y ago
Heck, I work at a vendor (professional services) and trying to get pricing for my own company's offerings is next to impossible. The best I can find is list price, but of course no one pays the list price so that's useless. The sales folks hesitate to state a price as well, saying that it varies. Of course it does.

chrisBob 11y ago

If you don't want to deal with the haggling then I have found two good options: My bank offers pre negotiated prices on new cars that are decent and well under the sticker price. You can also get the current Consumer Reporte car guide and walk in with that in your hand. It has the invoice price and recommends a fair price for each model. This gives you a much stronger position.

jstelly 11y ago
Costco offers a similar negotiation service. The prices are good, but it is limited to fairly popular models and specific dealers. It seems like a good tradeoff if you find the usual negotiation painful.

jmilloy 11y ago

I think this is, happily, becoming a myth. The transparency of the internet and the ease of owner to owner sales is making the used-car market more efficient. It is easier now for consumers to know the value of a vehicle. If you are treated poorly or over-quoted at a dealership, hopefully you are in a position to just leave (like the parent). Fighting the "war", even if you win, is still supporting the old model. Keep in mind that it sucks for the salesperson, too, at these sorts of dealerships. I recently bought my first used car since 2007. The first dealership I went to is still in the past: "You know, before you go, I've just remembered I've got another one in the back that would be perfect for you....", overpriced, etc. The second dealership I went to simply pointed us toward the computer with a searchable inventory with all the information about the cars, prices, and additional fees explained. The way a purchase should be. Knowing the value of the vehicle beforehand made it easy know the additional cost due to the convenience of not searching on craigslist for weeks and weeks for some random "best deal", and driving out of the lot that day with a clean, serviced vehicle.

technofiend 11y ago

I have a friend who wanted a new BMW at a given price. He faxed his offer to every dealership in the state. He didn't hear back from most, he got a counter offer from a few and one in El Paso, TX accepted his deal. And then there was the dealership in Houston (his town) that took the time to write "HA HA HA!!" and fax his offer back. Despite the distance he drove to El Paso.

mzs 11y ago

I think it's pretty nice that there are all these stores I can drive to where I can sell and buy a car in couple hours. That's risky buisiness-wise and most manufactures enjoy not taking that on directly. There are no haggle dealerships out there, you might like those more, and if the car you are interested in is low demand you should get a decent price there for one. Might be worth the less stress to you, won't make much of a difference month to month.

ghaff 11y ago
I'm no particular fan of the car buying experience although if you can take both financing and trade-in totally out of the equation--and have done your research--it gets a lot easier. You're also right that there are no haggle dealers and brands. When I bought one of my current vehicles (about 15 years ago now!) I test drove a couple different variants and the purchase process probably took less than an hour at a no haggle dealer that was selling the car at just about dealer cost according to Consumer Reports.