I thought that’s why Ford set up a new “division” known as Ford Model E to bypass some of the current regulations and / or dump a hundred million in legal fees trying to get it that way?
1 Like
That could def be the case. I’m sure evs were never included in their agreements made years ago
Tesla is def the exception but they will raise pricing when it’s viable. Right now it seems they’re just lowering to corner the market, pump up the stock price. When you have endless cash you can afford not to profit, or profit less for years.
The Amazon model, put the competition out of business then raise pricing when there’s no one else left. Tesla is years ahead of the competition at this point and their costs seem to be much lower since all other companies are losing billions in their ev divisions.
3 Likes
Of course. But the same applies to the dealer model when manufacturer raises prices - consumer pays more. But if Volvo dealers sell a $62,240 C40 at 11% off + rebates and consumers snap them, then why Volvo can’t sell the same car directly for the same $55,400? This “negotiation” to the rock bottom is psychological.
4 Likes
Because they don’t sell them all for 11% off + rebates. They sell a few while selling many more for higher. Go to a single entity setting the pricing and you may not see the mean sales price decrease but you will definitely see the -3 sigma sales price increase.
3 Likes
CSI scores for Saturn were really high for the fixed price model.
But the costs of non-parts sharing were very high and GM’s zero-sum internal politics meant everyone else within the company looked at Saturn’s budget as a potential windfall for themselves.
2 Likes
I was making a point that no one needs a middle man, not that 99% pay more than 11% off.
1 Like
Huge point here being mostly overlooked.
Tesla’s service generally sucks as those service centers are allowed to pretty much treat customers any they want because the customer essentially has less good choices.
Many buyers want to be able to buy at one dealer and service at another for a variety of reasons. Service (under warranty really) is a important factor for most car buyers and having many dealers that you can choose from for warranty/service work is a great option.
3 Likes
The middle man is what enables us to get 11% off though. No middle man and the deals we love to chase will be gone
3 Likes
Again - Volvo can sell at the same 11% off directly to consumers if they can sell to dealers and incentivize them on top of it. And I don’t want to chase, BTW lol
1 Like
Just because the manufacturer gains a larger margin doesn’t change the market price people are going to be willing to pay. What motivation would the manufacturer have to slash their new found margins?
The only thing that’s going to happen with this is squishing the standard deviation of deals.
2 Likes
Why can’t free market decide if current dealership model works or the direct channel is better? Why does a supposed free-market champion need to take the trouble to legislate the behavior?
1 Like
Not sure what you mean by “slash their new found margins”? They sell to dealers at 11% off MSRP. How’s selling directly to consumer at the same price is slashing? We all know that C40 is overpriced at $62K, not so much at $55K. Slashing MSRP? Yes.
The market determines what these will sell for. Getting rid of the middle man doesn’t change what the market is willing to pay, it just pads margins to the manufacturer. The only thing that’s going to happen with a direct to manufacturer model is the current mean sales price will turn into the future mean sales price, the manufacturer will gain a larger margin since they’ll absorb the money the dealer pockets, and the standard deviation of deals will go to 0.
5 Likes
The way I see it is that the dealership model is actually a preservation of free market capitalism. The consumer benefits because he/she has the ability to shop around for the product they want at the price they feel most comfortable paying, and the franchisees/businesses benefit because they stay in business.
The alternative will result in what you see with health insurance. A few big corporations who dictate pricing and consumers have very little to no choice on how much they have to pay. Literally the antithesis of free/fair market pricing. Competition makes the world go round. Manufacturers compete against each other but it’s even better when dealers for the same manufacturer compete against each other.
3 Likes
So, basically leaving all in the hands of a middle man? But the market will determine what the cars sell for anyway. Volvo can keep the same MSRP or drop it. Volvo actually was mulling this idea a couple of years ago, but their dealers were not happy about it. So there must be a reason for them to do it. But it doesn’t mean consumer would win lol
I agree with SD getting 0 or close to it but assumption that manufacturer will keep the larger margin for themselves vs passing some or all to the buyer is debatable, especially in competitive segments.
I personally feel the mean will go lower (how much is debatable) and leasehackrs needing to find a new religion.
You may see the MSRP drop to fall in line with the current mean sales price, but that doesn’t help anyone here
1 Like
Wouldn’t allowing both direct to consumer and dealership models allow us the best example of the free market and see what consumers ultimately prefer in the end?
3 Likes
We are 1% lol
3 Likes
No doubt, but that’s the whole point. This culls the outliers.