Why do car dealerships still exist?

My lease is up in a few months and as I start to talk to dealerships it is incredibly frustrating.

I WISH I could just buy a Tesla online and be done with it. In fact, if there was anything fast and convenient that worked for me I would probably buy it just to avoid all the BS with dealers.

I don’t think the next generation, growing up in the information age, is going to put up with dealerships. I think they may be dinosaurs.

Once Amazon or another web business figures out how to sell cars at cost plus a small fixed margin, the business model has got to go away. It seems dealers make the most profit on uninformed consumers and purposely play games to hide complexity.

It is so annoying to have to dance like this every time to get a car. I am thankful to have found this forum. Anyway, rant over. Thanks for listening.

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Amazon and others are legally prohibited from direct auto sales in every state. If you don’t like the franchise laws in your state you should take it up with your state representatives. But just be aware that there are powerful interests behind those laws.

You aren’t the first person to make those same complaints.

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Yup. The Auto industry is VERY powerful in Texas. I believe this came up in the last legislative session and the laws protecting them were kept on the books.

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Just ask Tesla…

Thats exactly why we’re here…operating in all lower 48 states! :slight_smile:

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Do you have examples of leases you negotiated in Texas?

I believe some franchise dealers sued the state for allowing Tesla to open more than one store. Going off memory here which is a bad idea.

You make the deals, but the cars come from a dealership not directly from the manufacturer.

I have seen estimates that cars could cost 20-25 percent less with a direct-to-consumer approach. But then Lucky-Louie the salesguy and Guido “The Closer” would have to do something else.

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Yep, they did…

Dealership is not frustrating. You just pay msrp and they will be your best friend. Tesla has no negotiation but you pay full price minus fed and local rebates. Deale giving you the same deal. Again, just saying not that i agree with the whole dealer process.

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yes that is true. there has been a mountain of money spent on lobbyists over the years to make it the way it is. Now we have laws in place protecting the status quo.

Companies like DSR and other services you may find on leasehackr, what we have done is inserted ourselves into the transaction, technically as a middleman that pushes out the retail sales dept “Guido”.

This way to provide our clients with more of a “House” deal closer to their actual cost. Buying services and brokers here do charge a fee, however the fee is much less than the mark up the retail dept would be adding.

Of course there is a nice trade off with working with buying services like us over the phone and email on your time table versus toe to toe with a salesman on their pressure cooker of a time line. On the downside, we don’t offer the traditional test drive of a vehicle when going thru our service but that’s easily remedied.

http://www.autonews.com/article/20170924/RETAIL01/170929949/could-the-amazon-of-auto-retail-be-amazon-itself?&X-IgnoreUserAgent=1

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The dealership model is not going anywhere soon and frankly I would not mind if they stayed for ever. I believe if this sales model continues to exists than us hackrs can get great deals as they are subsidized by suckers paying close to MSRP.

Lets face it, if the deals we want is what the dealers could only do than they would be out of business and no where for us to negotiate and get best deals from. If the manufacturers who do direct sales like Tesla will have us all pay the same price, there won’t be any Leasehacks or such a forum needed.

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I agree with you that the dealership model isn’t going anywhere anytime soon.

But… All those dealerships, all that overhead, all those support people could (in theory) be eliminated to significantly reduce costs to everyone. That includes you and your deals.

Anyway that’s the case for direct-to-consumer sales.

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I keep hearing that new car sales is pretty much a loosing side of the car dealership business model in general. So there is a possibility that dealer would retain the used car side and service even possibly separating those two and just giving an Amazon like business new car sales side. Those new car sales guys are working for less than minimum wage anyway, so there’s no really loss of labor force if they go away imo.

Maybe they could work at Burger King and get a big raise !

When Henry Ford created the first mass production vehicle, the government was worried the market would be dominated by monopoly, duopoly or oligopoly. So the dealership was created to protect consumers back in the early 1900’s. Funny thing is, a century later, consumers are now more than ever susceptive of being duped by dealership. But the model has been around for too long where laws protect their existence, even though there are more than enough competitions for automakers to prevent themselves from duping us consumers.

Keep in mind, Tesla has only been around since 2003. It’s going to take time for the dealership model to change, and I doubt much progress can be made by consumers direct sale to consumer until EV market is mature.

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Two bits of interesting news today:

  1. Geely offers completely online car buying/delivery/testing/servicing model in China. Results in orders up 5 fold in first week, sales leads up 75 times.
    http://global.geely.com/media-center/news/geely-auto-launches-full-online-car-buying-and-home-delivery-service/

  2. Number of US dealerships declines (albeit very slightly) - start of a new trend?
    https://www.autonews.com/dealers/us-dealership-count-drops-first-time-six-years-urban-science-reports

We’ve known for a long time that the traditional dealership model is not well liked by consumers hence companies like Rodo, Carvana etc and to a large extent Tesla. I guess the question is, will it take someone like Amazon to come along and work through the overly complex legislation that many (all?) states have mandating new vehicle sales through dealerships?

Or, is it just a matter of time - wait for more dealerships disappear and thus opposition to direct to consumer selling diminishes?

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It will take a long time in the US, I think.

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There are a lot of laws and lot of money behind keeping the dealership model. I think the tide might turn in some states sooner than others, but for the most part it will stay the same.

Even if the dealership model changes in the US, car manufacturers will still need to have locations where people can look / touch / test drive / service their vehicles. So maybe goodbye to the fields of cars parked in front of a dealership, but not to the actual dealership model.