Observing my nephews as they began turning 16 over the past five years, there was no urgency to take the driving test and buy a car. Their world is accessed through the numerous electronic devices. That’s not a good sign for the industry.
StukiMoi
2 years ago
“This settlement allows Tesla to sell and service cars in Michigan as it wants, and thus represents a total victory for Tesla in Michigan.”
Even Tesla is good for something, it seems… If not building cars, then selling them… Way to go!
Even in our theft-is-all-that’s-left dystopia, “Franchise Laws,” literally outright bans on anything resembling free competition, has got to be one of the more egregious examples of crass government theft on behalf of it’s cronies and buddies.
Felix_Mish
2 years ago
The MishTalk web site was so nice to include a link to this interesting 2016 article.
Costco sells cars too. You don’t need the dealership with the exception, they are usually the best trained for the specific brand you are buying. I figure with electric cars having so few moving parts, even that’s going to change things unless they adopt the John Deere model.
Not exactly. Costco has negotiated “discounts” with certain dealerships. You still need to go through a dealer to buy a car, at least in Illinois.
Casual_Observer2020
2 years ago
The electric cars would help here in Dallas where I am this week. The sky is bluish grey on a clear sunny day and smog is reminiscent of the fires in California. A normal smoggy day here feels worse than a normal sunny day in most of the rest of the US.
AWC
2 years ago
Since 1999 I’ve purchased new vehicles by emailing 7 or 8 dealers with a spec sheet, and taken the lowest bidder. The new truck I just purchased was completely online. Saved over $5 k off sticker price.
Excellent plan. I despise car dealers, and that nicely avoids the usual game of “how much is this car” “how much do you want to pay for it” “it’s your car, how much are you willing to sell it for” “if you give me an offer, i’ll take it to the sales manager” “I guess I need to try a different dealer” “what price would I need to give you to keep you from going elsewhere” and so on, ad infinitum.
stephejdu
2 years ago
I bought my last car from Vroom. Picked the car up in a Target parking lot from a Ukranian immigrant driver. Korean Hyundai purchase. I’m a 55 year old Gen Xer who loves the United States. My next car purchase will be an electric car.
For myself, I rented cars at Avis and Hertz on business trips that I was interested in buying. Got tons of long distance test drives on the company’s dime!
I did the same. Even paying out of my own pocket to upgrade to better models because the company rental rate was only for low end models I wouldn’t be buying so I was happy to shell out an extra $20-25 a day to upgrade for a 3 day test drive.
Very simple. It can be done the Tesla way – schedule a test drive online then go to the showroom (a relatively compact location, not a giant lot with hundreds of vehicles) at your designated test drive time and date.
hhabana
2 years ago
I prefer to go to the dealership, but only after I’ve contacted several dealerships to see what is the best “fair” price they can give me. I couldn’t imagine buying a brand new car without checking it out in person. That’s a little odd for me especially the amount of money you pay.
I’ve bought four or five new cars in my life, new motorcycles, jet ski and no one is putting a gun to your head to buy. Other things that I will do is go to a car show to look at specific models that interest me in the future as well as push for 0% interest which I got from Jeep and Toyota.
Years ago, I went to India. I learned to haggle there and I love it. You just can’t take it personally if you lose a little in a haggle. Try to remember what you did wrong and apply it to the next barter. There was tape years ago done by this Jewish guy and it was on negotiating. You have to understand the sellers needs to and you bring your needs to the table and make a deal. I did this with my last purchase earlier this year. A new Jeep Wrangler under 50 grand with most the options I wanted. After taxes it was like 54 grand, but base under 50 with all the bells and whistles is difficult. I made the sales guy angry what I was offering, two weeks later he contacted me again, I offered little more and the deal was made. Got 0% financing too! lol.
You guys need to pay me to buy your cars. 😉
RonJ
2 years ago
We have a Tesla dealership in the city.
Glendale has a boulevard of car dealers, on Brand. It has been refurbished over the years, now with a major Mercedes dealership. Dealership Row now looks as if it could be in Beverly Hills, it is that spiffy.
If buying a car on line is a no haggle, reasonably set price, i would think that more people would go for that.
I have no interest in the dealership games. My last car, i kept for over 20 years.
thimk
2 years ago
I ain’t spending 20k + for a car that I can’t “kick the tires”, and maybe take it to a mechanic for pre purchase diagnostics . This isn’t buying boxer shorts on Amazon. Would you buy a piece of vacant land online ?. Jus sayin AND yes I am a boomer . Oh let me share a dirty little secret of online sales ( take note greenies : massive carbon footprint alert) .
American consumers returned an estimated $428 billion in merchandise in 2020—approximately 10.6% of the year’s total U.S. retail sales—,
Some states have laws stating you can return a car with no questions asked before a certain number of days. In some places where there were rental car shortages I heard of stories of people “buying” a car and returning it as a way to rent. I would think the car dealers could make a killing renting cars during times like these.
I think the article is referencing new cars, not used ones. That said, there is nothing stopping you from test driving a used car either, regardless of where you buy it. Some of the newer outfit that sell used cars have short guarantees on the cars they sell.
TexasTim65
2 years ago
With the price of new cars these days I’m trying to figure out exactly who can afford to buy them. I’ve bought 1 new car in my life back in the mid 90’s and can never see myself doing that again due to cost. It’s been certified pre-owned used cars ever since and then drive them to the ground (ie get 10 or more years out of them).
CarMax and other massive used dealerships are already ahead of the game allowing you to browse inventory at any of their stores across the country and have the car shipped once you find it. If you go to the local CarMax lot, you can take a 24 hr test drive (up to 50 miles worth) to see if you like how the car drives / comfort level etc.
It’s a great model and makes a ton of sense. It would not surprise me in the least to see new car sales go that way over the next 10-15 years. to be honest I thought it would have happened 20 years ago and it might have except for franchise laws.
They just lengthen the term of the loan so that the cost of the car is spread over a longer span, thus lowering each payment. I believe the current average car loan length is six years (long gone are the days of the 36-month car loan).
You’re exactly right. I’ve worked for Carmax and know the ins and outs there. They have the buying experience so nailed down, I don’t see how smaller/traditional dealers will compete.
Like all other parts of our economy, the aggregation into monolithic entities (Amazon, Walmart, Netflix, Apple, Microsoft) that can simply manage business more efficiently and easily for consumers is part of the car business too.
Eventually the role of the “salesman” will be simply verifying documents and ID’s and providing a smile and a handshake. The process is so easy now.
Pick your car online, run financing with a 10 min phone call, have your car delivered to your house (test drive included). And if you don’t love the car.. just bring it back within 30 days. Money back refund, no questions asked.
dbannist
2 years ago
I have honestly never stepped foot in a car dealership, not one time in 43 years of life. For all I care, I’ll go another 43 years without stepping foot in one.I’ve never understood America’s love affair with the car that costs 1/2 of a house in most places. I’ll always buy used and never ever from the dealership.
I’ve bought as many new cars as used ones. I actually think a used car with less than 15k miles is the best. New cars have to be broken in and they drive differently as they accumulate miles. You can test drive a used car and that’s how it will drive. You can test drive a new car but it wont be the same after about 7500 miles.
Casual_Observer2020
2 years ago
I’ve used indepedent brokers to buy cars. I get a cheaper price and fee has been less than $500. Not had any success finding the right features with online sellers for a good price. Auto prices will continue to climb until silicon supply chain issues are fixed.
Brokers are a good alternative, especially for leases and especially if you are willing to travel for a good deal.
Moving to an online buying model has many advantages, but if the industry (read: automakers) make this shift to a direct sales model, you’ll see a situation similar to the iPhone: lots of places to buy it conveniently, but nary a difference in price between the retailers.
LostNOregon
2 years ago
In 2005, I decided to buy a Toyota Matrix in San Diego. Went online to link to edmunds.com and chose all my upgrades. Edmunds asked me if I wanted quotes from 3 different dealerships in my area and what was my target price. I got an email within 10 minutes from Toyota of El Cajon, saying that they would meet my price but they needed to trade with a dealership in LA for my color if I didn’t mind the car having about 120 miles on it. I agreed, and when the car arrived, it took 10 minutes inside the dealership to close the deal.
In 2018, we decided to buy a new Subaru and went to the dealership to choose between a Forrester and an Outback. Made the stupid decision to buy it then at the dealership. 3 very painful hours followed with the dealer pulling all kinds of crap (extended warranty, undercoating, special dealer markups, etc) Never again. Dealerships can just go out of business as far as I care. And I grew up in dealerships!
LGT
2 years ago
Mish –
I applaud the move to online ordering for cars, but I’m going to pour cold water on the idea that online buying will result in lower prices. Consumers will be paying for the convenience of avoiding a dealership and for the privilege of being able to custom order. Here’s why:
First of all, you need to understand that the automakers sell to the *dealers*, not to the end consumer. They do this because auto manufacturing is an incredibly capital intensive business which requires mountains of cash to keep the gears turning. As a result, it is imperative that automakers pump out vehicles and invoice them as soon as they leave the factory.
As a result, dealerships bear the financial burden the moment a car is loaded onto a transport truck, speeding the cash delivered to the factory. This is one of the reasons for heavily subsidized leases at BMW and Mercedes, for example.
If we see factories, whether direct or through intermediaries, move to online ordering for vehicles, we will likely see price increases for two reasons: one, there will be less competition between retailers, and two, the factories and their intermediaries will be assuming additional costs and risks for handling the direct sales model. If the manufacturers decide to build direct to consumer showrooms, that’s an added expense.
So for those who are okay not negotiating, not dealing with dealerships, and having the ability to more highly customize a vehicle – this will be a great move. Just don’t think that this move to direct sales or online ordering will necessarily result in lower vehicle pricing.
You’re missing the point. The idea is to get away from the “buy it off the lot” model and shift to a “order the vehicle exactly per customer spec” model that Tesla uses and the big automakers themselves also use in many countries outside the US.
Selling cars under this model (a car doesn’t even get built [or completed] until it’s ordered by a customer) negates needing the type of OEM-dealership arrangement that exists today in the US.
It’s not that simple. Automakers need to run factories at a very high utilization in order to remain profitable. This is why they pump out cars the way they do and then rely on incentives for the dealerships to move slower metal: it ensures the factory gets their cash immediately. Cash is the lifeblood.
I’m not arguing that the factories *cannot* change the model, I’m suggesting that it’s hard to do so. Very hard.
I’m also arguing that those who think this shift will lead to *lower* prices are mistaken. If anything, this will lead to a decent increase in automobile transaction prices due to the loss of retail competition.
To me, under the Tesla/overseas model, factories still stay continuously busy from orders in the queue as final demand is still there.
Automakers will save substantial sums by not building models or trims which turn out to have unexpectedly low demand and sit on dealers lots being continuously discounted and friction from unnecessary dealer involvement in the process is reduced.
As for whether these savings would flow to the customer… initially you might see some price rises, but as the market settles, the cut-throat competition between automakers will eventually force them to pass these savings to the customers.
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I have honestly never stepped foot in a car dealership, not one time in 43 years of life. For all I care, I’ll go another 43 years without stepping foot in one.I’ve never understood America’s love affair with the car that costs 1/2 of a house in most places. I’ll always buy used and never ever from the dealership.