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NADA Is Terrified of Tesla
cartechboy writes It's no secret that the National Automobile Dealers Association has been trying to block Tesla from selling cars directly from consumers, but to date, it has been defeated countless times in many states. Now NADA put out a release and promotional video touting the benefits of dealer franchises, something Tesla has shunned. NADA mentions price competition, consumer safety, local economic benefits, and added value.
While possibly true, it's complete speculation to tie this to Tesla.
But hey, Tesla gets page views.
There will always be a need for car dealerships, but there is no good reason to ban direct sales. This is pure rent-seeking behavior. The dealerships should position themselves as Tesla's partners in buying/selling used Teslas and in repairs.
Wow, local dealerships sound AWESOME!
So far it seems that NADA has happen.
Not specifically Tesla, but electric cars don't have alot of things that car dealers make money with (oil changes, engine work, transmission work and on and on). Alot of dealerships make much of their profits from such things, so what Tesla represents is scary change - of course that change is coming whether driven by Tesla or someone else.
So the dealers have alot of money, alot of friends and will do what they can to gum up the works for (or kill) Tesla and what it represents if they can. JMHO...
They are great, they protect the consumer, ensure fair prices, charge fair prices for repairs, ensure you don't get ripped off, the list goes on! Good for them, Tesla deserves a beat down for trying to get rid of these middle men.
Oh, jk.
I believe this has greater significance than merely a turf war in some backwater market. We have a direct connection between development of a new technology and the challenging of a significant evil of the developed world, institutionalized rent-seeking. A similar thing is happening with the ride sharing services challenging taxis and other escort businesses.
They forgot to mention the free leg massages from leg-humping auto salesmen.
First I heard that ride sharing services were challenging the escort business.
Are these ride sharing services over Craigslist, perchance?
Imagine being the marketing team that had to make car dealers seem like a good thing to have!
Information theory is life. The rest is just the KL divergence.
The margins for dealer sold cars are HUGE, thousands and thousands of dollars in commission for the better sales guys per car. Now imagine if Tesla ruined that market made cars cheaper for everybody.. of course these guys are scared of Tesla, if they are a success doing this nobody will want to use a dealer and the price of all cars will go down so they lose out on that margin.
Uh, Tesla wouldn't be making anything cheaper for consumers. They'd Apple it up and charge comparatively more, while keeping all the profits to themselves.
..in the traditional sales system is not a thing that most people enjoy
Some people falsely believe they are "players" but they still get screwed
Most people are "sheep" and they get screwed faster and harder
I am not a master negotiator..I just want a car at a fair price
I always feel like a lamb in a roomful of tigers when I deal with a traditional car dealer
I'm a really good engineer, and I have many other talents..but cutthroat negotiation is not one of them
I really, really want a better system
But everyone knows what that conveys, even the dealers themselves:
Of course, this divides ranks with the dealership community itself, as the old guys close to retirement are going to continuing milking their cash cow by any means available, as the younger guys start to worry about their long term futures when the backlash strikes, which the old guys are doing nothing whatsoever to abate sooner rather than later.
They say that society is "only" three square meals from anarchy. That's a lot, actually. I estimate that the fraternal order of the car dealership is only two snifters of brandy and one Cuban cigar's worth of suggested forbearance away from king-sized flop house crossfire.
p>Wouldn't we all be buying the same wholesale price?
No, we'd be buying at retail, so the price is by definition the retail price.
As to whether it's the same price for everyone depends on whether the manufacturer wants to haggle like dealers do or go with a fixed price a la Saturn. A fixed price is more likely though. Otherwise you'd end up paying for what amounts to an in-house dealership employing the people who did the haggling.
"Local dealers will be there for consumers in good times and bad."
Yep, I bought a car 6 years ago from a dealer. They closed down 5 years ago as soon as the "GFC" hit.
I probably would have been a little sad, except they were ass holes to me as soon as I drove it off the lot.
They'd Apple it up and charge comparatively more, while keeping all the profits to themselves.
Good. Tesla spends far more than most companies on R&D, and healthy profits will allow them to continue doing that.
Yes, in this case it would be retail, by definition. I think we're getting tied up in terminology. It's only called wholesale with other car companies because consumers can't buy from the company directly -- the purchase must be done from a middleman, at a brick and mortar store, with usually a pretty large number of employees. All that ultimately adds overhead costs plus dealer profit margin, which is why the car costs more than if you (could) buy it from the manufacturer.
In the case of Tesla, you *are* buying from the manufacturer. Without dealer overhead (and profit), all other things being equal (which they never are, but bear with me), wouldn't this result in cheaper prices to consumers? I chose to call it "buying wholesale", but I suppose the terminology depends on your point of view.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
You are looking at this from the wrong point of view. The way you should be looking at is, if you ALSO had the option of calling up Ford or GM or whoever your car maker was directly, and asking THEM if they could beat the dealer's price, could they? Of course they could, they make the damn car.
The idea that dealers create pricing competition for cars is total baloney because dealers don't make cars in the first place, they just mark them up and sell them. Ford competes with Honda and GM, they don't compete with Honda dealers and GM dealers. The thing that keeps the features and functions progressing for Ford while keeping costs low is not their dealer network, it is competition from other auto makers. The only competition dealers are having is who can mark up your car the least.
ride sharing an escort - eeew.
This issue is a bit more complicated than you think.
The margins are huge. Part of the thing dealers love is preying on people who just don't know about buying a car. Either a full sticker priced sale, or dealer add ons that are insane such as $2000 running boards are a great way to make money off a sucker. Just one item like that can be much more then the normal profit made on a car.
It took me a week to buy my last vehicle. I felt dirty and angry after several of my purchase attempts because I was quite clear on the phone before visiting what I wanted and did not want to waste time going to a dealer who was not willing to do it. I wanted to pay invoice and get fair market value for my old vehicle. Some of the dealers tried to cheat (keeping rebates), others did a good deal but then offered be well below market for my old vehicle. It was a very frustrating process. In the end after failures at 4 dealers I found one that was at least honest. They still made dealer 'holdback' plus other incentives which is enough profit.
'Everyone' hates the car dealership, and I do too. But, in my recent, personal experience, they have provided me the benefit of price competition. I needed to lease a car and found the lowest price I could find. I then simply called the 'Internet Department' at each of the local dealerships for this particular model, and just asked if they could beat that price. One guy said he could, and I went to him. I don't know if this is possible with purchasing a Tesla. Can different dealerships set their own prices, or, since the dealership is the manufacturer, is the price the same across any 'dealership' within a given geographical area?
The problem is, all the different prices you got were different amounts of markup from the manufacturer's price. You settled for the least amount of markup you could find. I suspect that all of them would be more expensive than buying directly from the manufacturer, which in the case of Tesla, you essentially are.
It only seems like a good deal in comparison to worse deals, not because it's actually a good deal.
"You paid WHAT!!" "But it's ok honey, it was 50% off! Think of the money we saved!"
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
Most things are not sold directly by the manufacturer but by retailers. The variety of things that can be bought is too large to have a seperate store for each manufacturer out there, its nice to have product catagories in one place. With smaller objects of lower value, it seems this is strongly preferred. Cars are a very large, expensive item so there is more of a tendancy to have stores that specialize in just them. This sort of reduces the natural retailer/manufacturer seperation.
The fact is dealers do provide added value, however. The value comes from of course, the lot, of being able to actually see a car before you buy it. The cost of running this will be there whether the manufacturer runs the lot, or whether an independent dealer does. The market does operate to regulate prices for dealers, since its a part of the car price, it can be argued that having independent dealers may give people more choice regarding who has a more efficient lot operation.
Many aspects of the dealership people find unpleasant will still be there with a manufacturer run dealership. One of them is the credit checks for the loans. Bargaining is not necessarily exclusive to independent dealers but could also occur at a manufacturer dealer. A lot of the qualities of the independent dealer will still be there with a manufacturer dealer, therefore. Since you have no choice of dealers to work with, it could even be worse.
Maybe people should have the option of a direct buy from a manufacturer, but, a manufacturer locking out independant dealers from providing an alternative is also not a great idea. The vertical integration could be anti-competive and lead to overly monopolistic qualities.
Safety recall fixes have to be done at a dealership. Like when GM issues a recall for the ignition switch that can catch a car on fire.
No they don't. That's just mostly how the current companies handle it. Safety recalls have happened with Tesla. They've simply used company techs to do the work by picking the vehicle up from your house/work if the fix can't be done on the spot, sometimes delivering a loaner vehicle.
Also, much like repair shops working with lots of insurance companies, there's nothing except laws preventing a car manufacturer from simply paying any qualified shop for doing the work.
I don't read AC A human right
The only competition dealers are having is who can mark up your car the least.
don't you have that backwards? the competition is to see who can get away with marking it up the most. it's an endless quest to find new ways to screw the customer.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
I had to drive through a hedge row to leave a dealership once. I was eighteen and shopping for my first car, driving my folks' old '86 Isuzu Trooper. I had driven in to look at a car up on the pedestal that I wanted to know the price of, and they blocked the driveway and wouldn't move. I shifted into four-wheel-high, jumped the curb into the landscaping, drove through a shallow, landscaped water retention basin, through a short hedge of oleanders, out on to the flat landscaping next to the street, shifted into two-wheel, and pulled out onto the street. I only saw the facial expression of one of the salesmen that blocked me, but it was absolutely priceless...
I do not have a problem with the end of the dealer franchise system. It's one thing if they were honest about the price and all of the associated costs so that one could actually negotiate with them, but it's fighting tooth-and-nail to get them to that point. When we tried to buy a truck in September 2008 and the prices just didn't align with what we expected, and finally after more than an hour they brought out the complete price breakdown, under duress that we were going to walk out if they didn't. Still couldn't reach a price, still walked out.
If franchise dealers would negotiate on an out-the-door price (especially when one is going to pay cash or bringing in one's own financing, effectively a cash transaction from the dealer's point of view) then I wouldn't be calling for their end, but with all of the crap they pull I see nothing redeeming about them, no value added.
Do not look into laser with remaining eye.
That isn't to say Tesla will solve all these problems (I'd be especially worried about the cost of servicing what's essentially a computer on wheels), but at least they charge a price and you know what you're getting. No negotiations. No oily salesman pitching stuff you don't need.