Direct sales vs dealerships, opinion?

[SOAB]

everyone always says that the dealership model is antiquated. it may be. online sales are still not as common yet because for most people, this is a huge purchase.

lots of people say that they would rather have a set price and not have to deal with haggling, negotiating, etc. many brands have tried that, yet most customers that go into those stores still try to negotiate a better price, a better interest rate, free accessories to be thrown into the deal.

internet sales definitely can work but 99% of car buyers will want to sit in, touch, feel the vehicle they are buying before purchase. who pays the dealer to have that inventory in stock just so the customer can order it online? the manufacturer? they will just pass on the cost to the customer so what's the difference?

for some reason, profit seems to have become a dirty word for the automotive business, not just dealerships. I can't think of any other business model that has customers trying to dictate what percentage of profit a company is allowed to make. could you imagine going to Memory Express and demanding to know what their cost is on a TV and then telling them they are only allowed to make 3% gross profit off of that product from you? oh, and throw in free cables and cleaning supplies for that price. if they don't agree, they are just trying to rip you off because they are thieves and crooks. nobody needs to make that much margin on their product.

[you&me]

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And that guy is a real....

... lil' fella ???

This could be a new thread unto itself

[Buster]

Set, no haggle pricing will never happen in the general car market.

[tonytiger55]

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everyone always says that the dealership model is antiquated. it may be. online sales are still not as common yet because for most people, this is a huge purchase.

lots of people say that they would rather have a set price and not have to deal with haggling, negotiating, etc. many brands have tried that, yet most customers that go into those stores still try to negotiate a better price, a better interest rate, free accessories to be thrown into the deal.

internet sales definitely can work but 99% of car buyers will want to sit in, touch, feel the vehicle they are buying before purchase. who pays the dealer to have that inventory in stock just so the customer can order it online? the manufacturer? they will just pass on the cost to the customer so what's the difference?

for some reason, profit seems to have become a dirty word for the automotive business, not just dealerships. I can't think of any other business model that has customers trying to dictate what percentage of profit a company is allowed to make. could you imagine going to Memory Express and demanding to know what their cost is on a TV and then telling them they are only allowed to make 3% gross profit off of that product from you? oh, and throw in free cables and cleaning supplies for that price. if they don't agree, they are just trying to rip you off because they are thieves and crooks. nobody needs to make that much margin on their product.

It can work the other way, but not for new cars though. Just to offer a different perspective. In the UK, you have car supermarkets. The prices are fixed. The cars are usually a few years old. Lease buy backs etc. But the cars are still very new. You get a lot of choice. its like a giant warehouse/lot. Cars are organised by brand and model.
https://www.cargiant.co.uk/

My family have bought from them a quite a few times. Its taken the headache of going to Dealerships/small used dealerships. Its easier, simple and decent prices. The cars have been good too.
No idea if that model would work here.

[SOAB]

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It can work the other way, but not for new cars though. Just to offer a different perspective. In the UK, you have car supermarkets. The prices are fixed. The cars are usually a few years old. Lease buy backs etc. But the cars are still very new. You get a lot of choice. its like a giant warehouse/lot. Cars are organised by brand and model.
https://www.cargiant.co.uk/

My family have bought from them a quite a few times. Its taken the headache of going to Dealerships/small used dealerships. Its easier, simple and decent prices. The cars have been good too.
No idea if that model would work here.

what you described is basically a used car lot. ask around what people think of used car dealers around here? they're all worse than Hitler, apparently... haha

the no-haggle price has been tried in Canada and has failed every time.

[Mitsu3000gt]

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could you imagine going to Memory Express and demanding to know what their cost is on a TV and then telling them they are only allowed to make 3% gross profit off of that product from you? oh, and throw in free cables and cleaning supplies for that price. if they don't agree, they are just trying to rip you off because they are thieves and crooks. nobody needs to make that much margin on their product.

Maybe not at a chain store like Memory Express, but this precisely how most Home Theater equipment is sold haha. They also don't try to fuck you over every single step of the way.

The tricky part about car dealership profit is that even if they sold you the vehicle below their cost, they would still come out way ahead after dealer kickbacks, holdbacks, referrals (if you were happy), and parts/service assuming you serviced your car at the same place. Also, if they weren't so shady, people would probably haggle a lot less. You go in knowing 100% for sure that they are doing everything in their power to screw you, and will lie to you at every turn - of course people are going to have their guards up to the max and haggle as much as possible in that kind of environment. Also since there are so many dealerships, naturally people are going to shop around and play them against each other until they find the bottom. Nothing wrong with that IMO.

The other thing with vehicle cost is that anyone can find out what it is for $30, so if they don't tell you, why would you do business with that salesperson/dealership? You are going to find out regardless as part of a standard due diligence process, so they might as well tell you and earn your business rather than deliberately push you away.

[blitz]

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for some reason, profit seems to have become a dirty word for the automotive business, not just dealerships. I can't think of any other business model that has customers trying to dictate what percentage of profit a company is allowed to make. could you imagine going to Memory Express and demanding to know what their cost is on a TV and then telling them they are only allowed to make 3% gross profit off of that product from you? oh, and throw in free cables and cleaning supplies for that price. if they don't agree, they are just trying to rip you off because they are thieves and crooks. nobody needs to make that much margin on their product.

Memory Express has never force anyone to use the 4-square method when buying a computer, or switched from monthly to bi-weekly mid negotiation to try to fuck someone over. Or added a bunch of hidden fees to a sales agreement at the last minute.

People don't like interacting with car dealerships for a reason.

[ExtraSlow]

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everyone always says that the dealership model is antiquated. it may be. online sales are still not as common yet because for most people, this is a huge purchase.

lots of people say that they would rather have a set price and not have to deal with haggling, negotiating, etc. many brands have tried that, yet most customers that go into those stores still try to negotiate a better price, a better interest rate, free accessories to be thrown into the deal.

internet sales definitely can work but 99% of car buyers will want to sit in, touch, feel the vehicle they are buying before purchase. who pays the dealer to have that inventory in stock just so the customer can order it online? the manufacturer? they will just pass on the cost to the customer so what's the difference?

for some reason, profit seems to have become a dirty word for the automotive business, not just dealerships. I can't think of any other business model that has customers trying to dictate what percentage of profit a company is allowed to make. could you imagine going to Memory Express and demanding to know what their cost is on a TV and then telling them they are only allowed to make 3% gross profit off of that product from you? oh, and throw in free cables and cleaning supplies for that price. if they don't agree, they are just trying to rip you off because they are thieves and crooks. nobody needs to make that much margin on their product.

Fuel retailers too.

[gmc72]

I voted for some sort of hybrid system. I like to drive a vehicle before buying, that's a deal breaker. Why not have delivery centers with salaried employees to show the vehicles and go on test drives with the customer, but you order the car online. The price is set, with a delivery fee for the person working there, and it is all known upfront. The person there can even help with the ordering at computers set up in the showroom. There is a service center attached for warranty work and such as well. There are no used vehicles at this site, and if you wanted to trade in your old car......................I haven't figured that part out yet.

Just my opinion for a Utopian car buying experience.

[killramos]

I couldn’t care less how much profit the dealership makes, if they are selling something I want for a price I am willing to pay that’s great.

I would much rather salesman see themselves are facilitators, being experts whose job is to make sure I am informed about what I am buying and providing a level of customer service. Rather than being actively combative in what is a 0 sum game that is a terrible experience for all involved.

[SOAB]

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The tricky part about car dealership profit is that even if they sold you the vehicle below their cost, they would still come out way ahead after dealer kickbacks, holdbacks, referrals (if you were happy), and parts/service assuming you serviced your car at the same place. Also, if they weren't so shady, people would probably haggle a lot less. You go in knowing 100% for sure that they are doing everything in their power to screw you, and will lie to you at every turn - of course people are going to have their guards up to the max and haggle as much as possible in that kind of environment. Also since there are so many dealerships, naturally people are going to shop around and play them against each other until they find the bottom. Nothing wrong with that IMO.

ok, so that just proves my point. what makes you think that you should dictate that the dealer should have to sell you a vehicle at cost? because you might give them a referral which would also want it at cost? what if that dealer doesn't meet the required quote to get the so called kickbacks, holdbacks, etc that you refer to? what about the interest that the dealer has to pay on all the in-stock units? you think the $300 gross profit on a $18,000 car pays for any of that? lol.

you guys talk like every dealer is shady and tries to screw you. not unlike how every customer that has a trade in doesn't try to lie and hide problems and issues that their trade in has. you think dealers lie? customers are full of lies. you think everyone on kijiji selling cars are always completely honest about their vehicles?

- - - Updated - - -

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I voted for some sort of hybrid system. I like to drive a vehicle before buying, that's a deal breaker. Why not have delivery centers with salaried employees to show the vehicles and go on test drives with the customer, but you order the car online. The price is set, with a delivery fee for the person working there, and it is all known upfront. The person there can even help with the ordering at computers set up in the showroom. There is a service center attached for warranty work and such as well. There are no used vehicles at this site, and if you wanted to trade in your old car......................I haven't figured that part out yet.

Just my opinion for a Utopian car buying experience.

again, trying to sell a vehicle for a set price. it's been tried many times and has failed every time.

[you&me]

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I voted for some sort of hybrid system. I like to drive a vehicle before buying, that's a deal breaker. Why not have delivery centers with salaried employees to show the vehicles and go on test drives with the customer, but you order the car online. The price is set, with a delivery fee for the person working there, and it is all known upfront. The person there can even help with the ordering at computers set up in the showroom. There is a service center attached for warranty work and such as well. There are no used vehicles at this site, and if you wanted to trade in your old car......................I haven't figured that part out yet.

Just my opinion for a Utopian car buying experience.

The trade in part is actually already handled and established, and the dealership being the "landing" point of the trade is the last piece of that puzzle.


The most insurmountable part of this whole revamping of the new car buying experience is the manufacturers pulling the rug out from under their franchisees... That's the part that can't be reconciled without a huge payout / buyback from the manufacturer to the dealerships.

[ExtraSlow]

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The most insurmountable part of this whole revamping of the new car buying experience is the manufacturers pulling the rug out from under their franchisees... That's the part that can't be reconciled without a huge payout / buyback from the manufacturer to the dealerships.

At least make it legal to do direct sales in all jurisdictions and let the manufacturers and the dealerships figure that out themselves. The government doesn't need to figure out who is liable to whom, but just to get out of the way to allow the private market to find the best solution.

[Disoblige]

You guys aren't thinking outside the box. What is the root cause of all this? People who generally have poor haggling skills, poor car knowledge, or a combination of both tend to get the shit end of the stick here. The best deals come from good hagglers, and also those who know cars to compare to others on the market.

So, my point is...

Schools need to teach you haggling and car knowledge in CALM

[Mitsu3000gt]

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ok, so that just proves my point. what makes you think that you should dictate that the dealer should have to sell you a vehicle at cost? because you might give them a referral which would also want it at cost? what if that dealer doesn't meet the required quote to get the so called kickbacks, holdbacks, etc that you refer to? what about the interest that the dealer has to pay on all the in-stock units? you think the $300 gross profit on a $18,000 car pays for any of that? lol.

you guys talk like every dealer is shady and tries to screw you. not unlike how every customer that has a trade in doesn't try to lie and hide problems and issues that their trade in has. you think dealers lie? customers are full of lies. you think everyone on kijiji selling cars are always completely honest about their vehicles?

I think what you're missing is the broader fact that nobody is dictating a thing. A dealership will never sell a car for a price they don't want to, in the end it is 100% their decision. You make an offer and it's entirely up to them to accept. Vehicle cost is publicly available information and a standard part of the due diligence process. Dealerships make the majority of their money on items like protection packages and parts & service, not new car sales (last I checked new car sales only account for around 25% of the profit). If dealers don't want to pay interest on new vehicles sitting on the lot, maybe they should manage their stock orders better and treat customers better. On the flip side, if a customers offer is too low, no dealer will accept, and they don't get the car....it's almost as if it operates like a standard business. If a customer is able to find a dealer that will accept the price they want, then it's win/win.

To your second point, it doesn't really matter how much a customer lies about a trade in, the dealership is going to inspect it and once again they have the final say - they don't have to take your trade in when they discover you've been lying to them.

Also, I'm willing to bet the majority of vehicle buyers don't haggle very much and don't do their homework - the dealers are not exactly suffering here.

You make it sound like customers are approaching dealers and forcing them to accept a bad deal, if you can find me a single dealership that operates like that I'm sure we'd all love to know about it haha.

[HiSpec]

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The luxury brands are better but the local BMW dealers for example jack up the Freight & PDI charges for M cars for no other reason because they can. The only way to get them to remove their fudge factor was to threaten to walk out on the deal but I shouldn't have to do that when I'm trying to purchase a BMW.

I also noticed few dealerships charge different Freight & PDI than their corporate website.

[SOAB]

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I think what you're missing is the broader fact that nobody is dictating a thing. A dealership will never sell a car for a price they don't want to, in the end it is 100% their decision. You make an offer and it's entirely up to them to accept. Vehicle cost is publicly available information and a standard part of the due diligence process. Dealerships make the majority of their money on items like protection packages and parts & service, not new car sales (last I checked new car sales only account for around 25% of the profit). If dealers don't want to pay interest on new vehicles sitting on the lot, maybe they should manage their stock orders better and treat customers better. On the flip side, if a customers offer is too low, no dealer will accept, and they don't get the car....it's almost as if it operates like a standard business. If a customer is able to find a dealer that will accept the price they want, then it's win/win.

To your second point, it doesn't really matter how much a customer lies about a trade in, the dealership is going to inspect it and once again they have the final say - they don't have to take your trade in when they discover you've been lying to them.

Also, I'm willing to bet the majority of vehicle buyers don't haggle very much and don't do their homework - the dealers are not exactly suffering here.

You make it sound like customers are approaching dealers and forcing them to accept a bad deal, if you can find me a single dealership that operates like that I'm sure we'd all love to know about it haha.

trade-ins don't go into for inspection until after the deal is done.

sure, dealers can manage their inventory better but alot of the time, manufacturers just send them a bunch of cars that are optioned out that nobody wants. bad colours, bad option packages, unpopular models and the dealer has to try and sell them.

I'm not saying that dealers are forced to accept bullshit offers from customers. I'm saying that those same customers get their offers rejected and are pissed that the dealers are just trying to "rip them off" and low ball them on their shitty 2004 Honda civic that is worthless to the dealer. they shouldn't be "allowed to charge a doc fee" or anything like that because the business office person should be getting paid from the measly $300 gross profit from the sale of the car.
so many people walk into a dealership with a chip on their shoulder, thinking that their shitty trade-in is worth more than market value while they should get their new vehicle at 10% below cost because "dealers make that back on hold-back and kick-backs from the manufacturer.

I'm not saying that the car buying & selling business is squeaky clean. there are lots of areas of improvement. some sales people really are sleazy but some customers are just as bad.

[killramos]

Lol I have never seen someone try to defend a documentation fee before. That was hilarious.

[SOAB]

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Lol I have never seen someone try to defend a documentation fee before. That was hilarious.

You're the type of customer I'm talking about. "they wouldn't budge on their stupid fee or price so they are con artists!"

I wasn't defending it, I'm just stating what customers say. IMO, it should be an OTD price on all cars, take it or leave it but customers have shown that they don't want that so dealers need to try and recoupe some money when they sell the car to the customer at or below cost.

you guys act like dealers make money hand over fist and rape every customer for every red penny that they have and that is just not the case.

[rage2]

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last I checked new car sales only account for around 25% of the profit

It's less than that. It's typically a break even department. The profits comes primary from service, followed by used car sales.