Will dealerships soon be a thing of the past? | Column

In reply to codrus (Forum Supporter) :

I agree in general but the attitude you approach and the person you interact with are always the determinate factor. 

Frenchy makes a good point, except the same things happen at highline dealerships too. Case in point, I "upped" a fellow at the Porsche+Audi dealership one day, introduced myself and asked how I could help him. First thing he says - not his name or hello or anything - is, "I don't expect you to tell me the truth, but...." I admit I almost lost my cool, but I stopped him right there and said You don't even know me and you're accusing me of lying to you? Let's start again, my name is......

He backed off immediately and I sold him a new Audi for his wife. Musta worked, cause I later also sold him a new Porsche, and cars for three of his kids over the next couple of years. He also brought me his business partner, several  associates, neighbors and friends.

I worked at that dealership for over 5 years and more than half of my sales were to repeat or referral customers. There were times when I literally had no time to up new customers cause I was so busy with those....

Those guys who just want to beat you up for the "best deal" aren't really buyers in my book. If they do wind up buying a car they'll be miserable shiny happy people the whole time they have the car, wanting - no expecting - you to throw them freebies every time they walk in the door...... and they never bring you more business because they're scared to death that someone will get a better deal than they did. Don't need 'em, send them over to the Chevy dealership.

I had a well know local attorney come in and offer me half price on a new Porsche Turbo - those cars were extremely limited in those days and we had to make each one of them count. His logic as he explained it to me was that we would easily make plenty more back because all the people who saw what he drove wanted one too. The old "you can make money on the next guy, not me" routine. I told him I wouldn't do that, but would sell him the car at sticker, and for each one of those people who came in and said they wanted to buy a Porsche Turbo because he had one - and did - I would rebate him $5K.

last I saw him he was still driving his old clapped out Caddy.

In reply to frenchyd :

I go into every car dealership/ attempted purchase from dealership with the same attitude. I assume they are trying to screw me over but I know what I want to buy and I know what I am willing to pay. 
The local dealership was extremely rude and tried to screw me over with slimy sales tactics. 
I went into talking with the Porsche dealership with the same process and was treated with respect. 

My last new car dealership experience:  games, lies, hours of my time wasted. 

My last dealership experience, a local father/son lot with maybe only a dozen cars at a time:  "Test drive it. If you like it, we'll talk. If not, thanks for considering us."  Decided to buy it. "Well, it's been here awhile...I'll knock another $200 off if you agree to take it today."

We still have it (2010 Jetta wagon). 185,000 miles on it now.

My wife's friend from junior high married into a car salesman family.  All the brothers worked at a Dodge dealer and some have moved on to owning dealerships.   The guy we know has easily worked 30+ dealerships the past 40 years; salesperson along with being a manager then demoted back to sales.

It's a butthead industry that treats the employees like crap too.

We were finally able to buy a new Accord Hybrid this year, after wanting one for a year or so with no new cars available.

We paid MSRP, and got a good number for our trade.

For the first time in my life, I felt like MSRP was a good deal. But if that's the case, it now seems to negate the benefit of the dealership. Test drives are nice, but if there are no new cars in stock to drive, that falls by the wayside. Other than that, I have found few positive experiences at any dealership over the past 30 years.

I'm ready to buy a new Civic Si, but there are none available. If I can find one at MSRP, I'll take it, based on what I've read about the car here on GRM.

At this point, do I need a dealership? Honda finance might get me half a point better on the rate, although financing deals never seem to align with the specific models that I'm interested in, but the convenience of my Credit Union usually tops that difference anyway.

Bring on the Tesla/ Carvana experience. I'm ready.

I find these threads humorous every time they come up. 
 

We live in a time when we celebrate and demand having options in how we communicate, how we shop, how we make purchases, etc., but we argue for a "one size fits all" approach when it comes to our opinions on the value of dealerships. 
 

Dealerships are not obsolete, and not a thing of the past. They are just a different way to buy, and some people DO prefer them. 

Can anybody offer a review of Hennessey Honda in Woodstock, GA?

In my fantasy world, the Dealership Experience would be replaced with rack of paper brochures and an online parts counter.

Woody (Forum Supportum) said:

In my fantasy world, the Dealership Experience would be replaced with rack of paper brochures and an online parts counter.

That's a mighty big risk. Call it a $30,000 plus gamble.   The specs might be appealing. The pictures might look good.  One car was once defined as long, low,  and luxurious.   Welcome to the new Edsel. 
      It really depends on who is doing the testing for everyone.   Do you have farmer Brown who thinks anything more complex than a Ford Model A is too fancy.  Or some bored debutant who is a very angry  the rear view mirror won't cover her whole face so she needs to tilt her head up and down to check her makeup?  
  Maybe it's an academic engineer who is thrilled the crankshaft pin diameter is exactly the square root of Pi ? 
  But none of them have your shape and won't realize your knees hit the dashboard  or the steering wheel blocks your view of the speedometer. 
  Maybe your wife might not like how to adjust the seat or kids have trouble getting the seatbelts fastened?   
     Now you can try to sell it, take the depreciation hit, and gamble again on another car?    
 

Datsun310Guy said:

My wife's friend from junior high married into a car salesman family.  All the brothers worked at a Dodge dealer and some have moved on to owning dealerships.   The guy we know has easily worked 30+ dealerships the past 40 years; salesperson along with being a manager then demoted back to sales.

It's a butthead industry that treats the employees like crap too.

My local Chevy dealership hired me as a salesman straight out of the Navy.   By the second month I was top salesman. In the third month President Ford visited his brother and a few days later 19 of the sales staff were laid off including me.  And then the recession  hit.    I wound up running a gas station. 

Woody (Forum Supportum) said:

We were finally able to buy a new Accord Hybrid this year, after wanting one for a year or so with no new cars available.

We paid MSRP, and got a good number for our trade.

For the first time in my life, I felt like MSRP was a good deal. But if that's the case, it now seems to negate the benefit of the dealership. Test drives are nice, but if there are no new cars in stock to drive, that falls by the wayside. Other than that, I have found few positive experiences at any dealership over the past 30 years.

I'm ready to buy a new Civic Si, but there are none available. If I can find one at MSRP, I'll take it, based on what I've read about the car here on GRM.

At this point, do I need a dealership? Honda finance might get me half a point better on the rate, although financing deals never seem to align with the specific models that I'm interested in, but the convenience of my Credit Union usually tops that difference anyway.

Bring on the Tesla/ Carvana experience. I'm ready.

Woody, it sounds like you are.  Why not try a Tesla?  
       I hear it's a good car, the price is in line with its value.  And you can buy it the way you want to?  
    Why be loyal to Honda?   Back in the day Chevy was a good car, people bought a lot of cars from Chevy. But then Honda came out and over time they switched  to Honda's and Toyota's.  
 Maybe it's time to move on?  

MiniDave said:

Frenchy makes a good point, except the same things happen at highline dealerships too. Case in point, I "upped" a fellow at the Porsche+Audi dealership one day, introduced myself and asked how I could help him. First thing he says - not his name or hello or anything - is, "I don't expect you to tell me the truth, but...." I admit I almost lost my cool, but I stopped him right there and said You don't even know me and you're accusing me of lying to you? Let's start again, my name is......

He backed off immediately and I sold him a new Audi for his wife. Musta worked, cause I later also sold him a new Porsche, and cars for three of his kids over the next couple of years. He also brought me his business partner, several  associates, neighbors and friends.

I worked at that dealership for over 5 years and more than half of my sales were to repeat or referral customers. There were times when I literally had no time to up new customers cause I was so busy with those....

Those guys who just want to beat you up for the "best deal" aren't really buyers in my book. If they do wind up buying a car they'll be miserable shiny happy people the whole time they have the car, wanting - no expecting - you to throw them freebies every time they walk in the door...... and they never bring you more business because they're scared to death that someone will get a better deal than they did. Don't need 'em, send them over to the Chevy dealership.

I had a well know local attorney come in and offer me half price on a new Porsche Turbo - those cars were extremely limited in those days and we had to make each one of them count. His logic as he explained it to me was that we would easily make plenty more back because all the people who saw what he drove wanted one too. The old "you can make money on the next guy, not me" routine. I told him I wouldn't do that, but would sell him the car at sticker, and for each one of those people who came in and said they wanted to buy a Porsche Turbo because he had one - and did - I would rebate him $5K.

last I saw him he was still driving his old clapped out Caddy.

The Lawyer got a good settlement with about 1/2 of what a Porsche turbo costs. He was just trying to Lawyer the rest of the way there.   He's a flawed guy. Not all people are like that.   Most people can be decent if properly dealt with.  

The service sales scams are an cousin to odious and predatory new car sales models.  Besides having purchased new cars in the last decade, I formerly worked in new and used cars sales at two different new car stores for nearly two decades.  The people who owned and operated the stores I worked at, were decent folks.  However the basic sales model the large majority of car sellers embrace is to use the car sale as bait to gain the opportunity to capture credit insurance, finance and dealer added accessory business.  Before recent covid markups began, the income from these additional sales was nearly always greater than the profit from the car sale alone.  It's a bad, yet incredibly persistent sales model.  Today, buying a vehicle and then leaving with your vehicle (or our signed order) is impossible in nearly all car stores - without first being forced to endure a finance, credit insurance and dealer added accessory pitch.  Imagine when buying an appliance or really any other consumer good, having to endure a second, post sale presentation for finance (even after making it clear you have your own), credit accident/health insurance and myriad accessories.  A primary reason these arcane retail practices persist are outdated state franchise laws that prohibit manufacturers from selling cars direct to the public.  These state laws are anti-competitive.  Whatever basis originally justified enacting these laws, the harm to consumers no longer supports them.  But for timid legislators and an incredibly powerful new car dealer lobby, we would at least have the option of buying factory direct.  Unfortunately, the current corporate mantra to not leave a cent on the table permeates new car dealerships and as such, without competition outside the tightly controlled franchise environment, the sales and service gamesmanship auto sales and service consumers get bombarded with will persist.

Woody (Forum Supportum) said:

In my fantasy world, the Dealership Experience would be replaced with rack of paper brochures and an online parts counter.

It pretty much is, if you're willing to pay MSRP, as you found out. That's the funny part, Tesla and Saturn charge MSRP and "it's so transparent" yet any other dealer at MSRP is "screwing you" somehow. 
 

Plenty of people spend a lot of time worrying if the guy down the street got "a better deal" for some reason. His deal has 0 relevance to my life. Maybe he paid less, maybe he didn't, I don't care. 

Exactly.

That and the rise of info on the internet is what has changed the landscape of new car sales - everyone is convinced that if they can't get it for less than the dealer paid then they are getting screwed. So, if the dealer can't make money on the front end, they have to get it somewhere and that's finance, insurance, service and parts.

That's part of why you're paying $150-200/ for shop labor these days.

And I still say those of you who think you would have a better experience if you could just order a car from the factory are dreaming......because they don't come out of the factory perfect, someone has to do the finish work, and someone has to service it later, and do warranty repairs. You think a shop can survive on the piddling droppings you care to bestow on them? If there are no dealerships, there is no service......ask some of the folks who have needed work done on their Tesla how that's gone?

I've read stories of folks who have waited weeks because they had a flat, wrecked the wheel and couldn't get another one and so on.

I've never had a bad dealership experience, I go in, buy my car, let the F&I guy know that I don't need any packages, write a check for the car and leave. Easy peasy. I also let them know if they have a better finance deal than I have already in hand that I'll go with theirs - that happened once on a used Audi I bought, Audi had a better deal than I could get thru my bank or CU, so I signed up.....still easy peasy since I put about 1/3 down. 

I do know that there are some "bad" dealerships out there, with ruthless shiny happy people who try and beat you down, but an informed shopper still has all the power.

Steve_Jones said:

It pretty much is, if you're willing to pay MSRP, as you found out. That's the funny part, Tesla and Saturn charge MSRP and "it's so transparent" yet any other dealer at MSRP is "screwing you" somehow.

That's because the normal dealer obfuscates the meaning of MSRP and has spent decades making sure most of us understand that it's got merely a passing relationship to the actual value of the car, while places that only sell at MSRP only sell at MSRP.

Putting a finer point on it, you are describing two different scenarios: one is a stated price which is what you pay. The other is a stated price and the suggestion that the discount/markup/adjustment/deal is reasonable and that you should trust the dealer about that change, in the face of plenty of evidence that you shouldn't. These two versions of MSRP are not equivalent.

If you look at two places that sell at MSRP, you can comparison shop.

I don't care whether I got a better deal than Dwight down the street. I care about the very real possibility that I'm paying a dealership hundreds or thousands of extra dollars for the service of obfuscating the market and being professional negotiators, neither of which are services I care to pay for.

MiniDave said:

And I still say those of you who think you would have a better experience if you could just order a car from the factory are dreaming......because they don't come out of the factory perfect, someone has to do the finish work, and someone has to service it later, and do warranty repairs. You think a shop can survive on the piddling droppings you care to bestow on them? If there are no dealerships, there is no service......ask some of the folks who have needed work done on their Tesla how that's gone?

Why can't a factory store have service, like the Apple Store?

The problem is dealers are another middle man between the customer and the manufacturer. And their lobbying power has prevented OEMs from setting up their own shops.

Like how movie theaters don't make much money on ticket sales, so they charge $40 for popcorn.

MiniDave said:

And I still say those of you who think you would have a better experience if you could just order a car from the factory are dreaming......because they don't come out of the factory perfect, someone has to do the finish work, and someone has to service it later, and do warranty repairs. You think a shop can survive on the piddling droppings you care to bestow on them? If there are no dealerships, there is no service......ask some of the folks who have needed work done on their Tesla how that's gone?

You don't think there's any other possibility for a service tier other than "dealership?"

Using Tesla as evidence that factory direct service is impossible is unconvincing to me. There's a lot about Tesla that's problematic.

As an aside, I also cringed at the suggestion of Apple as an example of store with service facility. I'm sure we can do better than the "genius bar."

You can't convince me that there isn't enough savings in removing the dealer layer in favor of a small retail space and a few demo parking spots to allow manufacturers to either roll out proper repair facilities (which don't need to pay retail-district rent), or to allow for independent business to contract that niche of delivery prep, warranty, recall, and authorized repair.

I feel like we're hearing contradicting arguments that no part of a dealership really makes money, and each of them is subsidized by the others. I love sleight of hand, but I do not bet on three card Monty.

Not what I'm saying at all.....what I did say is that since dealerships have a difficult time making money on the actual sale of the car, they have to get it from other sources - like finance, insurance, parts and labor. and I didn't say Tesla's service was impossible - difficult and not a good experience either - tho they're trying. But imagine how it might change if they start selling Ford or Chevy volume of cars?

As to a small lot with a few cars and a service center - no - even if the factory owns it. And in the volume of cars sold that Ford or GM do, it would have to be huge if you're going to eliminate all the dealerships. 17 million new cars a year sold in the US......that is a HUGE number.....

I see it as a dream of those who just can't deal with modern dealerships. I understand the frustration, it isn't pleasant if you let them dick you around, and my hope is that the dealerships who practice that kind of hardball selling just finally collapse. But I think the idea will turn out to be worse than the way it's done now.

And what will you all do with your trade ins? CL? FB Marketplace? You can do that now if you want, but most don't - and for a reason - they'll be doing all the  hard work the dealerships do by themselves, and then dealing with the shiny happy people who want to offer them half, want to make payments and so on. It's not pleasant either......

I've pointed out before, the manufacturer has no interest in direct to consumer, as the dealership is their customer, not the end buyer. Ford has 3000 customers that each buy an average of 550 vehicles per year. They have no interest in 1.7M customers that each buy 1. 
 

It's much more efficient to sell 1 guy 500, than 500 people 1 widget no matter what business you're in. 

MiniDave said:

...

Those guys who just want to beat you up for the "best deal" aren't really buyers in my book. If they do wind up buying a car they'll be miserable shiny happy people the whole time they have the car, wanting - no expecting - you to throw them freebies every time they walk in the door...... and they never bring you more business because they're scared to death that someone will get a better deal than they did. Don't need 'em, send them over to the Chevy dealership.

I'm one of those guys that just wants the best deal.  I don't want to hassle with negotiating prices with the sales guy, who defers to the sales manager to jack up my offer and waste as much of my time as he can so I'm "invested" in the deal, or the finance department who wants to sell me a bunch of stuff I don't want and to tack on dubious "fees".

My last few cars have been Mazda S plan with various rebates and that simplifies things.  No negotiating, and there's a local dealer nearby with a sales guy that minimizes the hassle.  But before that I bought about ten cars online, almost all for invoice or below, and all negotiated over a wire.  I absolutely do not want to deal with commissioned sales people and their managers and the finance guy.  I'm not naive about how things work.  A close family member was a sales guy, then service manager that rose to be GM of the biggest dealer in the state and I heard lots of dealer/sales stories, starting when I was a kid back in the sixties.  Things haven't changed.

Steve_Jones said:

I've pointed out before, the manufacturer has no interest in direct to consumer, as the dealership is their customer, not the end buyer.

Ford would seem to differ on that point.

https://arstechnica.com/cars/2022/06/ford-wants-to-sell-evs-online-only-with-no-dealer-markups-says-ceo-farley/

I've lived in and around the IT sales world for a couple decades and I don't really think the new car dealers are anything special in terms of the sales process if you take a bit of a macro view of it.  Like in anything, some folks are going to try to take advantage as much as they can while others are going to work a little harder to make their profits by providing good service.

Think about this, though: how many things do you buy that cost more than a single paycheck and that the expectation is you're supposed to haggle?  For most folks, it's your car and your house and my guess is that people generally buy cars more often than they buy houses in their lives.  So really the car-buying experience is the one opportunity to really deal with a sales process and it's typically a large percentage of your income that you're dealing with. 

A commissioned salesman at Best Buy might talk you up or down the model line, but the price is the price and in the end you're out, what, a few thou for a TV or fridge?  But at the car dealer folks go in with the expectation that if they don't do some good negotiating, the dealer will, in their mind, "take advantage of them". 

In my B2B sales experience from both sides of the table, there are an equal number of horror stories of sales reps gouging customers, selling things that customers don't really need or want, and playing all sorts of dirty tricks to get the deal closed as I think you'd find with car salesmen.  But on the flip side, I've dealt with a majority of reps who want to get the deal done by making sure that the customer is getting good value for their money and is treated right so that they don't have to coerce them to come back.  And my guess is that those stories would also appear in equal percentages among car sales interactions but they make really boring tales to tell at parties.

I've only had the dealership experience 5 or 6 times and only one of those crossed a line that I thought was distasteful: I was cross shopping a Subaru Legacy Brighton wagon with a Saturn SL2.  On my way to sign the paper on the Saturn, I stopped at the Subieship and told them that if they could hit a certain dollar amount I'd buy today, otherwise I was on my way to buy the SL2.  They said they couldn't do it, so I thanked them and left and bought my car.  The next day the salesman called me and told me that they'd be willing to hit my number.  When I told him that I had already bought he told me that Saturn had a 3 or 7 day return policy (which was absolutely true) and that I could just take the car back to them and then come and buy the Legacy.  Certainly not an egregious affront to morality or anything, but I certainly wasn't going to do that!

I bet you don't want to hear about the other 4 or 5 times that I bought cars from dealers and nothing exceptional happened other than I arrived home in a car different from the one I left in.

Yeah, some of the folks in there are absolutely predators and willing to try any trick to get as much out of your wallet as they can.  But there are some decent folks in there as well.

I don't know that a company-owned store would be all that much better or worse than a franchise dealership.  People that I know who have bought Teslas have been happy with the experience.  And the Carvana model seems to work okay for a lot of folks.