
The battle between Tesla and your neighborhood car dealership - eplanit
https://www.washingtonpost.com/business/economy/the-battle-between-tesla-and-your-neighborhood-car-dealership/2016/09/09/55fb1878-6864-11e6-99bf-f0cf3a6449a6_story.html
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techsupporter
I am so opposed to walking into a dealership and buying anything that my last
three vehicles were bought from private sellers on Craigslist. After the most
recent crapped out, I gave up even on that and now use transit full time. The
entire ecosystem around buying, owning, maintaining, and disposing of
privately-owned automobiles is just...well, bad to me. And I'm tired of
dealing with it so I won't. Instead, I give car2Go, ReachNow, and ZipCar
around a hundred dollars per month, an insurance company under $20/month for a
non-owner liability policy, and my employer gives me a transit pass as a
benefit (though my household does have fare expenses for my spouse and kid).

(Offer does not apply to cities without a viable mass transit system. Your
experience may vary. See a doctor for transit trips lasting more than four
hours. Ticket vending machines on the upper level. Do not cross or stand in
the roadway.)

~~~
tass
Where did you find this policy for $20?

I've been looking for one of these, but everywhere I could find was much more
expensive than this.

~~~
techsupporter
A specialty mutual carrier but you could try Vern Fonk. I hear that they are
inexpensive and issue those policies.

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henrikschroder
> Legislatures want to open up markets for electric vehicles but are wary of
> undercutting dealers, which are local economic and political engines.

Which, if you think about it, means that the local community is overpaying for
their cars, and this money funds the dealers. We're generally ok with
middlemen taking a cut _if they add value_ , but I don't know anyone who
thinks car salesmen add any value whatsoever, they're just an annoying
hindrance between you and the car you already researched and wanted.

If everyone was super happy about car dealers, allowing some manufacturers to
skip the dealerships wouldn't be an issue, because people would still use the
dealers for the value they add.

But people aren't, which is why only the dealers themselves, and the
politicians they've bought are fighting to keep them around. Everyone else
just wants them gone.

~~~
wintermute42
Well the problem, of course, is that they would test drive the cars in the
dealership and then buy online.

~~~
matt_wulfeck
They can still test drive at one dealership and buy at another.

~~~
UlyssesSKrunk
But the difference is that all dealerships have artificially inflated prices,
so if you live in a state with no direct to consumer sales you have no choice
but to overpay which means there's no incentive to test drive at one
dealership and buy at another, you're getting fucked either way. If direct
sale is allowed the cars will be cheaper when bought from the manufacturer
which is what creates the incentive to test drive at one place and buy at
another.

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linuxhansl
Personally I will not miss the car dealer trying to pull every stunt on the
planet to get me committed (having you wait around "We're trying the find a
car for you", the "I want to help you, but I need to convince my boss",
mingling the trade-in with the new price, etc, etc).

I have yet to see a single car purchase where the dealer added any value
whatsoever instead of just being a nuisance in the way to buying a car.

Of course they are afraid. They should be. Deep down they know they're not
needed.

~~~
forgetsusername
> _Personally I will not miss the car dealer trying to pull every stunt on the
> planet to get me committed_

I think this is a relic of the past. My last two car purchases have been
straight forward: I walked in and told them what I was willing to pay for the
car. One dealer couldn't do it, another could. In fact, this dealer showed me
their little spreadsheet of costs associated with the car and said, "This is
what we'll make on this car at this price. If I go any lower than this it is
no longer worth it for us to sell to you." I make the purchase and pick the
car up the next day. The car dealer business is pretty competitive, at least
where I live.

There is so much information available to consumers that there's no longer any
reason for the process to be very complicated or opaque. Sure, you might not
want to "negotiate", but then you're welcome to go pay retail ("sticker
price") like you would anywhere else, including Tesla. If you do that you'll
be out of there in a heartbeat at that price (and the dealer will love you).

I don't car what happens to car dealerships, honestly. I just don't find them
to be such a problem.

~~~
haneefmubarak
I think the idea there was supposed to be that if no "negotiation" occurred
for most sales (either dealerships reformed or they were replaced with direct
manufacturer sales) and everyone paid "sticker price", then manufacturers
would start to compete more on price, thus reducing the overall price and
margins of vehicles in the long run.

Also, how come you didn't drive out if the dealer with your new vehicle that
same day?

~~~
shostack
Exactly. There is little incentive for them to compete on price when they can
instead play games with it due to information asymmetry and sales tactics.

~~~
linuxhansl
A friend of mine does this when he needs a new car:

He goes to 3 dealerships in this vicinity, tells them exactly what car he
wants to buy with the exact extras, asks them for their best price, and let's
each know he's going to two other dealerships. Then he leaves his phone number
and walks out.

Has worked the few times he did it so far.

~~~
seanp2k2
The thing is, dealerships have incentive to keep dealerships in general in
business, and they likely all know each other, so they probably won't undercut
each other by a large margin. Since they all know the actual cost of the thing
you're wanting to buy, dealership A gives you a price maybe a few hundred
below dealership B even though it's a few thousand above what their actual
cost is.

Consider how much prime real estate dealerships sit on, how many employees
they have, and how many units they sell per day which must pay for the
aforementioned items with their mark-up, and still turn a profit at the end of
the day. Now consider how much less expensive every car would be if they
didn't have those additional costs, and consider if the benefits a dealer adds
are worth those costs. IMO factory-direct sales can't come soon enough.

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richardw
"Goodwill", my ass.

Remember "Confessions of a Car Salesman"?

[https://news.ycombinator.com/item?id=8824544](https://news.ycombinator.com/item?id=8824544)

[https://news.ycombinator.com/item?id=3779735](https://news.ycombinator.com/item?id=3779735)

(Article is gone, but word doc here:
[http://comp.uark.edu/~lmeade/Communication/persuasion_files/...](http://comp.uark.edu/~lmeade/Communication/persuasion_files/Confessions%20of%20a%20Car%20Salesman.doc)
)

Some update for 2009:
[http://www.naltblackchurch.com/finance/pdf/ConfessionsOfACar...](http://www.naltblackchurch.com/finance/pdf/ConfessionsOfACarSalesman.pdf)

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c3534l
It seems to be a recurring theme that policies meant to protect special
economic interests from things like prices and competition might seem good in
the short-term, but over time are bad for everyone. Except government seems to
follow a law of bureaucratic entropy: policies, exceptions and departments are
a lot easier to expand than take-back.

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LanceH
"...persuading an increasing number of states to allow it..."

I would love to see this covered as, "...persuading an increasing number of
states to not prohibit it..."

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savrajsingh
It's almost funny how the car dealers realize they provide no value to
customers.

~~~
Gibbon1
My thought is having a dealer network is getting less useful for car makers.
Historically dealers provided an interface between the car manufacturer and
the end user in an era when.

1\. Cars were a lot crappier than currently. 2\. Shipping replacement parts
was slow and expensive. 3\. Communication was expensive, long distance
calling, or slow, post. 4\. Mass marketing was not fined tuned as now.

Dealers thus provided a service. They stocked parts performed quality warranty
work. Sold and marketed the manufacturers cars.

Gasoline powered cars tend now to be very reliable, especially if you stick
with manufactures that specialize in low cost of ownership cars. _cough_
Toyota _cough_. The advent of electric cars will likely push reliability even
further.

The other thing that's happened with cars as well is price transparency.
Dealer could make work for themselves by specializing in getting better prices
for the manufacturers cars then they could if they had a unified price list.

~~~
tajen
Could Tesla get an alliance with the manufacturers to bypass the cardealer
scheme as a whole? I get manufacturers would rather see Tesla have problems,
but wouldn't everone win with removing the middleman?

Or could Tesla, in their showroom, if they can't sell directly, let people
preorder then redirect them to the cheapest local car dealer, in a sort of
auction to the lowest margin, so cardealers are only seen as a commoditized
cost?

~~~
mountaineer22
These are state laws that regulate the dealership franchises, and prevent
Tesla from selling in certain US states.

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madengr
Screw car dealers, screw them. I'll also be happy when those eye sore dealer
lots wither up. Nothing more hideous than gobs of cars packed together in
sprawling lots with cars on ramps, gimmicky billboards, and massive light
pollution at night.

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Agustus
I cannot wait until the day I do not have to step into a car dealer and deal
with the slimiest of the slime and feel of taken advantage of.

I was for Chris Christie until he gave in to the lobbying of the car dealers
and stopped Tesla from selling directly to the customer. The front end
aggrandizing is great, but when you have the choice to help the consumer and
you whiff, say good bye to support from me.

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alkonaut
The idea of walking into a dealer and driving off with a new pre-built vehicle
from a lot where someone else chose all the equipment, color and trim, is
dead. It's more or less gone in Europe since a long time ago, and the cost of
having stocks of cars of older models being sold out is just too big. In
Europe brand dealerships are showrooms for the latest models, little more.
Obviously these showroom dealers get a cut of the profits (you buy it from
them, not from the manufacturer directly, but it's built to order), but they
make most of their money from aftermarket service and used car trading in the
same brand. You test drive, make the hundreds of choices, and get the car in
1-3 months. If you want a car directly, get one of the used ones.

There is a lot of inertia in the US but it will be the same there.

I don't understand why dealers are upset with someone selling something
directly to the customer? Apart from lobbying and inertia, are there any
_legitimate_ reasons for protecting these businesses from change?

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nfriedly
Heh, I live near Troy, Ohio, so I see that Arbogast dealership all the time. I
don't have anything against them personally, but I'd love to see a Tesla
showroom pop up here in town. (Mostly for looks, though. I've never bought a
brand new car myself and don't expect that to change any time soon.)

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rdtsc
So if legislators with their car dealer friends ban Tesla from selling
directly to consumers, could Tesla do something like "We'll pay for your
flight out to nearest place you can buy a car and drive it home. You'll get
free nice hotel stays on the way home?" I can see that for someone buying a
Model S or Model X. The sale was not made in that state so it should be fine.

What would the states do then? I am guessing force buyers to pay a steep
registration tax, but they'd just have to word in a very strange way. Can't
people then just register the car quickly out of state and then re-register it
locally so it looks like "a move" legally and not a sale? It seems for any
trick these states can come up with, the other, Tesla friendly, states can
come with an alternate trick to counter it...

~~~
natermer
> Can't people then just register the car quickly out of state and then re-
> register it locally so it looks like "a move" legally and not a sale?

Paying twice the taxes on a new car is not a cheap thing.

The states cannot prevent you from importing a car, but they can make it a
huge pain in the butt. Multiple days of having to take off work, getting the
run around and misinformation from bureaucrats, spending hundreds of dollars
on fees and inspections to get to what is free if bought in-state. They can be
very nasty about it.

(don't ask me how I know. This is based on personal experience)

How unpleasant it gets depends heavily on the state and how much of a vendetta
key politicians will be willing to go on when they have a corporation thumbing
their nose at their laws.

It's not just registration. Most people buy new cars on credit. Which means
they don't have the title. You'll have to provide a out of state title, which
you don't actually own, to the state. You'll need insurance that is accepted
by the state and your creditor. You'll have to make sure that the insurance
agency can communicate this correctly to the state and provide them the right
information, or it may be multiple trips to government buildings until it gets
sorted out.

And it's not like the state you are buying from is going to be all that happy
about losing out of probably will amount to several hundred dollars in sales
taxes.

Each of these things is just another thing to go wrong. Another day waiting in
lines and getting bad information from people who would rather spit in your
face then talk to you.

All of this stuff is very doable, of course. Probably take just a week or two
of screwing around at the most, etc. And I am sure that Telsa would help
streamline the process as much as possible, but they would still lose
customers because of it. Getting dragged through the mud for what really is
just a luxury car is nobody's idea of a good time.

~~~
gregpilling
I purchased a Toyota Tundra truck in Utah in 2007, and then drove it back to
Arizona where I lived. The truck was new to the market and not available yet
in AZ. The dealer had no problem whatsoever with titling the truck, financing
it, and paying the taxes on it to Arizona and not Utah. It was very painless.
The dealer told me that they do it all the time, and it was totally normal .

So my personal experience - easy, no problem. Only paid taxes to AZ, not UT.
No lines, no DMV, no problem with registration, nothing. I just flew in, got
the truck, drove home.

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matt_wulfeck
> But it is not yet clear that the disruption of the auto industry will lead
> to the shuttering of dealerships the way digital sales of music and books
> led to the death of record stores and bookstors.

This is a completely unfair comparison. Book and music stores were everything
dealers were not. They had marked and easy to understand prices. They were
knowledgable and interested in spreading knowledge about their product. And
they were very low pressure. They just couldn't compete on price.

Dealerships can go burn in a fire as far as I'm concerned. They hustle you
with information asymmetry and use high pressure sales tactics. And they
provide _no_ value for information or knowledge. They exist solely to skim as
much money as possible from a sales transaction that they provide no value to.

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kylehotchkiss
Has anybody peeked into dealership metrics to find any biases in prices in
different racial, income, gender, introvertedness, or any other demographics?
It seems like haggling could be a gaping hole in how fair a car sale is to
different people.

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ars
Isn't there a federal law about states not being allowed to interfere in
interstate commerce?

What could they possibly do to ban internet sales?

~~~
greglindahl
I don't think any state's tried to do that. What they're trying to ban are
Tesla-owned showrooms and repair centers. And that's even though Tesla
actually sells over the Internet - if you buy in a showroom, it's because you
borrowed their iMac to order from the website.

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mountaineer22
Not any discussion of how service or recalls are handled?

Schedule an appointment at the genius bar for your vehicle?

