
Tesla Clashes With Car Dealers - fieldforceapp
http://online.wsj.com/article/SB10001424127887324049504578541902814606098.html
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jvm
The zinger:

> Dealers say laws passed over the decades to prevent car makers from selling
> directly to consumers are justified because without them auto makers could
> use their economic clout to sell vehicles for less than their independent
> franchisees.

To rephrase: Auto dealers increase the price of cars without producing value,
therefore they must be protected by law or they would cease to exist.

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nirvdrum
Well, they do produce value. Ford couldn't possibly service every municipality
in the country and thus relies on dealers. So, the dealers take the risk and
do the market research, but Ford is always able to undercut them on price. But
Ford probably still can't service all these locations, so they'll only
undercut dealers in the most profitable centers and kick dealers out to pick
up scraps. Understandably, many won't bother, and so now purchasing a vehicle
becomes much harder. Since most dealerships now are full service centers and
they have a monopoly on the diagnostic equipment necessary for servicing
modern vehicles in some jurisdictions, this also means servicing a vehicle
becomes much harder.

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greglindahl
Makes sense -- that's why Tesla is so eager to sign up dealers, because it's
totally worth the money they charge!

(That was sarcasm, btw. A tiny car maker like Tesla will never get anything
like a fair deal from dealers, especially if state law gives dealers a
monopoly. It's a disfunctional marketplace.)

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TheAnimus
I had a similar thought two years ago when I bought my car. I test drove about
6 differen't cars in total, if it was not for the fact that the dealer at the
showroom was a complete dick, constantly trying to sell me a loan scheme which
I did not want, I might have bought it from the dealer.

Instead I used an online broker firm. As a result I got about £5,000 off the
list price of a £20,000 car. The joke is two years later someone offered me
£14,000 for it last month, this is due to the lack of cars which qualify for
exemption from Londons Congestion Charging Zone.

Now whilst I would hands down recommend the sales service I recieved from the
broker, I still value the fact I was able to try so many differen't cars.

I think that we could potentially see a new system for doing test drives,
either as Tesla has, the manufacturer pays for booths, which will often lack
local knowledge (dealers know what sells in their patch better than some top
down management).

Or, and this could be the interesting one, some form of part time
demonstraiters. People who get a heavily discounted lease or similar (who
would want a stranger to ruin their own gearbox, lease would be the only
option) with the agreement to be available for 10 hours a week of test drives
or similar. Given a £30k car leases normally for about £400 pcm, 40 hours a
month of demotime would be a fair trade, for what is ultimately a fairly un-
skilled job.

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vampirechicken
Showrooming, using an actual showroom. Well played.

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vampirical
Paywall busted:
[http://const.it/http://online.wsj.com/article/SB100014241278...](http://const.it/http://online.wsj.com/article/SB10001424127887324049504578541902814606098.html)

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polyfractal
NPR Planet Money has a great episode on the history of car dealerships:
[http://www.npr.org/blogs/money/2013/02/12/171814201/episode-...](http://www.npr.org/blogs/money/2013/02/12/171814201/episode-435-why-
buying-a-car-is-so-awful)

Basically, everyone in this thread is right.

\- Local dealerships were originally founded because in the 1920s, cars were
big/expensive and hard to move around the country. Cars needed a lot of
repairs, so local dealers to service them made sense.

\- During the Great Depression, car manufacturers continued to make cars
despite no one buying them. So they forced dealerships to purchase cars, or
else get banned from selling their brand ever again (effectively terminating
the business, obviously bad if you have loans and other capital investments).
This was before overseas competition from Japanese/Korean manufacturers
existed, so losing your contract to Ford meant you were pretty sunk.

\- Dealerships fought back by getting legislation passed to protect them
legally, slowly granting more power to the dealerships over time. Now the
balance of power is far, far on the side of dealers - manufacturers cannot
shut down dealerships, cannot control who runs them, must provide cars to
dealers even if they are in poorly profitable areas, cannot tell the dealers
what to sell, no real way to incentive dealers to not be "car salesmen"
assholes, etc etc.

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mikestew
The link takes me to a paywall. The non-paywall version is:
[http://stream.wsj.com/story/latest-
headlines/SS-2-63399/SS-2...](http://stream.wsj.com/story/latest-
headlines/SS-2-63399/SS-2-255429/)

~~~
mdturnerphys
For the WSJ, accessing the article through a search result (e.g. googling the
article's title) will give you the full version of the article.

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mercutio2
I keep hearing this. It has never once worked for me, on any device and the
WSJ pay wall. What browser are you using? Do you have cookies disabled?

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yashg
May be because wsj is playing smart here. When go to the article for the first
time they are putting a cookie on your browser, so even when you visit through
a search engine it is still able to detect you as a previous visitor and
showing you a paywall. Use a different browser to do the search or clear the
cookies before doing the search or block all cookies form wsj. That's what I
did with experts-exchange.com long back and it worked.

~~~
mdturnerphys
Nope. I only ever do the search trick after hitting the paywall, and it always
works for me.

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quattrofan
Middlemen, driving up costs for everyone for the last 2000 years.

~~~
rgbrenner
Munger on Middlemen

" ... about the often-vilified middleman--someone who buys cheap, sells dear
and does nothing to improve the product. Munger explains the economic function
of arbitrage using a classic article about how prices emerged in a POW camp
during World War II. "

[http://www.econtalk.org/archives/2008/10/munger_on_middl.htm...](http://www.econtalk.org/archives/2008/10/munger_on_middl.html)

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magoon
Dealers are the problem.

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ibudiallo
It's unfortunate that you have to subscribe to wsj to read.

