
Auto Dealers, Startups Try Amazon-Style Ordering for Cars - prostoalex
https://www.wsj.com/articles/auto-dealers-startups-try-amazon-style-ordering-for-cars-11546174802
======
blakesterz
Buying a car is such a horrible and archaic process still.

I love this quote at the end...

"For the vast majority of dealerships, in-store sales will continue to be the
main way they sell cars. Delivering cars to customers can get expensive, and
dealers see a benefit in getting them in showrooms, where they can be induced
to spend more for features and add-ons, like paint protection and extended
warranties, "

That word "induced" made me laugh.

~~~
christophilus
Carmax feels a lot like dealing with Saturn dealerships. No haggling. Fairly
simple process. Low pressure. I’m never buying from a dealership again.

~~~
amyjess
Carmax still only sells used cars, don't they?

I want a no-haggle dealer for new cars, especially if they sell economy cars
like the Nissan Versa and Chevrolet Spark.

~~~
smacktoward
Honest question: why? Cars’ rapid depreciation makes a gently used car a much
better buy than a new one in just about all circumstances. And CarMax does
thorough inspections and provides solid warranties for cars they sell, so you
don’t have to worry about “used” equaling “unreliable.”

~~~
pps43
Asymmetric information. The buyer has no way of knowing whether the car was
used gently, which results in market for lemons.

CarMax has no incentive to fail a car at inspection. They'd rather sell it to
you and if it breaks, fix it under warranty. But for you a broken car might
mean ruined vacation or road trip.

~~~
smacktoward
CarMax gives you a free history report on the life of the vehicle to date,
including how many owners it's had, any accidents it's been involved in, any
recalls it's been included in, registered odometer readings over the life of
the car, and so forth. (Details here: [https://www.carmax.com/articles/free-
vehicle-history-report-...](https://www.carmax.com/articles/free-vehicle-
history-report-walk-through))

If you don't trust CarMax to give you an _accurate_ report, you can buy a
separate one from a third party like Carfax ([https://www.carfax.com/vehicle-
history-reports/](https://www.carfax.com/vehicle-history-reports/)) to confirm
the details.

 _> CarMax has no incentive to fail a car at inspection. They'd rather sell it
to you and if it breaks, fix it under warranty._

Any car you buy from CarMax can optionally be covered by their "MaxCare"
extended warranty, which lets you choose a deductible and then obligates
CarMax to pay the remaining cost of any repairs to the vehicle beyond that
deductible. So if you set the deductible at, say, $250, and then you get the
vehicle home and discover that the transmission is shot, the worst case
scenario is you're out $250. CarMax eats the rest of the cost.

Car YouTuber Doug DeMuro bought a Range Rover from CarMax with this type of
coverage a few years back. He paid $3,899 for the extended warranty, and
CarMax ended up paying out $16,925 on warranty repairs over the six years he
owned the car. More details here:
[https://www.youtube.com/watch?v=E3jA55TJboA](https://www.youtube.com/watch?v=E3jA55TJboA)

~~~
pps43
If the previous owner only changed oil once (just before trading the car in),
how would CarMax or Carfax know?

~~~
smacktoward
They would know it had missed a bunch of scheduled maintenance. They know how
many miles are on the car, they know how many times it should have had its oil
changed over that many miles. If the owner never brought it in for service,
you can say _maybe_ they were just a gear-head and were changing the oil
themselves in their garage. But there's lots of service tasks you can't do in
your garage, so if the car missed lots of scheduled maintenance windows, that
puts up a big red flag.

~~~
pps43
Typical lease is three years. In that timeframe there isn't a bunch of
scheduled maintenance. You need to pass state inspection a couple of times,
but apart from that there's normally nothing really to service yet.

From the carfax report the owner who did the oil changes on schedule with
quality synthetic oil looks indistinguishable from the one who did nothing and
drove the car like a rental. An you can't tell what's inside the engine block
until you open it up.

------
cujo
I'll share my last car buying experience. We had done our homework and more or
less knew within a couple within a couple of models, which car we wanted.

After going through the test drives and the stupid dance with a couple of
dealerships, the process smoothed out.

I checked out a few regional dealers, and called 3 different ones for prices.
2 of them were willing to me prices over the phone. Great. I found another
regional dealer which had this "amazon-style" process. I could configure the
car I wanted on their website, and it showed me the price. It was the best of
the 3 prices I was quoted, so I "placed my order".

I got an auto-responder email email saying that paperwork was on the way and
salesperson would be in touch. The guy called to discuss the trade in process,
and tell me how the paperwork would be handled. In about 3 days I had a new
car, delivered to my house, having never set foot in a dealership. They even
did the trade in estimate remotely (I took some photos and sent them in).

Hopefully that's the trend things move in the future. It was a breeze.

~~~
Someone1234
Related to this I have the "best-worst" idea for a business...

So everyone hates car dealerships. But we need to test drive vehicles (or
physically look at them). Right now car demos are linked to buying, and
therefore the dealership.

What if there was a business that ONLY did car demos? You go in, and there's a
row of SUVs from all the major manufacturers.

This saves you from driving all over town for the different dealership, and
because they aren't selling you vehicles it is a no-pressure situation.

I'd pay money for this. But people are cheap and I doubt it would work as a
concept, unless buying cars online became the norm.

~~~
NullPrefix
I thought this post was sarcasting and only halfway through I've realized that
you're actually serious. Renting. It's a thing. You can rent cars for short
periods.

~~~
FajitaNachos
Yeah but no one is doing a one day rental on the 4 cars they want to drive.
Not to mention finding the exact make/model they are looking for.

~~~
kylec
If I’m interested in a car, I’ll try and rent one for a few days on Turo. It’s
a great way to see what it’s like to actually live with the car. I’m never
buying without renting again.

------
larrydag
I work in auto finance for a lender. There are so many gimmicks used by a
dealership to get a customer into a car with financing. A lot of it is the
lenders too because they offer incentives like markup to the dealers. There is
a lot that goes on behind the scenes as far as car market value, backend
products like warranty and GAP, and dealer incentives from lenders. It is just
too much to understand for the typical customer.

My recommendation is to research the car you want and understand the market
value. Then get pre-approved financing through a trusted lender. This will
leave a lot of the confusion out of the car buying experience.

~~~
ced
OT question: why does a car with financing cost less (summing up all the
monthly payments) than a car paid cash?

~~~
toast0
Manufacturer financing is weird. You might be eligible for some rebates only
if you take manufacturer financing. The financing arm may be trying to get
more loans on the books in general, or specifically good credit loans, or ?
Strange incentives all around.

~~~
larrydag
Great point. Manufacturers are interested in moving inventory. Not so much
with making money on loans. So they will take a small margin or even a loss on
the loan as long as it sells the car.

------
ctime
For those looking to buy a new car and have a Costco in your area, I highly
recommend looking into their Auto Purchase program. They negotiated great
pricing below invoicing. I did a ton of work shopping around for a new car
just before Thanksgiving and I couldn’t find a better price.

For reference the 2017 Toyota Highlander XLE AWD was $1700 under invoice.

~~~
argonaut
Just know that the Costco price will always be higher than the price you could
achieve by negotiating, simply because dealers pay Costco a referral fee for
each sale made through the program.

It's great for getting quotes though.

~~~
ec109685
Why do you think a dealer will sell you a car for X, just because Costco isn’t
taking Y commission?

------
amyjess
It's a shame that more dealerships aren't like this.

The traditional car dealership needs to go away. While companies like Carvana
are great, the vast majority of car dealers are just engaging in rent-seeking
behavior. These dealers exist solely so they can inject their own markup into
the supply chain. They only continue to exist because their lobbyists have
bribed state legislatures into passing laws that prohibit automakers from
selling cars directly and blue laws that prohibit dealerships from being open
on Sundays. Yes, most of the blue laws that are still on the books are the
direct result of lobbying by car dealerships: small businesses are terrified
that they're going to be replaced by corporate-owned dealerships that can
afford to hire employees to staff their dealerships seven days a week, so they
bribe lawmakers to pass anti-consumer laws that make it illegal for
dealerships to be open seven days a week. Can't compete with a company that
offers better service? Outlaw them! They are actively trying to drag the
standard of living for the entire state all the way down to the lowest common
denominator. Small businesses cause more externalities than they're worth.

We really need an aggressive push at the state level to overturn laws
forbidding automakers selling cars and to overturn blue laws.

And while we're at it, let's get rid of the archaic third-world practice of
haggling over car prices. We don't haggle over anything else, and it's an
emotionally draining process that discriminates against people who don't have
natural tendencies towards aggression. Honestly, I'm really disappointed
Saturn and Scion went away, because they were the best hopes for dealership
reform. And if we _are_ going to have dealers lobbying state legislatures for
laws, then let's actually have them do something beneficial and make it
illegal to buy or sell a new car for anything other than MSRP.

Carvana is great, but ideally the automakers should be selling cars directly
and adopting every single one of Carvana's innovations for themselves. We'd
all benefit if every automaker in the country moved to the Apple Store model.

No more blue laws. No more dealers extracting markup from an unnecessary step
in the supply chain. No more haggling. No more lying to and hiding information
from buyers. Online sales as a first-class citizen of the omnichannel.

~~~
ralph84
> We don't haggle over anything else

On the contrary, almost all big ticket items are negotiated. It's just cars
are the most frequently encountered big ticket item for the average person.

~~~
sokoloff
Exactly right. I negotiated _hard_ on both houses I bought and pretty
regularly (as a percentage of transactions) negotiate on Craigslist or Ebay
type purchases. I've negotiated salary at every job I've taken after my first
one. Many (perhaps more than half) of my business contracts are also
negotiated as well.

You don't _have_ to negotiate these things if you're willing to take the other
side's initial offer; it's probably financially materially in your favor to
not do that though...

------
neonate
[https://outline.com/DjHJdV](https://outline.com/DjHJdV)

------
adamqureshi
I am curious to know how many other EV carmakers will be going direct to
consumer. I know Tesla is doing it but they can't be the only one? I read
about Rivian and Bollinger but i don't know if they are going D2C

------
izacus
Can someone lift my european ignorance and tell me what's wrong with the
dealers? How are they different from BestBuy, Target, etc - just essentially
bringing the car to a showroom and selling it to you?

Why are dealers such a huge problem and who would buy such an expensive thing
as a car without trying it first?

~~~
sairahul82
It is because a lot of dealers in US are dishonnest. For example they never
honor the quote they themselves have given in email. They never tell the
interest rate or car price they are offering. They always ask you what is your
affordable monthly payment! After buying they push to extended warranty so
much. You need to spend couple of hours just saying no. It is just a
frustrating experience overall.

~~~
NicoJuicy
In Belgium, any price on email is valid in court.

Also, I have never seen issues like this here. The entire price has to be
shown upfront and it's pretty boring actually.

Compared to the US, it seems great though

------
jonbaer
It's been rather hard to find others who might have used Fair before
([https://www.fair.com](https://www.fair.com)) - or have an open opinion about
it, short term leasing I guess would be best way to describe.

~~~
sahaskatta
I've used Fair to lease a car. The entire experience has been a nightmare.
Billing errors, really bad support, them losing records of giving me a car,
charging me interest for not making a payment when their system had an error,
their auto-pay system is broken, their mobile app not working, they forgot to
register my car with the DMV, them not able to generate receipts for me, etc.

The idea is great, but have had a really bad experience so far. I hope the
resolve these issues. We need more competition/innovation in the space.

~~~
ryan_j_naughton
Thanks for the honest feedback, Sahas. I'm a director of engineering at Fair,
and we realize our ops and customer support need improvement (and we have
directed significant resources in that regard).

I'm curious when you used us, as we have resolved most of those issues.

When trying to deconstruct the entirety of the car industry and re-invent it
in an app, there are so many moving pieces and entrenched players.

For example, our partners on wall street (with whom we pledge the assets and
finance them through securitization agreements require us to use third party
servicers so that these cashflows would still be serviceable if we happen to
go bankrupt. Thus, our recurring billing is still through them and these old
school finance companies are not paragons of modern technology (to say the
least).

We are moving a lot of this servicing and payments in house and focusing on
core customer support experience as our top priorities for this year in order
to ensure we can scale while providing an amazing experience.

I'd be interested in talking to you more about your experience. E-mail me.

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davedx
Yep, I work for Carnext.com, a spinoff of LeasePlan and we are doing this. Its
very satisfying how hard everyone works to streamline the whole process from
start of order to delivery of the car.

~~~
sixQuarks
Is this like a Fair.com for europe? Any plans to come to the US with the
service?

------
habosa
Anything would be an improvement.

I was looking into getting my first car recently. Narrowed it down to a few
Honda models and walked into the SF Honda Dealership.

Never seen anywhere so incompetent in my life. When I asked about car features
the guy would just Google "honda fit sunroof on ex?" where I could clearly
see. I finally asked for a price and he came back with something 3.0x the
market rate for the car ... When I asked why it was so high he said computer
error nothing he could do.

So yeah, let's Amazon it up.

------
choward
Since I can't view the article can someone tell me what Amazon is doing in the
title?

~~~
CaliforniaKarl
If you scroll down through the comments, by now someone would have posted an
outline.com link that allows you to get around the paywall. That should get
you to the article!

------
cookiecaper
Article is paywalled so I'm just gonna assume my experience with Vroom is
relevant.

The long and short of it is that Vroom sold me a car, promised delivery by a
certain date, and missed it by about 3 weeks ostensibly because they noticed a
variety of maintenance issues with the vehicle during "final conditioning". In
addition to being almost a month late, the delivery driver was expecting to
pick up the trade-in at the same time, despite the Vroom rep telling us more
than once that they'd send a different driver for it within 3 days of
delivery.

The process is online until you click "buy" and then everyone wants to spend
just as much time with you on the phone as they would if you had walked into
the dealer -- I spent most of the weekend on the phone. Their agents double as
reps at a used car dealership in Houston and are frequently unavailable
because they're out with an in-person client. It seems like someone goes out
to the floor and drags them away from their physical customers when a Vroom
customer calls in. Every time I sent an email about something, after an hour
or so I'd get a reply asking me to call in to discuss.

Once you're finally done with all that, they overnight a stack of about 50
papers to sign and return. As soon as the return label is scanned, you're
considered sold and they do everything they can to ignore and avoid you.

A few days after I finally got the car, I noticed a leak and took it to the
dealer, where I paid to get it examined. Was informed that the water pump was
going bad and would need replaced soon. I emailed Vroom about this while I was
still within the return window, including a copy of the quote from the
dealership, and they never replied. I didn't want to deal with the crap
anymore, overall I was OK with the car, and the mechanical issues were non-
urgent so I just let it go.

The only reason I don't 100% regret the transaction is because there were no
local dealers that had the vehicle I ordered from Vroom in stock for the
entire duration of the delayed shipment. I'm sure, however, that I would've
had a better experience if I had just done eBay Motors or something. Buyer
beware.

------
Casseres
Is there a way for people to learn to be good negotiators?

Below was my last negotiation. I think I did pretty well because I put a lot
of research into it and had some background knowledge already. Most people
won't have those luxuries, and I won't always be able to research or know
everything before a negotiation. I would like to learn to be a better
negotiator in general.

\---

I recently just bought a new vehicle. I found the VIN I wanted, called up the
dealership and asked for the Internet Sales Manager's email address. Sent a
very short email saying I'm ready to buy a 2019 MAKE/MODEL in City, State. The
dealership's website shows VIN in stock, is it still available? And without
incentives, what is their best offer on that vehicle?

I got an email with a number, it was very close to invoice, and replied when I
would be there to take a look at the vehicle.

(Dealerships do need to make some profit to keep the lights on and pay
salaries. Even if you pay invoice, the dealership still makes money on dealer
holdbacks and dealer incentives. Additionally, you do not want the dealer to
include customer incentives/rebates when giving you a quote, because that's
money you'll be paying directly into the dealership's pocket otherwise. Agree
on a price, then let the dealership know what incentives you're eligible for.
Also check with your bank and organizations you're a member of for additional
rebates, I got an additional $1000 just for being a member of my bank.)

The only tricks the dealership tried to play on me was the waiting game, and
the dealership's protection package that they "already applied" for $1500. I
told them to take it off or I walk. They came back at $500. I said the VIN
etching is a $20 kit that only takes a few minutes to apply, we're already
breathing 78% nitrogen, and I'll offer them $100 because the anti-theft lug
nuts actually cost some money. I was immediately offered $150 with no window
tint (the 4th and last part of the package which I guess they didn't really
apply yet). Later the salesperson said he looked up their cost for the VIN
etching and it was $68 because they had a third party do it for them. I looked
up the cost of the OEM anti-theft lug nuts, and they were about the same, so
$150 does seem like the dealer's cost on what I got.

I only realized after I took the vehicle home, that it didn't have the window
sticker on it (illegal for the dealership not to display the Monroney
Sticker). I did thoroughly inspect every part (including the engine
compartment and undercarriage) of the vehicle and test all of the features to
make sure they worked (and that the manufacturer didn't forget to install
something - it's happened before), but somehow I overlooked that. I knew
everything about the vehicle prior and got the PDF of the window sticker from
the manufacturer.

~~~
AmericanChopper
>Is there a way for people to learn to be good negotiators?

Never Split the Difference by Chris Voss is the best book on negotiation I’ve
ever read, and it’s also pretty entertaining. I negotiate a lot at work, and
that book helped me quite a bit. The negotiation style he advocates, aside
from being effective, is also very personable. Which is great if you don’t
have the stomach for the (less effective) sleazy and aggressive styles.

~~~
Casseres
Thank you for the recommendation. Does the book offer any suggestions on how
to practice the ideas that might be presented to the reader?

I know there's a lot of books out there which admittedly I haven't really
looked into, but my concern is that in the US, it would be hard for the
average person to actually find an opportunity to negotiate.

~~~
AmericanChopper
Absolutely. The book is essentially about communication strategies, presented
in a way that relates to negotiation. But the strategies are useful in so many
contexts. We actually negotiate all the time, any time we’re settling a
difference of opinion, ask for something, have something asked of us, we
usually end up negotiating. My girlfriend and I both use the strategies any
time we ‘argue’ or disagree, because they’re really just about communicating
towards and amicable outcome.

