Is direct sale really a better model than dealerships?

[PtG62901]

I have been through a number of factory recalls on ICE over the years. 4 or 5 times, my car came back not working quite right. It turns out the dealer doesn't make any money doing recall work, so they like to introduce electric problems, like making your cruise control not work by unplugging it in the engine bay, or making the electronics on your passenger door stop working. So, recall work, no money, bad service.

The ICE dealers are nicer now, good coffee, free cookies, wash your car, and they make all their profit on service. Much better to go to the local independent mechanic. Normal service work, good money, good service.

On EV's there isn't normal maintenance work, most of the work is factory recall or under warranty. I don't think there is any money there. In "Who Killed the Electric Car" they discuss this. If there is no money, it is going to be hard to get 3rd party shops to do work. I suspect, the Model S work is largely drying up, because build quality is up?

Should be interesting to see what happens.

 

[Vince Cobelo]

This is about the dumbest question ever asked on this forum.

 

[Max*]

This is about the dumbest question ever asked on this forum.

I'm not sure if I'd go that far...

 

[Akikiki]

Well, since we are talking about how to buy cars, I wonder what other people's opinion is of "True Car". I've not used True Car. The last two times I bought a new are was (thank heavens) was Tesla. What do you think of True Car?

When True Car was first introduced as a service the actual manufacturer price was available. A user of True Car had a good chance of getting an excellent price on a new car. Then things changed. Instead of exposing the cost to the dealer for the car, the model changed to (supposedly) what other buyers in that area paid for the same or like car.

It changed from what it cost the dealer to what dealers sold it to buyers. I wonder where True Car now gets this data to share with the buyer. Where does it come from? Is it from the dealers directly or indirectly? My point is, so now when a buyer pulls up a car and pulls the pricing data all they know is this these are the prices (higher or lower) than other people have paid for the same car. How does that become the best possible price?

I don't know about others, but I don't like the idea of judging if I got a good deal by the price other buyers near me paid for the same vehicle. Seems to me that all that told me is we all paid more than we could have for the same car, because its based on what the dealer is reporting to True Car (how else would True Car know)? The way I see this, True Car shifted from being an ally to the buyer to being in cahoots with the dealer.

 

[tezzla]

About 10 years ago I dropped by a Mercedes dealership about an ad they had for a used E350 @ like $28k.
They said it was sold; then tried to upsell me to a CL550 at only $60k

 

[jaguar36]

On EV's there isn't normal maintenance work, most of the work is factory recall or under warranty.

On the Tesla's there is normal maintenance work, and its frequently more expensive than normal maintenance work at a dealer on a ICE. Of course if third party shops could do it, then it might be vastly cheaper.

 

[Skotty]

As I see more and more complaints on this forum concerning pricing, trade-in, delivery and servicing, I am beginning to consider this issue.

The fact is, direct sale does not always deliver a better price and experience to customers compared to dealerships. If dealerships are in fact more efficient, then consumer surplus will be greater with dealerships.

Based on both personal experience and information I have read on this forum, Tesla's delivery and service experiences are sub-par. Service experience is particularly bad in busy locations with many owners. If this is the case now, then I can't even imagine what it will be like when Model 3 comes out and both the delivery and service needs are multiplied many folds.

Moreover, it's uncertain if customers even get the best pricing with a direct sales model. Operating stores are expensive and those costs need to be spread into the cars. If stores operate inefficiently, compared to a dealership, then they would actually cost more, be more risky for the company, and lead to higher car prices.

Overall in the past few years, my experiences at dealerships (mostly premium brands) have been great. Sales, delivery and serving have all been good. These are experts at doing what they do, while Tesla stores are not. I am beginning to think that they may be economically more efficient at doing what they do and dealership model may actually be better than company stores in maximizing consumer welfare.

What are others' thoughts?

It has always been my opinion that it doesn't really matter. A company should be allowed to sell their product with franchised dealerships or without, regardless of which is better. In cases where a company does both, I'm okay with keeping certain dealer protection laws, which is what I think the original intent was before the dealer lobbies tried to use it as a weapon to club everything to death.

It's hard to keep a free country free, as it is always free to become not free. It's vital that the law always focus on ensuring fairness and not favoritism. Dealer lobbies have stepped over that line into pushing favoritism, and in doing so they threaten the freedom our country was founded upon.

 

[green1]

It has always been my opinion that it doesn't really matter. A company should be allowed to sell their product with franchised dealerships or without, regardless of which is better. In cases where a company does both, I'm okay with keeping certain dealer protection laws, which is what I think the original intent was before the dealer lobbies tried to use it as a weapon to club everything to death.

I agree that a company should have free reign to decide how to sell their products. But I don't think they should have the ability to determine who is allowed to fix the products once people have purchased them.

 

[Max*]

I agree that a company should have free reign to decide how to sell their products. But I don't think they should have the ability to determine who is allowed to fix the products once people have purchased them.

Good thing you can crack open an iPhone for repairs and not void it's warranty. O wait...

 

[green1]

Good thing you can crack open an iPhone for repairs and not void it's warranty. O wait...

You actually do not void your warranty by opening it. Unless the item you change causes the issue they can not legally refuse your warranty.

Cars have even stricter legal protections in most places.

 

[bro1999]

Just bought a car by dealer method Thursday. There were ~300 models in the area to pick from. A few hours on the phone cut the list to 2 dealer with the right trimmed cars. Both claimed the same price.

Dealer 1 sucked, but we were not there long, 30 minutes max. Price went up when we actually arrived, we split, we don't haggle, ever.

Dealer 2 sucked, but we did not do our homework, it was a driveby stop on the way to the second dealer. Fail. True Aholes though out of the 1980's. Odd, I already bought 2 cars there in 2 years with flawless experiences. Our saleswoman was not there that day.

Dealer 3 was painless, professional, and EV friendly. Had the price down to $ and Cents, washed, charged, excellent prep, out of there in an hour.

Price payed for new 2017 with 6 mi with no haggling at all? 18% under MSRP before government programs. Finished price for a car with ACC, Lane Keep, Automatic Braking, auto parking, deluxe sound, Teen Driver Mode, Valet Mode, cool traffic-based NAV, XM, leather, etc, etc, after all the government programs it was the MSRP of a similarly equipped Camry or Prius. But with instant full power acceleration at all speed, and nimble handling, and better operational economy.

So it took a day, got exactly what I wanted, got a good price, and a well prepped car. They even had the HOV stickers right there and put the front plate and stickers on.

Note. Nobody hassled us about features, prices, or options. The whole thing took just over an hour due to the cleaning and top off charge.

Cliff Notes: Brick and Mortar Dealer shopping took a full day using 3 stops. In the end, smoking price, great service, nice car. Put 500 miles on it by Sunday. No issues with fit, finish, noise, prep, performance.

Note, if I do have an issue, it can be serviced 15 miles away. On the very rare service calls, fast, fair pricing, clean car.

DISCLAIMER - Your results may vary. Professional Car Nut. Do not try this at home. If you have an erection that lasts over 4 hours and poor eyesight, PLEASE use a condom.

Congrats on your Volt! I think?

 

[McRat]

Congrats on your Volt! I think?

Shhh!! When they find out we have 3 Volts for 4 drivers, I will be lynched.

 

[STbreaker]

I recently posted a story about my experience with my wife's Honda in another thread. To make a long story short:

a dealer (which has since closed unfortunately) botched the repair of a factory defect. The botched repair job subsequently caused another failure. Honda used the franchise dealership model to disavow all involvement and I had to pay a lot of money to get the problem fixed.

 

[bob_p]

I've had good experiences with car dealerships with my previous ICEs - just as I've had positive experiences working with the Tesla store, service center and support staff.

The dealerships make money off every sale - that's their business model. What value are they providing for what they are making off your car purchase?

Unless they are providing value to the purchaser, the dealerships are essentially a tax - an overhead to the sales process, and artificially increasing the price of each car they sell.

While the car dealership lobbies are investing heavily to kill Tesla's direct sales model, they are fighting a losing battle, because unless they can provide real value to the consumers, justifying the additional cost they are adding to every sale, at some point the tide will turn, and direct sales will be officially allowed - everywhere. And like other "brick and mortar" retail stores, they'll either adapt or disappear.

 

[jelloslug]

My last two dealership cars were basically bought over the internet. I had to skip over the 4 closets dealers (Nissan Leaf) for one that would deal via email and I had to go out of state for the other (BMW i3). Unfortunately the Nissan dealer I bought from was incompetent when dealing with EVs so I had to use a different dealer for service. Fortunately, that one had a great EV tech. For the i3 I was basically stuck with my local dealer which was horrid for just about everything. Nothing was ever done on time; I had to call the service manager every single time I took the car in to actually get anything done. If you did not call and check on the status of parts, they would just sit there and they would never even call you to let you know the parts came in. My Tesla was purchased the normal way (on line), delivery was great, I have had one service appointment for a minor flaw noted at delivery, was provided a loaner with no questions asked, and everything was fixed properly the first time.

 

[jelloslug]

I recently posted a story about my experience with my wife's Honda in another thread. To make a long story short:

a dealer (which has since closed unfortunately) botched the repair of a factory defect. The botched repair job subsequently caused another failure. Honda used the franchise dealership model to disavow all involvement and I had to pay a lot of money to get the problem fixed.

I had a Honda with very obviously defective strut mounts that made my 10k mile car sound like a 20 year old pickup truck. The service manager said that there was nothing wrong and sent me packing. I had to get the regional service manager to do a ride along and we did not make it out of the shop bay before he told the dealers service manager to get me a loaner and fix my car now.

 

[jelloslug]

Well, since we are talking about how to buy cars, I wonder what other people's opinion is of "True Car". I've not used True Car. The last two times I bought a new are was (thank heavens) was Tesla. What do you think of True Car?

When True Car was first introduced as a service the actual manufacturer price was available. A user of True Car had a good chance of getting an excellent price on a new car. Then things changed. Instead of exposing the cost to the dealer for the car, the model changed to (supposedly) what other buyers in that area paid for the same or like car.

It changed from what it cost the dealer to what dealers sold it to buyers. I wonder where True Car now gets this data to share with the buyer. Where does it come from? Is it from the dealers directly or indirectly? My point is, so now when a buyer pulls up a car and pulls the pricing data all they know is this these are the prices (higher or lower) than other people have paid for the same car. How does that become the best possible price?

I don't know about others, but I don't like the idea of judging if I got a good deal by the price other buyers near me paid for the same vehicle. Seems to me that all that told me is we all paid more than we could have for the same car, because its based on what the dealer is reporting to True Car (how else would True Car know)? The way I see this, True Car shifted from being an ally to the buyer to being in cahoots with the dealer.

You can get the same deal they can get (if not better) by doing your own haggling.

 

[Chopr147]

Well let me go run that by my manager and see what we can do" is so stupid its offensive to me. I always begin my conversation with "please don't waste my time, lets just cut out all the haggling and start where this will ultimately end up...at your best price."

I actually don't mind haggling some but yea, the manager bit is a little too much.
I have leased 4 Lexus' from the same dealership and same saleswoman. (wife's car)
After the "lets just cut out all the haggling and start where this will ultimately end up...at your best price" talk I still ended up at the dealership for 4 HOURS!!!!
That's how long it took her to get back to my original price and an agreement. Remember I am a customer leasing every 3 years, she knows me well. And she called a month later asking why i gave her a bad review.
OK, fast forward 4 months to June of this year. After a couple test drives and very pleasant Tesla staff I sat on my home computer, set up my S and clicked order. Done! HUGE difference and I can't wait to send that Lexus back and order the Model 3 in 2018. Here's what you can do with your review lady!

 

[Buddy]

I actually don't mind haggling some but yea, the manager bit is a little too much.
I have leased 4 Lexus' from the same dealership and same saleswoman. (wife's car)
After the "lets just cut out all the haggling and start where this will ultimately end up...at your best price" talk I still ended up at the dealership for 4 HOURS!!!!
That's how long it took her to get back to my original price and an agreement. Remember I am a customer leasing every 3 years, she knows me well. And she called a month later asking why i gave her a bad review.
OK, fast forward 4 months to June of this year. After a couple test drives and very pleasant Tesla staff I sat on my home computer, set up my S and clicked order. Done! HUGE difference and I can't wait to send that Lexus back and order the Model 3 in 2018. Here's what you can do with your review lady!

I don't understand how the dealerships think that tactic benefits them. Perhaps they "rip off" enough customers that it's worth their time to try? Or maybe they think if they can get an extra $500 from 200 customers, they can easily give the 25 savvy customers a "$500 coupon".

I would think that if they lost enough customers that they would change their tactics. Maybe the dealership model has never had any true competition until Tesla came along.

 

[theslimshadyist]

Here's an old trick where they primarily target younger or inexperienced buyers.

Buyer: "What is the bottom price for this vehicle?"
Stealer: "Are you financing or paying cash?"
Buyer: "I'm going to finance."
Stealer: "Do you have a trade?"
Buyer: "No."
Stealer: "What is your monthly payment budget?"
Buyer: "I would like to spend less than $600/month."
Stealer: "Ok, what if I could do $579/month?"
Buyer: "Fantastic, you've got a deal!"

Potential result - Price of the vehicle often exceeds MSRP!