Is direct sale really a better model than dealerships?

[JPP]

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!

...ooooh, the 'monthlies...I can get you into a Rolls Royce for $579/month, but you will be paying for a whole lotta months.

 

[Buddy]

@theslimshadyist yes exactly, they'll just finance you for 6 or 7 years to get that payment "affordable".

When the salesman draws the 4 squares on a piece of paper in front of me I know what their intentions are.

 

[Sonny Daze]

I know I would rather deal with the direct sales model than with a third party company who is making money by trying to sell the car to me for the highest price possible (not to mention additional services). The only issue with Tesla is that the limited number of stores/galleries makes it difficult to go to another store if you are unhappy with the service you are receiving (except in some areas). For the record, I have only had good experiences in my limited dealings.

 

[tinm]

Every auto-buying experience I had with dealers, in the 80s, 90s, 00s, and 10s, was awful. Typically 4+ hour ordeal. Nickeled and dimed to death. Massive paperwork. Constant upsells. Indifferent salespeople. Always felt buyer's remorse afterwards.

Tesla purchase: simple, straightforward, uneventful. Delivery was a mess (car was filthy) but that was back in the wild & woolly 2013 era.

Thing with dealers is: on the purchasing side, things are fluid and an unpleasant haggle. On the service side, price is fixed. And they make their money on the service side.

With Tesla, on the purchasing side, price is fixed. On the service side, things are a lot more fluid but not unpleasant -- it's usually the customer knowing more than the service rep, or even the service manager, that gets one into communication breakdowns requiring phoning home to the Fremont mothership for clarification.

Bottom line: no question. Dealers suck. Dealers are the past. Telsa's model is 1000x better and is the future. (And I'm lookin' at you, auto dealers association who told me "we're watching you.")

 

[brkaus]

It sounds like I'm the only one around here that appreciates the $100 wheel locks and $275 trunk mat. Those special ones that were in the car that just can't be removed AND they didn't realize it until they get to the finance/closing desk.

Also, the flashbacks about Zeibart...

 

[Claypigeon]

With dealerships, it would likely force Tesla to a yearly product cycle. Could you imagine a dealer getting a shipment of vehicles right before the AP 2.0 announcement? if it was a boutique dealership like Bentley, the markup needed would inflate the price substantially--especially with lower service needs. Parts and service are 40% of dealers profits.

 

[bob_p]

Dealerships make their money from their margins on each new car sale, on (often unnecessary) upgrades added to new cars before the sale, on service after the sale, and on selling used cars they've received as trade-ins.

And this model is protected by state law, mandating new cars can only be sold through dealerships - which is why the dealership lobby is fighting so hard against Tesla's direct sales approach, because once manufacturers are allowed to sell directly to customers, much of the dealerships' revenue stream disappears.

And if EVs really take hold, with their much simpler designs and fewer moving parts, they'll require less maintenance, reducing the amount of potential revenue that can be derived from service.

What does that leave the dealerships? - a little money from adding upgrades after a sale - and selling trade-ins.

It's not that the dealerships are being dishonest or misleading - this is the business model that was developed many years ago, and protected by law - and, at some point, direct sales will be accepted - and that will have a huge impact on the dealerships.

Though... if ICE manufacturers are allowed to direct sell their cars to customers, that would significantly reduce the price of those cars to consumers - and create pressure on Tesla to further reduce their sales prices to stay competitive.

So, it may actually be in Tesla's best interest NOT to break the dealership monopoly - and instead find creative ways to implement a direct sales model for their cars, while forcing the other manufacturers to have to carry the dealership overhead in their sales prices...

 

[Chopr147]

Massive paperwork.

Oh yea, that! I forgot about it. I signed more papers for a 3 year lease then I did on my house closing. Doing that every day? They must have a massive factory just to hold all the original paperwork.

So, it may actually be in Tesla's best interest NOT to break the dealership monopoly - and instead find creative ways to implement a direct sales model for their cars, while forcing the other manufacturers to have to carry the dealership overhead in their sales prices...

Hmmm..........that's a different way of looking at it but, I don't think the OEM's would agree to it.
I understand why the dealers are fighting hard against this, it is their livelihood we're talking about. But from a simple point of view it is so un-American

 

[McRat]

If you are having to deal with a 4 hour dealership fist-fight over a dollar laying the gutter, you have the wrong idea about how to buy things.

Never Go To A Dealer Before The Price/Payment Thingys Are Settled. Period. Bad dog!

There is NOTHING about negotiating pricing that requires a face to face meeting. Nothing. NO! Go sit in the corner.

This isn't just cars. It's everything in the Internet Age. Heck, we have video chat phones like Captain Kirk or Dick Tracy.

 

[dhh12]

After experiencing the most disappointing car purchase experience ever - I think dealerships would benefit Tesla and exponentially increase their sales. The repeated stories on this board are nearly uniform - we love the cars we hate the sales system.

No longer would the sales and delivery staff have the luxury of ignoring calls and emails for weeks. There would be true competition between stores and they would be forced to increase their level of service. The apathy would be eliminated nearly immediately.

 

[McRat]

After experiencing the most disappointing car purchase experience ever - I think dealerships would benefit Tesla and exponentially increase their sales. The repeated stories on this board are nearly uniform - we love the cars we hate the sales system.

No longer would the sales and delivery staff have the luxury of ignoring calls and emails for weeks. There would be true competition between stores and they would be forced to increase their level of service. The apathy would be eliminated nearly immediately.

Heck, just go to Amazon dammit!

https://www.amazon.com/s/ref=s9_acs...04-4603-8586-2ef1ed2cf42e&pf_rd_i=10677469011

 

[dhh12]

Love that Idea - amazon is damn responsive with issues and inquiries.

 

[Snerruc]

If you are having to deal with a 4 hour dealership fist-fight over a dollar laying the gutter, you have the wrong idea about how to buy things.

Never Go To A Dealer Before The Price/Payment Thingys Are Settled. Period. Bad dog!

There is NOTHING about negotiating pricing that requires a face to face meeting. Nothing. NO! Go sit in the corner.

This isn't just cars. It's everything in the Internet Age. Heck, we have video chat phones like Captain Kirk or Dick Tracy.

I have gone to a dealer only once in the last 20+ years. I just call or email the SM or GM and sometimes they drive a car over to the house with the papers. The once was because I could walk over and pick up from a selection. Took a little over an hour including the walk. I was treated quite well. Typically 16% under list. How could anyone spend 4 hrs in a dealership?? BTW I picked my Tesla up in the parking lot of a bar.

 

[McRat]

Love that Idea - amazon is damn responsive with issues and inquiries.

I tried to put a Bugatti Veyron in my cart, then return it in 30 days for a refund...

It failed.

Need to call Customer Service.

 

[Gizmotoy]

I have gone to a dealer only once in the last 20+ years. I just call or email the SM or GM and sometimes they drive a car over to the house with the papers. The once was because I could walk over and pick up from a selection. Took a little over an hour including the walk. I was treated quite well. Typically 16% under list. How could anyone spend 4 hrs in a dealership?? BTW I picked my Tesla up in the parking lot of a bar.

That's the thing. Nobody knows!

In all seriousness, I bought a CPO from another automaker 6 months ago. I negotiated and had the price lined up ahead of time, financing was settled. It still took 3.5 hours to finalize everything. Buying cars at dealerships is terrible.

 

[Chopr147]

It takes 4 hours for the sales to walk back and forth to the managers office every time I refuse the great "deal" they are giving me

 

[McRat]

That's the thing. Nobody knows!

In all seriousness, I bought a CPO from another automaker 6 months ago. I negotiated and had the price lined up ahead of time, financing was settled. It still took 3.5 hours to finalize everything. Buying cars at dealerships is terrible.

Just curious. Why didn't you walk out after 1 hour? It doesn't take that long to sign 10 times while they wash the car.

Did you read the contract or something? That would CERTAINLY take 4 hours under a microscope...

My record was 25 minutes. I told them ahead of time I was in a rush. The wild thing? When I arrived, the car was inside on a raised and rotating display table. That's the day I learned those big glass walls on a showroom are movable. Those raised displays have ramps under them.

 

[Gizmotoy]

Just curious. Why didn't you walk out after 1 hour? It doesn't take that long to sign 10 times while they wash the car.

Did you read the contract or something? That would CERTAINLY take 4 hours under a microscope...

My record was 25 minutes. I told them ahead of time I was in a rush. The wild thing? When I arrived, the car was inside on a raised and rotating display table. That's the day I learned those big glass walls on a showroom are movable. Those raised displays have ramps under them.

It's not like you just walk in and sit for hours and then suddenly everything's complete. There's continual progress, it's just slow. There's the test drive. Then "oh you're right, that is damaged. I think we can fix that. Let me get approval." Then they have to wash and detail, and I have to inspect. Then there's financing vs. not financing confusion, then I find an error in the paperwork that has to be redone, then I have to read the sales contract (yes, I read the document where I agreed to spend $30k). It adds up.

Also, there's no way I'd sign BEFORE they washed the car. What, are you mad? Who knows what was hidden under those 6 layers of dirt.

Do you offer a one hour car purchasing service? Sign me up

 

[HankLloydRight]

Also, there's no way I'd sign BEFORE they washed the car. What, are you mad? Who knows what was hidden under those 6 layers of dirt.

I bought my first BMW 3-series like that. It had just been a lease-return from Kansas. Covered with dirt. Inside needed cleaning badly. But it was *exactly* the car I was looking for. I think I got a pretty decent price, although at the time I opted to pay $750 for the OEM alarm system, which I found out later I could have gotten the exact same thing from BAVAUTO for less than half that. But by the time I went to pick it up, it was all cleaned up and fully detailed. Looked great. Sold that car with 125k miles on it in 2006 and bought an M5, which I still have today (it's my winter beater instead of driving the Model S).

 

[Jopo43]

Really this is a question here??????