Ford going direct-to-consumer, no-negotiating for EVs?

In reply to frenchyd :

Tesla accepts trade-ins, you can finance through Tesla and they also have service centers, so those are all moot points.

Direct To Consumer just means that there's no dealer group middleman; instead of automakers selling cars to a dealer who sells them to the consumer, automakers just sell the cars to the consumer. It doesn't mean they can't do it from a building or offer service or anything else, they're just eliminating a middleman.

If it's not a problem for Tesla it certainly won't be for Ford (well, organizationally at least, maybe the dealer lobby will make it a headache for them).

Negotiating prices sucks. It shouldn't require a bunch of back and forth or hours of negotiating to determine the price of a consumer good. And that price should be the same for everybody. The current system is way too opaque to be beneficial for consumers. People go into dealing with car dealerships expecting a bunch of games which seems like a pretty unique and stupidly adversarial relationship between one party that wants to sell something, and another that wants to buy it. Just tell me what it costs, make sure that cost is actually what I'd pay if I show up and let me decide if I'm willing to pay that amount or not.

First off, this is the first time I've been impressed with Jim Farley.  I always thought he was the least capable, least intelligent, least visionary of the Ford leadership, who was good at playing politics so was in a position he didn't deserve.  But for the first time I'm impressed with the direction he's taking, and the words he's speaking, at least in public.

Next.  I whole heartedly agree with getting away from, or at least giving an alternative too, traditional dealers.  They can claim it's unfair to sell direct as it prevents a free market, but then they add on massive dealer mark up's on popular vehicles and you have no option to buy for MSRP unless you wait months for price gouging to go away.  They get to choose one side of the argument, not have their cake and eat it too.  And if a significant number of dealers are refusing to go electric, as has been mentioned in this and other threads, then that a great argument for Ford and GM to tell dealers to get stuffed.  

• Dealers.  Sorry, you can't sell direct that's unfair pricing and no competition
• Dealers.  Sorry, you can't buy it for it's real price, because we control the supply side, you have to pay what we want, give me an extra $10K on this $40K car, it's only a 20% gouge, but that's a free market for you!
• Dealers.  Nah, we don't want to gear up for electrics because we don't think it's the future
• Manufacturers.  berkeley you guys, we'll sell for the advertised price, save on your non value added middle man tactics, and get ready to sell cars to the customer that they want, because you wont.
• Dealers.  Whaaaaa, that's not fair.

Don’t companies such as Ford already have a form of DTC in National Fleet Customers? The vehicle is shipped to the dealer of choice and the dealer receives the PDI fee. In the case of a company I worked for the NFC was a lease company we dealt with, and the lease company aggregated orders of smaller fleets such as ours.

pointofdeparture said:

In reply to frenchyd :

Tesla accepts trade-ins, you can finance through Tesla and they also have service centers, so those are all moot points.

Direct To Consumer just means that there's no dealer group middleman; instead of automakers selling cars to a dealer who sells them to the consumer, automakers just sell the cars to the consumer. It doesn't mean they can't do it from a building or offer service or anything else, they're just eliminating a middleman.

If it's not a problem for Tesla it certainly won't be for Ford (well, organizationally at least, maybe the dealer lobby will make it a headache for them).

I was aware that Tesla did that.  However that is a new change for Ford, Chevy , and Dodge buyers.  It's the way my daughters , I, my father,  and Grandfather bought cars. For the last 120 years. 
  Well, I did buy a Saturn that way.  But apparently not enough Saturn's  were sold to remain in business.  

    My question is,  ( I'm playing the devils advocate here) will enough people turn to this way of buying cars to make it work for The Big Three?  
    What about the import crowd?   Now that we finally got a Ferrari dealership in town, is that about to go away?  Along with the Porsche, Audi, Jaguar, Toyota, Aston Martin,  Bentley, BMW Mercedes-Benz, Nissan, Subaru,VW, Alfa Romero, Fiat, ( I think I got them All ) 

DTC assumes a lot of things about consumers. It assumes they are internet savvy enough to place orders, that they understand the buying experience enough to negotiate it, that they care most about price, etc. 
 

It's kinda easy for us to be advocates of DTC purchasing. We are a rather thin slice of the buying market, and whether we realize it or not, we (GRMers) are fairly homogeneous as a buying group. 
 

Some people really want someone to hold their hand through the buying experience. Some people believe the dealership or salesperson has knowledge that is valuable to them. Some want their money to stay locally. Some trust their local dealership for service.  Some are quite wealthy, and prefer a salesman type experience. One brand I deal with is quite popular among drug dealers and nefarious types- they wouldn't be the least bit interested in a DTC model. They are trying to launder cash. 
 

It doesn't work for everyone.  Kinda like real estate... for some reason people are willing to pay middlemen (realtors) a premium of 6% or more because they must have some magic that their closing attorneys will not provide. 

In reply to SV reX :

I'm sure that internet buying will be a large part of DTC, but technically DTC just means that the OEM is selling vehicles direct to consumers without a private dealer in between. You can still go to a Tesla store and have questions answered, sit in them, and go for a test drive. There's no reason other OEMs couldn't do something similar.

In reply to STM317 :

I understand. 
 

The point was that some buyers actually want dealers, believe it or not. 

SV reX said:

In reply to STM317 :

I understand. 
 

The point was that some buyers actually want dealers, believe it or not. 

I'm sure you're right.  But it really chafes me that I have no choice DTC vs a dealer.

In reply to jwagner (Forum Supporter) :

Just out of curiosity, why?  Is that a perceived cost savings, or something else?

SV reX said:

In reply to jwagner (Forum Supporter) :

Just out of curiosity, why?  Is that a perceived cost savings, or something else?

Without going into a political diatribe, I believe in free markets.  If there's a compelling reason for car dealers to continue existing, let the market decide.  It bugs me that the car dealers own my state legislators - and it's not just car dealers, I could go on with pages of examples. 

Basically, it nets out to my immense irritation with the corruption of government by special interests, and that's how I see state laws prohibing DTC sales.

In reply to jwagner (Forum Supporter) :

Ok. I get that. 
 

But it seems to me the manufacturers are the ones who will ultimately make the decision anyway. Not the consumer. They are gonna sell their product in the way they choose to that is most beneficial to them. 
 

SV reX said:

But it seems to me the manufacturers are the ones who will ultimately make the decision anyway. Not the consumer. They are gonna sell their product in the way they choose to that is most beneficial to them. 

The consumers as a whole make the decision because they're the ones with the money.  If you put enough friction into the buying process without a unique "gotta have it" product then they'll go buy your competitors' products instead.

In reply to SV reX :

I don't think the manufacturers are totally happy with the mandatory-dealership situation either, which should be obvious by the fact that they're all chomping at the bit to do DTC sales. We've also seen news of the manufacturers trying to discourage price gouging on rare models by dealerships - the way the new Ford GT was sold is perhaps an extreme example of that.

Cars are one of the few things that don't have much of a DTC option. 

That was why the internet was such a huge boom in the 90s. It allowed nearly every industry to go DTC. Many did, some didn't, but now consumers have both options for many items.

The ones who didn't, are the ones who had strong legal or true value add reasons they could not.

jwagner (Forum Supporter) said:

SV reX said:

In reply to jwagner (Forum Supporter) :

Just out of curiosity, why?  Is that a perceived cost savings, or something else?

Without going into a political diatribe, I believe in free markets.  If there's a compelling reason for car dealers to continue existing, let the market decide.  It bugs me that the car dealers own my state legislators - and it's not just car dealers, I could go on with pages of examples. 

Basically, it nets out to my immense irritation with the corruption of government by special interests, and that's how I see state laws prohibing DTC sales.

Tesla actually went to war against the State of Texas on this and the dealers here in this state spend a lot of money on lobbyists. They actually found a loophole in the law where the sale takes place out of state, but the car is then delivered to a Tesla Service Center in Texas.

Elon actually won this round.

I'm pretty sure the manufacturers don't like dealers because they see ways to make more money for themselves in DTC.
 

Seems to me we are saying "I don't trust big business, so I'd rather trust a MUCH bigger business". 
 

Manufacturers build. Dealers sell. There are some similarities to that model in almost every product (wholesale v retail). 
 

I agree the system is broken. So let's fix the system. Don't throw it away. 
 

I have absolutely no reason to distrust a corporation, but then ENTRUST a MUCH larger corporation. Sounds like a monopoly on the entire chain. 
 

I don't see any evidence that manufacturers are equipped to handle sales and service well. 

Robbie (Forum Supporter) said:

Cars are one of the few things that don't have much of a DTC option. 

That was why the internet was such a huge boom in the 90s. It allowed nearly every industry to go DTC. Many did, some didn't, but now consumers have both options for many items.

The ones who didn't, are the ones who had strong legal or true value add reasons they could not.

Perhaps. But the internet ended up creating FAR more middlemen than ever could have been imagined before. I see very few manufacturers of products who want to spend the energy investing in sales. 
 

The biggest companies in the world right now are internet based middlemen (cough Amazon cough cough)

SV reX said:

I'm pretty sure the manufacturers don't like dealers because they see ways to make more money for themselves in DTC.

Manufacturers also dislike dealers because a lot of people don't understand the difference and it damages the brand.  They see a Ford logo, they get a bad experience, they think "Ford sucks!", and it transfers to any other Ford purchase they might make in the future.  The dealer doesn't care because they have a shorter time frame than the manufacturer does.

In reply to SV reX :

I think we're saying the same thing. 

In general in "business school", DTC is the holy grail for manufacturers. But it often turns out in real life that selling is a skill and it is not the same as producing. 

The internet went through a boom and then bust as everyone rushed to DTC and then realized that it wasn't as easy as it sounds.

Put another way: I'm willing to pay the grocery store markup on my food if it means I can get my lettuce mayo bacon and tomatoes at one store rather than going to 4 different places just to make lunch.

SV reX said:

The biggest companies in the world right now are internet based middlemen (cough Amazon cough cough)

I'm pretty sure Amazon is smaller than Apple, who are the poster child for doing well with DTC.

In reply to codrus (Forum Supporter) :

I'm pretty involved in branding dealerships. You'd be shocked how much control OEMs have over dealers and the entire sales experience. They defend their brands heavily. 

I do think car dealerships are ripe for disruption. Hopefully car manufacturers will break the dealer lobbies pushing for DTC and that will open the door for a new kind of car dealer to come in and provide an actual value add to both consumer and manufacturer.

I think it is unlikely the manufacturers become that new kind of dealer.

There is a certain group who want to get rid of the middlemen for sure either because they've had enough of shady local dealers or because those local dealers add a bunch of extra cost to vehicles with little or no added value. And the consumer is the one who gets to pay that extra cost whether they want to or not. Ford's CEO says that costs them about $2k per car, and that plus a markup is paid for by you.

If you want a personal shopper to navigate the buying process (which can be as simple as the Amazon model, as has been proven by Tesla), no problem. You can hire someone to do that, just like you can for any consumer good and just like some people do already with cars. And they pay for it. No problem there, if you add value you should be rewarded. 

But I think the big advantage to DTC is clarity on pricing. The manufacturer sets the price and that's what the price is. Period. That's appealing to a very large percentage of the population. If I want to buy an Apple laptop, I don't have to hunt around for whoever's got stock of the exact one I want and then go in and haggle with a sales person about the price I'll pay per month if I do this and then buy the antivirus protection plan and the special case and the custom-applied skin and the included extra cost cloud account setup and whatever. I can pick it up locally at Best Buy or I can order it straight from Apple, and it's the same price either way. That's what most people want from DTC.

SV reX said:

In reply to codrus (Forum Supporter) :

I'm pretty involved in branding dealerships. You'd be shocked how much control OEMs have over dealers and the entire sales experience. They defend their brands heavily. 

This is a relatively recent (OK, last few decades) innovation, before that it was pretty open.  It's there now because the manufacturers are tired of the dealers screwing things up for them and are trying to clamp down as much as they can.  Going direct allows them a much greater degree of control over the brand and customer experience.