I believe the gotta-have-a-dealership laws were originally established to ensure that manufacturers had local service and support for the cars they were selling. Although probably also to ensure locals (and the state's economy) got a cut of the huge car selling and service pie.
How do you describe the situation created by dealers, wherein cost and complexity are added and the ability to comparison-shop decreased by way of "competition"?
If it were apples-to-apples dealer-run sales, you'd expect Nissan's dealership to compete with Toyota's dealership by trying to offer the best package of car-for-your-dollar.
But because we have multiple dealerships for a given make, and especially because of the process dealers impose on car-buying, it's very difficult to make a simple decision like that.
The fact that most dealerships post something insane on the cars, (except the loss leaders) and then require most of your hard-won car-shopping day to arrive at the actual price prevents a sane version of comparison shopping. You don't get to know what you will actually pay for Car A or Car B until you bargain for it.
It's completely mental, and thinking about it makes me very irritated that in October 2015 I'll end up doing it again... Maybe Toyota will set Scion up with an EV xD by then 
Datsun1500 wrote: Am I the only one that thinks direct sales will actually increase prices? All Car manufacturers have a price on the car, just like the tag on a shirt at the store. The Dealers go below that price and choose to sell for less. What makes you think if the sales are direct the manufacturer will have any reason to negotiate? When Saturn came out people were saying what a great concept, no negotiation, without realizing they were just paying MSRP for a car. You can walk in to the Toyota store and pay the sticker price too...
If all manufacturers sold direct, you'd actually see competition on product and price. Right now, that (rather important) part is obfuscated by the dealer process. It's there, but it's much less direct.
Scion continues to at least get by (despite a strange-ish lineup), and you can sort of compare, but you look at what you will pay for a Scion, then look at what else you might want and wonder whether you can get the dealer to make you a good enough deal to make it better than the Scion.
RX Reven' wrote: Change typically has significant, negative unintended consequences. What about all the people that invested in license agreements, dealership locations, etc.. How is it fair to pull the rug out from under them? I hate non value added junk like this as much as anyone but once it’s in place, the damage is done. Revoking it just creates a second wave of damage.
Seriously?
"I know our situation sucks, but if we try to fix it, it might get worse somehow. Nobody move. Just slowly hand over your wallet."
RX Reven' wrote: I hate non value added junk like this as much as anyone but once it’s in place, the damage is done. Revoking it just creates a second wave of damage.
But the "second wave of damage" can destroy things that themselves cause damage over time...short term pain for a few, long term gain for many. Let's not forget that the current dealership system is only able to exist through artificial restrictions like these that prevent competition from company-owned stores. Doesn't that sound like more of a "capitalistic slugfest" than the fake WWF stuff between dealerships who conspire to keep the real competition out?
I guess you could say it is "free market", as long as you are not a wholesaler. Then it's not so free.
I am not taking a side here (though some of you will not believe it).
There are reasons for middle men in many industries. Better service at the local level, manufacturers ability to focus on volume production, etc.
You sure it is not just a matter of Tesla trying to increase profits while working less??
Here's something I have noticed...
In my industry (construction), there has been a move in the past 10 years to offer the "contractors discounts" direct to consumers. I used to be able to get a 15% discount on most materials, now I am doing well to get 2% for cash.
I used to be able to sell materials to the consumer for the same price as the building supplier, and make a couple of dollars. Not any more.
This means consumers get better prices, right?
Well, maybe. But it also means contractors (aka "middle men", or "retailers") can't get materials at as good a price. In order to maintain business revenues, they have had to increase margins in other areas. So, labor prices have gone up, increased change orders, reduced services, etc.
The end result, contractors make the same amount (they were pretty lean to begin with), but don't buy a lot of the materials (because homeowners can buy them "cheaper" themselves). Homeowners pay MORE for the finished product (in upcharges from the contractor), but also have LESS warranty coverage (because a contractor is not going to warrant the materials he did not supply, nor the labor to install them). The building supply makes "more" per sale (by decreasing the value of the contractor's discounts), but has lost a great deal of volume (because he no longer has reliable relationships with his retailers, and has therefore lost some of his wholesale business).
In a sense, it got easier for the contractor (because there are fewer call-backs and warranty coverages), but the building suppliers have killed the industry and are now in deep trouble, with no volume to operate from.
I'm not convinced it is a net win for the consumer, or anyone when it is all over.
Ransom wrote: If *all* manufacturers sold direct, you'd actually see competition on product and price.
I couldn't disagree more.
You are completely missing the entire purpose to a wholesale/ retail relationship.
The fact is that the manufacturers CAN'T sell direct anywhere near as effectively as a retailer. They are not equipped to to a one-on-one sales relationship with a buyer who wants to fuss about colors, options, and what their neighbor bought from the dealer down the road.
In reply to SVreX:
There are some interesting insights in general there, but I don't think much of anything else can be compared directly to auto sales. If it weren't so slimy, I don't think anybody would be getting wound up about how bad it is. But it is bad.
One question I do have about your example: How can the aggregate of building supply lose volume short of less work being done? Whether the contractor or the homeowner purchases the box of screws, it takes X screws to do a job. A given supplier may not get reliable business from a particular contractor, but the sum of materials for the jobs being done will be purchased from the collection of building supply businesses. The result is that all building supply places must compete with each other for both contractor and homeowner sales.
Perhaps the part that is most applicable is that, as you point out, the quality of service received by the homeowner is probably reduced, and at little appreciable benefit in cost. This part is perhaps applicable to the dealership arrangement in that having only one factory-owned dealership for a given make in a given market creates a monopoly on service (You'd be able to shop on price for Nissan vs Toyota auto purchase, but once you purchased, you'd have to go to that one dealer for dealer service).
Nothing is ever simple, but requiring factories to allow certification of independent shops seems like a good solution there, and one which already makes sense in many ways even with the current dealership model.
I am not usually one to advocate for a race to the bottom on price, and I still don't like that idea. But I do have a big problem with systems which create difficulty in even determining whether or not you've gotten accurate values with which to determine whether you've picked the winner of that downward sprint.
SVreX wrote:Ransom wrote: If *all* manufacturers sold direct, you'd actually see competition on product and price.I couldn't disagree more. You are completely missing the entire purpose to a wholesale/ retail relationship. The fact is that the manufacturers CAN'T sell direct anywhere near as effectively as a retailer. They are not equipped to to a one-on-one sales relationship with a buyer who wants to fuss about colors, options, and what their neighbor bought from the dealer down the road.
In a world where any given entity (e.g. VW) is actually a giant conglomeration of smaller companies, it makes no sense to say that VW can't do sales because they're too busy figuring out how to design the next Jetta.
The dealerships would in all likelihood be nominally separate businesses, but they would be owned by, answer to, and adhere to the rules of the parent company.
The idea that the wholesaler and retailer must be more separate in order to provide someone to fuss over the buyer while they look at color chips makes no sense. Assembly line worker, brand manager, and sales rep are separate positions, but could be within the same larger group.
I'd actually be fine with the retailers being completely separate businesses if they did it in a halfway straightforward fashion. But instead of being an order-facilitation and finance concierge service, which is what they should be, they're three-card-monty specialists working to see how much extra they can get out of any transaction between a buyer (who wants the car they want at the best/lowest possible price) and the manufacturer (who wants to sell as many cars as possible at the best/highest possible price, which could be determined by market competition if the current dealer arrangement didn't muddy the water so badly).
Ransom wrote:Ransom wrote: One question I do have about your example: How can the aggregate of building supply lose volume short of less work being done? Whether the contractor or the homeowner purchases the box of screws, it takes X screws to do a job. A given supplier may not get reliable business from a particular contractor, but the sum of materials for the jobs being done will be purchased from the collection of building supply businesses. The result is that all building supply places must compete with each other for both contractor and homeowner sales.Fair question... You forget that every town has more than one building supply, and that Home Depot and Lowes are muscling in as best as they can. It is a "WalMart" kind of thinking. The overall volume has remained the same, but the contractor (retailer) has been made just another consumer. He has no special relationship with his wholesalers, and is therefore free to buy where he wants. So, like every other consumer, he buys from a big box store, because he can no longer do better than buying their loss leaders. The big box stores export the revenues out of the community. The local building supplier has only succeeded in dividing his customer base and encouraging them to shop with his competitors, thus reducing his volume and assisting in exporting the revenues out of the community. Basically, he gave the big box stores a toe hold in his market. That's not a win for the building supplier. It was long term advantageous to encourage the "special" relationship to the contractors (which did NOT cost the consumers anything, and gave them better service), and enable the services they were uniquely capable of providing (like warranty work, small service work, local community efforts, etc.) BTW, the big box stores are now beginning to recognize the value of the wholesale/ retail relationship, and offer better discounts to contractors. Because they can. Another nail in the coffin of the local building supplier.
BTW...
I'm pretty sure Chris Christie does not work for the NJ Motor Vehicle Commission, nor did a bill pass his desk.
He also never took a position "against the free market".
Tesla is grandstanding. (Good for them- free advertising)
In reply to Datsun1500:
Yes, that's paying MSRP for the Scion. But they have to pick an MSRP that makes them competitive with whatever people can haggle up a Nissan for. They have to compete on price up front. If everybody did that, it would be apples to apples competition.
The issue I have with dealerships isn't that they mark up from wholesale. If manufacturers ran retail centers, they wouldn't be drastically cheaper. They'd hopefully be about what an average of decent bargainers could manage to buy for. But you wouldn't have to spend four hours having salespeople shifting this variable and that. You'd drive a Jetta, look at the price, drive an Altima, look at the price, and decide which car/price combination was better.
EDIT: And the win, in the end, is that the competition of the Altima's quality and real price against the Jetta's real quality and price wouldn't be hidden behind the dealerships' machinations. You don't have to wonder which dealership would give you a better deal. Hopefully you don't have to wonder which one's service department isn't as bad as sales. The competition is between VW and Nissan, and not among five local Nissan and VW dealers...
Post deleted because of my reading comprehension fail.
SVreX wrote:Ransom wrote: One question I do have about your example: How can the aggregate of building supply lose volume short of less work being done? Whether the contractor or the homeowner purchases the box of screws, it takes X screws to do a job. A given supplier may not get reliable business from a particular contractor, but the sum of materials for the jobs being done will be purchased from the collection of building supply businesses. The result is that all building supply places must compete with each other for both contractor and homeowner sales.Fair question... You forget that every town has more than one building supply, and that Home Depot and Lowes are muscling in as best as they can. It is a "WalMart" kind of thinking. The overall volume has remained the same, but the contractor (retailer) has been made just another consumer. He has no special relationship with his wholesalers, and is therefore free to buy where he wants. So, like every other consumer, he buys from a big box store, because he can no longer do better than buying their loss leaders. The big box stores export the revenues out of the community. The local building supplier has only succeeded in dividing his customer base and encouraging them to shop with his competitors, thus reducing his volume and assisting in exporting the revenues out of the community. Basically, he gave the big box stores a toe hold in his market. That's not a win for the building supplier. It was long term advantageous to encourage the "special" relationship to the contractors (which did NOT cost the consumers anything, and gave them better service), and enable the services they were uniquely capable of providing (like warranty work, small service work, local community efforts, etc.) BTW, the big box stores are now beginning to recognize the value of the wholesale/ retail relationship, and offer better discounts to contractors. Because they can. Another nail in the coffin of the local building supplier.
That assessment makes sense to me, and is the sort of thing that makes me generally unlikely to argue for race-to-the-bottom type competition. You may eventually get the lowest price (unless the winner manages to gain 100% market share), but it's far from a guarantee that you'll get the best outcome.
Again, the issue I have with cars is really the established manner of doing business of auto retailers. They go to great lengths to make it difficult to find out how what you're getting compares to what you could get, and it takes a prohibitively long time to reach a "real" number. The consumer loses because they cannot accurately compare competing cars without an undue investment of time and effort.
In reply to SVreX:
Whoops, am I having a reading comprehension fail myself?
I thought I was pretty much in agreement with your last post; is that only because I misunderstood you, or was agreeing with you misunderstanding me?
Lemme know if I should edit/delete my last response...
In reply to Ransom:
No, I think we are basically in agreement, but I had mis-read an earlier post of yours. Saw no point in arguing with someone I agree with.
In summary, I think we are both saying the current stereotypical method of consumers interacting with dealers sucks, but we are unconvinced whether a major change in the wholesale/ retail relationship will help the situation or not.
After that, it's a lot of anecdotal huffing and puffing on both of our parts, right?? 
In reply to SVreX:
That I can agree with!
(EDIT: I really do think the automotive middleman thing is hosed, BUT, I could be wrong, and we'll almost certainly never know; I'm certainly willing to cede the sanity of being unconvinced.)
I actually agree with that as well.
I think the building materials middle man is hosed too, and there is a REALLY great opportunity right now for a technological solution that will finish him off, make the contractors viable again, and offer great service and lower prices to the end line consumer.
Now all I need is a business partner! 
Datsun1500 wrote:Ransom wrote:You keep bringing up Scion as if paying MSRP for a Scion (everyone pays sticker with that brand) is somehow different than walking into the Toyota Store and paying MSRP for a Corolla. Am I the only one that does not find it difficult to buy a car? The dealer needs to make money, it's a business. To me it's like complaining that the grocery store charged you more for the milk than they paid, of course they did.Datsun1500 wrote: Am I the only one that thinks direct sales will actually increase prices? All Car manufacturers have a price on the car, just like the tag on a shirt at the store. The Dealers go below that price and choose to sell for less. What makes you think if the sales are direct the manufacturer will have any reason to negotiate? When Saturn came out people were saying what a great concept, no negotiation, without realizing they were just paying MSRP for a car. You can walk in to the Toyota store and pay the sticker price too...If *all* manufacturers sold direct, you'd actually see competition on product and price. Right now, that (rather important) part is obfuscated by the dealer process. It's there, but it's much less direct. Scion continues to at least get by (despite a strange-ish lineup), and you can sort of compare, but you look at what you *will* pay for a Scion, then look at what else you might want and wonder whether you can get the dealer to make you a good enough deal to make it better than the Scion.
Nope, I've bought numerous used and new cars from dealerships. It's always been a pretty good experience for me.
I suspect those who have bad interactions expect that result going in.
The new vehicles I've purchased have basically all gone like this:
"Hi I'm interested in buying X car from you. I am going to shop you on price to the other local dealers. I have Y car to trade-in. Whomever comes up with the best overall price/trade-in/financing package will get my business."
Never been a problem.
but that truecoat!
This type of legislation happens in every state over all types of issues. Wine in grocery stores was finally approved in Tn this year but the liquor stores will remain the ONLY place to buy wine for two years and there HAS TO BE a 20% markup on wine when grocery stores begin to sell wine in two years.
Now can you tell me who had the strongest lobby and who really got the shaft in this legislation?
I once had a forklift salesman tell me he didn't need parts or service backup to sell forklifts. I asked 'what happens if they break?' and his answer was 'That's not my problem'.
That attitude was a big part of why many states passed laws requiring cars to be sold through franchised dealers to ensure that service points were reasonably available. Before that, the buyer was pretty much on their own and as cars became more ubiquitous people who knew nothing about what they purchased were in big trouble if something went wrong. It wasn't exactly like buying, say, a shovel. Add to that the need of the manufacturers to have some semblance of control over warranty repairs and there's the big reasons.
I suppose it would be possible to have dealerships company owned, wonder what a mess that would turn out to be? Does Tesla have service points in Jersey, or is it like Ferrari: you need to be prepared to drive/tow 250-300 miles round trip for repairs?
No one carries inventory any more, except Dunkin Donuts, And Christie is bankrollin that for personal reasons.
oldsaw wrote:Xceler8x wrote: I feel like if this was Governor Obama of NJ the collective conservative cry would be quite shrill. It will be interesting to see if NJ is criticized for this by the usual free market advocates.I feel like you're being a butthole because of this statement and your deliberate choice of thread title.This is a blatant case of political, crony capitalism. Acts like this are common to both sides of the aisle and you know it. If any of the "conservative collective" gives Christie a pass, they'll be as guilty of hypocrisy as you are of trolling.
I don't know if anything truer has been said in this thread......
One thing to keep in mind is that auto dealers are consistently among the bottom tier of customer satisfaction and BBB ratings. They're not a positive experience for almost any of their customers. So why protect them with legislation at this point? As an industry they've proven themselves undeserving.
That's as an industry - I know there are individual dealerships that aren't bad.
You'll need to log in to post.
