What's the point of car dealerships anymore?
Buyers can now do their own research and find financing and repair services elsewhere. Why can't we buy directly from the manufacturer?
Tesla Motors (TSLA) is the hottest thing in the auto industry right now, and when CEO Elon Musk talks, people listen.
These days, Musk is talking about how much he hates car dealerships. He would much rather sell his Model S electric sedan directly to consumers instead of through a middleman, and he's making that very clear.
"The auto dealers association is definitely creating some problems for us, making it harder to get things done," he said during Tesla's annual shareholder meeting Tuesday, according to Reuters.
Tesla wants to have 50 of its own stores by year's end, up from 34 in the first quarter, Reuters reports. And after the Model S got a near-perfect score from Consumer Reports, buyers are anxious to see what all the fuss is about.
So, could Tesla avoid the dealership completely? The company will likely run into trouble legally because most states ban automakers from selling directly to consumers. A bill to overturn that in Texas didn't get to the floor for a vote this year. The lawmaker who proposed it said "the dealers are a pretty strong lobby group," Reuters reports.
The National Automobile Dealers Association said in a statement that states require dealers to invest in brick-and-mortar facilities, and that all automakers should be required to play by the same rules. "Tesla has the same right to petition state legislatures as everybody else," the group said.
Other states are having their own fits about direct sales by Tesla. North Carolina lawmakers are pushing a bill to keep dealerships in the loop, saying it would prevent unfair competition from the manufacturers. But as Slate points out, it's just fine for Apple (AAPL) to sell computers online in North Carolina or at its own Apple stores.
Why can't we buy cars directly from the manufacturer? The dealership model made a lot of sense decades ago, when automakers didn't want to make big investments in real estate, showrooms and distribution. But the Internet has made dealerships less relevant -- consumers can do all of their own research on price, availability and discounts. As a result, interacting with the dealership is for many the worst part about buying a new car.
You don't need a dealership for financing anymore. You don't need a dealership for repair. Shouldn't we just be able to go to the Ford (F) website and save money by ordering up a custom car for delivery?
The auto dealers' association countered that no other retail product has to be titled, license and safety inspected like a car. "The notion of buying a car directly from the manufacturer for less is a myth," the association said. If Ford sold cars in its own stores, what incentive is there to sell a Focus for less than Ford's suggested retail price?
A 2009 study by Gerald Bodisch, an economist with the Justice Department, found that consumers would indeed save money by buying directly from a manufacturer. The study referenced the Chevrolet Celta, which buyers in Brazil have been ordering online since 2000. The Celta has been a hit, and General Motors (GM) said it benefits from reduced production time, lower inventory levels and a more efficient distribution and sales model, according to the study.
Why do we need grocery stores, let's just all grow our own food! Why do we need retail, we can just buy fabric and make our own clothes. Why do we need construction workers, we can just buy all the material and plans and build our own house.
Really? This is why the US is in decline, a bunch of idiots who can tweet and text but don't know the first thing about anything that matters.
Getting rid of the dealership makes no sense. Would you buy a house online without checking it out in person? How in the world would you test drive the car to make sure it's the one for you? Once you buy the car and find out that day you didn't like it afterall, you are stuck.
I know, lets have the government provide us all a car. When it breaks down we will return and get another one..Just like food stamps and cell phone rent vouchers free health care. just saying
A friend of mine was interested in a Tesla until he had to drive to CARMAX to 'sell' his trade (thank God for car dealerships). Then he had to Pay sticker (God bless the saleman who has to check with his manager to try to save you some money or every car would be sticker). Then he had to wait 4 mos to get it. Who is going to wash it and detail it for you? Who will do the licence, title and plates? Financing? Ha ha ha, you can write a check for 85,000.00. Sure sounds like a good plan to me. Plus where the he!! do I take it for service? To the mall where some kid in a Polo shirt will apologize to me and ask me to take it to a Firestone service center? The way I see it, dealers provide an invaluable service for next to no margin at all. I guess we dont need groceries stores either. Just have each manufacturer send us our food via the internet. No coupons, no discounts. pay what they tell you to pay.
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