Buick dealers giving up franchises

[OVERKILL]

the service experience sucks, and the parts department wants above MSRP for selling me a widget off the shelf. I'll pass.

But the issue of service isn't going away. Tesla operates service centres, there is still a cost to their existence and operation, which, in the current dealer sales/service model is spread across both of those operations, but will rest solely on service if the sales portion moves online.

Some of the parts will be different, batteries and motors instead of engines and transmissions, but tires, brakes, suspension bits, wheel bearings, wiring, sensors, HVAC stuff, infotainment...etc. This stuff is all present on EV's and will require the same service.

 

[SC Maintenance]

But the issue of service isn't going away. Tesla operates service centres, there is still a cost to their existence and operation, which, in the current dealer sales/service model is spread across both of those operations, but will rest solely on service if the sales portion moves online.

Some of the parts will be different, batteries and motors instead of engines and transmissions, but tires, brakes, suspension bits, wheel bearings, wiring, sensors, HVAC stuff, infotainment...etc. This stuff is all present on EV's and will require the same service.

Yes, and the OEM's can choose to do it themselves, or outsource it to something like a dealer that focuses on service, or some hybrid. Same with parts.

Its the same argument that was used in the industrial world years ago. If you don't buy your equipment locally then your service would suffer. Service has gotten better, and more responsive. Those manufacturers that can't provide service get bought up or go away. Many still try to use distributors and there are exceptions of distributors that are great - provide a lot of value. But in a lot of cases there loosing market share due to higher prices - perceived or real.

Ultimately, even if its a franchised dealer, it seems their goals don't align with the OEM's goals. OEM's are looking for market share. Keep the factory full, you make more money due to volume efficiencies. Dealers / distributors / middlemen are looking to extract the most money at the least cost possible from every client. Their goals differ.

 

[OVERKILL]

Yes, and the OEM's can choose to do it themselves, or outsource it to something like a dealer that focuses on service, or some hybrid. Same with parts.

Which is pretty much exactly what I described. Turning dealerships into service centres might simplify (improve?) the sales experience, but the cost of operating those service centres still necessarily gets passed-on to the end user.

Its the same argument that was used in the industrial world years ago. If you don't buy your equipment locally then your service would suffer. Service has gotten better, and more responsive. Those manufacturers that can't provide service get bought up or go away. Many still try to use distributors and there are exceptions of distributors that are great - provide a lot of value. But in a lot of cases there loosing market share due to higher prices - perceived or real.

Do you feel these scenarios are reasonably comparable? Do you see GM sending a service team to my house to fix my EV Silverado, and doing so cost effectively? Do you feel the margin in a $30,000 EV is sufficient to support that model?

GE sending service crews to Darlington because they provided the multi-million dollar 890MWe generators didn't translate into them doing the same for refrigerators.

I expect better service/support from Miele than I do from Whirlpool, and the reason for that should be obvious, just like I get massively better support from Bryston than I would from Denon.

Ultimately, even if its a franchised dealer, it seems their goals don't align with the OEM's goals. OEM's are looking for market share. Keep the factory full, you make more money due to volume efficiencies. Dealers / distributors / middlemen are looking to extract the most money at the least cost possible from every client. Their goals differ.

Why would an OEM (Hyundai/KIA) setup their dealers to fail then, by charging over $40,000 for a battery pack? Why are Tesla parts so insanely expensive, given there is no separate dealer or service network?

 

[proveitwithdata]

I have no clue, never priced a Tesla. I do know that during the pandemic some Toyota dealers in some areas had huge "market adjustments" on regular Toyota's, and some did not. When the new Frontiers came out in 2021 some Nissan dealers had huge market adjustments in some areas, and some did not. None were selling below MSRP - even though the OEM's never lowered their hold backs. And the dealer added options skyrocketed. If your argument is that its an imbalance in supply and demand in local markets - well then even more reason to have it managed nationally.

Even without the market adjustments I have to deal with Southeast Toyota, which is a whole additional level of pain. Neither Toyota or Nissan have raised their MSRP beyond a few percentage points that you would expect in a inflationary environment.

I work in the equipment side of the industrial world. When I started almost 30 years ago just about everything, even large equipment, came through some sort of distributor or rep. Now probably well over half is direct. The need for a middle man's time has sailed. Again, IMHO.?

You and Jeff, are both talking about the mfg getting a better control on pricing, which is great for the mfg, but numerically how does it effect the cost of purchasing a vehicle?

As a business I have no reason to pass on the savings to the end customer, might as well keep that additional revenue to prop up my numbers to shareholders, with the idea that my profit per unit went up. When times are tough, its my piggybank to jumpstart sluggish growth. This is also ignoring the costs of being your own dealer and distribution network.

im not in favor of any model thus far, it seems we are simply playing hot potato and selling buzzwords to the uninformed.

The market needs more consumer education, this information asymmetry currently is terrible. What does a money factor, msds, security deposits, apr, down payment etc mean. Addons should be optional in bold letter, no tied selling.

I should know my tier of credit before the dealer, qualify me as a lead before hand in a central system, and let me know financing exists externally as well.

Incentives what are they, what are the requirements. What a pre incentive selling price?

Even for tesla, know how your lease ccr works and pos credit, or how certain sa have access to extra discounts if you know you know.

This one size fits all is not the educated way forward. Its just indiviual interests yelling to gain your attention.

 

[JeffKeryk]

You and Jeff, are both talking about the mfg getting a better control on pricing, which is great for the mfg, but numerically how does it effect the cost of purchasing a vehicle?

As a business I have no reason to pass on the savings to the end customer, might as well keep that additional revenue to prop up my numbers to shareholders, with the idea that my profit per unit went up. When times are tough, its my piggybank to jumpstart sluggish growth. This is also ignoring the costs of being your own dealer and distribution network.

im not in favor of any model thus far, it seems we are simply playing hot potato and selling buzzwords to the uninformed.

The market needs more consumer education, this information asymmetry currently is terrible. What does a money factor, msds, security deposits, apr, down payment etc mean. Addons should be optional in bold letter, no tied selling.

I should know my tier of credit before the dealer, qualify me as a lead before hand in a central system, and let me know financing exists externally as well.

Incentives what are they, what are the requirements. What a pre incentive selling price?

Even for tesla, know how your lease ccr works and pos credit, or how certain sa have access to extra discounts if you know you know.

This one size fits all is not the educated way forward. Its just indiviual interests yelling to gain your attention.

I would suggest that is short term analysis. As companies hone and improve their manufacturing, end-to-end, the product becomes a better value for the customer. You grow or you go. The dealership model is becoming a costly dinosaur with little or no added value. Your point of passing cost savings on to the customer, either dealer or end customer, is mainly true in a market where the manufacturer has exclusivity. It is more true for Porsche and Ferrari than Honda Toyota. More true for a Model S and X than 3 or Y. Less true for the upcoming "Model 2". To get near $25K EV selling price manufacturing efficiency is key.

By the way, vertical integration can be costly to the manufacturer (sometimes in the short term only) but offers control. Where to vertically integrate is the question.

 

[SC Maintenance]

Which is pretty much exactly what I described. Turning dealerships into service centres might simplify (improve?) the sales experience, but the cost of operating those service centres still necessarily gets passed-on to the end user.

Do you feel these scenarios are reasonably comparable? Do you see GM sending a service team to my house to fix my EV Silverado, and doing so cost effectively? Do you feel the margin in a $30,000 EV is sufficient to support that model?

GE sending service crews to Darlington because they provided the multi-million dollar 890MWe generators didn't translate into them doing the same for refrigerators.

I expect better service/support from Miele than I do from Whirlpool, and the reason for that should be obvious, just like I get massively better support from Bryston than I would from Denon.

Why would an OEM (Hyundai/KIA) setup their dealers to fail then, by charging over $40,000 for a battery pack? Why are Tesla parts so insanely expensive, given there is no separate dealer or service network?

I presume GE sent a service crew to your generator because you were under warranty or under service contract. When my crappy GE appliances were under warranty in my crappy builder spec house GE sent one service guy to repair it for free because that's what they offered to get the builders business. (bet you wished you used a different example When a Tesla breaks you drive or tow it to a Tesla service center. When my iPhone breaks I ship it to Apple, because I presume someone coming here to fix it would inefficient. Service won't vanish because a franchise dealer doesn't exist.

If OEM's wish to choose to continue to use dealers, they can. Its a make / buy decision. Do I outsource the dealer function, in part or in whole, or do I do it myself? It should be a free market decision, not one dictated by state law. I would prefer to avoid dealers. Other opinions vary.

I don't know why Kia/Hyundai are making batteries worth more than the car. I am not sure what having a dealer network or not would have to do with their stupidity either way?

The discussion was heading to a direction on whether Buick could survive without dealers. Perhaps it won't survive either way, or possibly the market will decide they want cheaply made Korean Buick's either way - so who knows. GM has been trying to get rid of dealers for a while, looks like they found one way?

I guess we get to see, the model plays out before our eyes.

 

[OVERKILL]

I presume GE sent a service crew to your generator because you were under warranty or under service contract.

I wish I owned that generator, lol. That's a $14.4 billion dollar nuclear plant. I was just using your example of an industrial facility, which, by virtue of the value of the equipment, is going to get much higher quality service, at a cost that, due to the value of the equipment, isn't seen as extravagant. That doesn't really translate to the quality of service you'd get in a similar arrangement from an auto manufacturer where the value, and the margin, aren't anywhere near as high.

When my crappy GE appliances were under warranty in my crappy builder spec house GE sent one service guy to repair it for free because that's what they offered to get the builders business. (bet you wished you used a different example

Not particularly. Did the guy actually work for GE, or was he contracted through a repair centre? When our Kitchenaid induction range board failed, the service guy that was sent didn't work for Kitchenaid, he was a local service guy that handled a number of makes and models. Once out of warranty, that service call would be very expensive, like the one for my Bosch washer that bordered on being cheaper to just replace the washer.

You pay a premium for the logistical convenience of on-site repair, either upfront as part of the price of a higher quality piece of equipment (Miele, Subzero...etc) or through the service cost (out of warranty), which can still lead to a horrible experience (see the LG fridge thread for example).

When a Tesla breaks you drive or tow it to a Tesla service center.

Exactly my point. And then you get it up the rear on the cost, despite this inconvenience. Despite having 3x Stellantis dealers within 15km of me (2x within 5km), 2x GM dealers and 2x Ford dealers within 50km, a Subaru, Hyundai, KIA, Toyota, Honda and Mercedes dealer, it's 136km; a 90 minute drive to the nearest Tesla service centre on the busiest highway in North America (the 401).

That's not convenient. Rather, it's the complete opposite of convenient.

When my iPhone breaks I ship it to Apple, because I presume someone coming here to fix it would inefficient.

But you can also take it to the Apple Store (a branded sales and service centre) if you want more immediate results. We pay a premium for Apple products for this kind of service, something you aren't getting from a Best Buy Android special that costs a fraction of the sticker price of the iPhone to buy.

Service won't vanish because a franchise dealer doesn't exist.

It won't get any cheaper either, and the logistics, like my Tesla example, may also become more challenging, which is why I took issue with your attempt to draw a parallel with industrial applications.

If OEM's wish to choose to continue to use dealers, they can. Its a make / buy decision. Do I outsource the dealer function, in part or in whole, or do I do it myself? It should be a free market decision, not one dictated by state law. I would prefer to avoid dealers. Other opinions vary.

Getting back to my point about the cost of operating this infrastructure, which is currently borne by the model of both simultaneous sales and service, which would shift to service only to cover the overhead, which isn't going to be less expensive; isn't going to translate to a less expensive or better experience for the end user.

I don't know why Kia/Hyundai are making batteries worth more than the car. I am not sure what having a dealer network or not would have to do with their stupidity either way?

Just pointing out that, counter to your point about OEM's running the show making decisions that are more logical; more in their best interest than that of the dealer, that this isn't necessarily the case in reality. OEM's can and do make boneheaded decisions, they don't need the dealers for that.

The discussion was heading to a direction on whether Buick could survive without dealers. Perhaps it won't survive either way, or possibly the market will decide they want cheaply made Korean Buick's either way - so who knows. GM has been trying to get rid of dealers for a while, looks like they found one way?

I guess we get to see, the model plays out before our eyes.

GM tried the "no haggle" sales experience (albeit, maintaining dealerships and sales staff) with Saturn and that was not a raging success.

My concern is that there appears to be a great deal of myopia being displayed by folks who hate dealers for a number of (quite valid) reasons and think that with them going away, things will improve. I'm not confident that this will be the case; I do not share that optimism, because running service centres without a corresponding sales experience to help carry the cost of the operation necessarily increases the financial burden on the service centre, which is then passed on to the customer. This may ultimately lead to fewer service centres and a more frustrating, expensive, and time consuming experience for the consumer.

I can see this potentially being less impactful for brands like Mercedes where a showroom is maintained for folks to come look, feel and drive and where service costs are already well-padded to enable the "Mercedes Experience". This will not be the case for "value-oriented" brands which I think we can extrapolate from our H/K battery example by adding a 90 minute trip to the service centre and no loaner vehicle.

 

[SC Maintenance]

Thats a lot to unpack, so I am not going to try to unpack it all, except these two points:

GM tried the "no haggle" sales experience (albeit, maintaining dealerships and sales staff) with Saturn and that was not a raging success.

Actually it was. The customers loved their cars, and the brand and plant were profitable. GM killed it. On purpose. Don't take my word for it - read forbes: https://www.forbes.com/2010/03/08/s...dership-managing-failure.html?sh=2dd3a2f56ee3

My concern is that there appears to be a great deal of myopia being displayed by folks who hate dealers for a number of (quite valid) reasons and think that with them going away, things will improve. I'm not confident that this will be the case; I do not share that optimism, because running service centres without a corresponding sales experience to help carry the cost of the operation

My experience working in the dealer was the service center actually was more profitable than the new car side. Used cars may have been better than both. Might have been a 1 off, I was very young and only worked at one. Still, lots of independent service centers run profitable outfits, so no reason such a service only model couldn't exist. Anyway, given that most surveys say most people would rather get a root canal than deal with buying a new car, their must be an improved way. The current franchise dealers have had a century to get it right and failed. Maybe its time for someone else to take a turn, for better or worse.

 

[OVERKILL]

Thats a lot to unpack, so I am not going to try to unpack it all, except these two points:


Actually it was. The customers loved their cars, and the brand and plant were profitable. GM killed it. On purpose. Don't take my word for it - read forbes: https://www.forbes.com/2010/03/08/s...dership-managing-failure.html?sh=2dd3a2f56ee3

Yes, when Saturn emerged on the scene, it had lots of popularity, but that declined over time and the early 2000's to its demise were a disaster. Admittedly, GM's meddling by pushing the parts bin and common platform approach didn't help, undermining what Saturn represented. However, It also didn't make GM money, which is why that approach was pursued apparently.

Great Expectations: The Saturn Cars Story (motortrend.com)

Key quote:

Saturn failed because the moment Roger B. Smith left the 14th floor of 3044 West Grand Blvd. in the summer of 1990, GM's old instincts kicked in. Saturn's budgets were slashed as the bean counters chipped away at its massive overhead and attempted to placate the old GM divisions irked by Smith's lavish spending on what they saw as a rival.

Saturn Cars: Why did GM's Different Kind of Car Company Fail? - CarGurus

In 1995, the Spring Hill plant churned out its millionth Saturn. In 1996, GM released its first-ever GM-branded car, the all-electric EV1, and Saturn stores got the honor of retailing it. That same model year, the second-generation S-Series cars debuted, sporting curvier styling for the new millennium and with all three prior body styles—sedan, coupe and wagon—accounted for. The Saturn tagline, “A different kind of car company” clearly resonated with its customers, many of whom did not know that it was a GM subsidiary.

But it wasn’t all smiles and rainbows. The GM boardrooms saw quite a bit of conflict and strife due to the Saturn brand. For one thing, GM had spent so much money on launching and setting up Saturn that the venture had yet to turn a profit. While Saturn vehicles were popular, GM was losing as much as $3,000 on each unit sold, and shareholders were not pleased. At the same time, the executives of the other existing GM divisions looked upon Saturn with some amount of envy and ire. Saturn got the benefit of billions in marketing and development dollars even while it was losing money; meanwhile, the other divisions, with profitable cars, had to fight tooth and nail for budgets. And lastly, the costs showed no signs of slowing down.

*snip*

It is estimated that the entire Saturn project and brand, which spanned some 28 years from inception to closure, cost GM between $15B and $18B.

So, sure, if you were a consumer in 1997 buying a Saturn, you might have seen that as a success story. If you were a shareholder at GM, watching them lose money on every car, well, it wasn't.

My experience working in the dealer was the service center actually was more profitable than the new car side. Used cars may have been better than both. Might have been a 1 off, I was very young and only worked at one.

Yes, you have multiple departments (Sales [new and used], Service, Finance...etc) all sharing the burden of cost. Shift that all to service, and that arm needs to be profitable, or the money will have to come from elsewhere (IE, from corporate, which will be recouped from new vehicle sales, affecting pricing).

Still, lots of independent service centers run profitable outfits, so no reason such a service only model couldn't exist.

Doing warranty work as well, and on a single brand? Not that I'm aware of Sure, there are specialty shops for certain marques. We have a local BMW/Volvo place and one that specializes in VW. Neither of them have to deal with warranty work however, so it's all standard paid time, and these are small operations compared to what you see at a dealership.

Note that I'm not saying that it won't exist, Tesla is currently doing it, I'm saying that it's quite likely to be less convenient and potentially more costly than what we have currently. That's not an upgrade.

Anyway, given that most surveys say most people would rather get a root canal than deal with buying a new car, their must be an improved way. The current franchise dealers have had a century to get it right and failed. Maybe its time for someone else to take a turn, for better or worse.

Yes, and as I said, I can see this working for the luxury marques who already have lavish service departments and the margins to cover it. My experience at BMW and Mercedes have both been fantastic, I have no doubt that they'll be able to make something work. Other brands? Not so much.

BTW, thanks for engaging with me on this discussion!

 

[TimeFlies]

Read this whole post before you judge me, but this is what I would like to see.
A company (Ford, GM, Mercedes, Kia etc. ) gets a fleet of semi trucks and loads them up with new vehicles, and they drive around North America. Support vans follow with pop up tents, tables, chairs, and some people who actually know about the vehicles. They stop at areas in or near towns, where there is room, maybe exhibition grounds, or a large parking lot. People can go see, touch, and drive the vehicles. If they want to get a price quote, no problem, or possibly even order a particular model. But even if they do neither, they can get a printed brochure, and business card with a number and website on it, where to get more info, or order in the future. No high pressure sales clowns, no telling lies to the customer, just a group of professional people, who actually know stuff. Depending upon the population of the general area, they might stay 5 hours, or 3 days.
They can advertise where they plan to be in advance on their own websites, but also run a few radio ads a week or 2 leading up to coming.
A local lender, or several in large populations can show up at the locations for those who need financing to see if they qualify, and give them an idea of terms.

For me, this would be ideal, and also open up sales to brands that don't sell in an area now. Choices of brand are limited for many people, because dealers are all too distant.
If I wanted to look at a BMW, Jaguar, Tesla, Mercedes, Audi, Porsche, Ferrari, Mini, Lamborghini, Rolls, Lincoln, Alfa, or really most brands, it just doesn't seem logistically worth it to me, as they are so darn far away. Independent shops can have certain mechanics trained on certain brands. A brand can have a central parts warehouse set up every 500 miles, so parts are never too far away, and shops can get them within say 36 hours of placing an order. For scheduled maintenance, the shop would simply preorder parts, because they know what is scheduled to come in. If they need another part while the car is at their shop, and the local parts stores don't have it in, no concern, send the customer on their way, with a new appointment time a few days away, and by then you have the parts. The shop called Dan's auto handles all general auto work, but also specializes in say Mercedes. A few blocks down is Debbies auto, and besides general work, specializes in Audi. If a job is just too much for a particular shop or area, they can call then next nearest places, until maybe a shop 100 or 200 miles away called Scarletts says oh ya, we got a guy here who has done that no trouble, send it over. A tow truck, or whatever transports the car there. Bob over at Scarletts auto is a pro at changing the widget in those Lucid cars. Pretty soon word would spread, and instead of the shop calling 6 places to find Bob, maybe its 1 call, and Tammy who answers the phone at Gords Auto says no we don't, but Scarletts auto has a guy.

 

[SC Maintenance]

Yes, and as I said, I can see this working for the luxury marques who already have lavish service departments and the margins to cover it. My experience at BMW and Mercedes have both been fantastic, I have no doubt that they'll be able to make something work. Other brands? Not so much.

I thought about this for a while. You make some very pertinent points. But I think that's the trees. The forest is the OEM's know it will be much easier to sell a millennial a car for MSRP on an app than get them into a dealer, and gen z won't go to the dealer no matter what. There is also the issue that most people look at about 3 brands of cars in person at most before buying, so if you want to expand your audience you have to be online - with something more than a website. The ability to buy or at least see true OTD pricing.

The three largest used car dealers, autonation, carmax and Carvana have already figured this out. Yes there models have struggled at times, but the first iteration seldom works.

The boomers gave up their local grocer, pharmacy, and hardware store for the low cost and ease of walmart, HomeDepot, and Walgreens. B2B got rid of the middleman. The middleman in many industries used to figure they were kings - they brought the buyer and seller together hence controlled everything to their liking. Both sides tired of it. This is the next iteration of that trend.

Maybe the dealers come along or not. Service might get worse, and more expensive - to your point - you used to repair your appliance, now you toss it. The EV progression convolutes things. That doesn't change that no one wants to visit the F&I guy, and everyone knows F&I has been online for a decade, hence there really not the F&I guy, there the dealers high pressure timeshare ringer.

Model is broken. Someone will figure a better way, most likely soon.

 

[daves87rs]

Some interesting reads and points here:

GM sadly will keep pairing down their product line for the next 5-10 years, as will most automakers-including Toyota. There’s no money to be made trying to cater to all the different markets. The auto industry is quietly dying, as they are pricing themselves above the average consumer, along with the hard push for public transportation/rail.

The current dealership will be dead- they will become more of “service centers” that make money after the sale. Most likely there will be warehouses (especially in large urban cities) that will carry the supply for the area. Want a blue truck? A person at the SC will check for you. You’ll get the closest model to your liking-paid for it, and get it shipped to your home/SC. Even before most of the EVs get there…

Another factor is the Chinese market is almost here. Cheap cars, EVs, carts, e- bikes and so on. Things are going to look very different in the next five years…..

 

[supton]

The auto industry is quietly dying, as they are pricing themselves above the average consumer, along with the hard push for public transportation/rail.

Are they pricing themselves out, or is life just getting too expensive? It's pretty hard to tell apart, and since most would rather buy the highly optioned & highly profitable SUV's, it could be that the OEM's are pricing themselves. But in the past we've looked at sedan pricing relative to inflation, and they tracked reasonably well. Ok, sedans are now gone but I think the first tier of CUV's aren't priced that much above sedans.

I'd argue that it's inflation doing the erosion of the public's ability to buy a car, but I wasn't buying cars in the 70's and 80's so that's just my unqualified opinion. I've simply watched the housing market do stupid things over the last 20+ years and consider myself lucky to have gotten in. What's the median house price to median income again? I recall reading, back in 2016, about it. The article I came across said, in 1950 it was something like 2x. In 2015 it was 5x. That data is likely stale now.

People have been wasting money on stuff for all the decades (soda, eating out, whatever) so while it's easy to pick on that and stupid cell phone plans, I'm not sure it's completely accurate.

 

[TomYoung]

GM was (is) huge. Once the largest company in the world.

Having internally competing brands wasn't why they became so large, it was a consequence of being so large. Hence, why they have cut Olds, Pontiac, Saturn, etc.

Both ideas are incorrect. GM grew through acquisition of smaller companies, buying market share. The whole company was managed to provide varied products at different strata to appeal to the entire market. For many years, GM dominated the North American Marketplace. It is true, that over time, platform sharing and badge engineering pushed the products closer together, with less differentiation, but that was not unique to GM. GM closed divisions because of eroding comparative quality, changes in consumer preferences, reduced investment (in Saturn) and general loss of direction. GM management is responsible, from terrible smaller cars, misreading the consumer, ignoring the Japanese (It was all over when the first Civic and first Accord came out). This is not to say that GM did not kill it's own brands. It did. As proof of the above, look at the current market, where all Korean, Japanese, and German companies still happily sell cars, while and Ford don't. The incompetence continues. Again, the import brands are covering all bases with a throughtful entree to the electric car world. Not GM, which is in for a penny, in for a pound.

 

[OVERKILL]

I thought about this for a while. You make some very pertinent points. But I think that's the trees. The forest is the OEM's know it will be much easier to sell a millennial a car for MSRP on an app than get them into a dealer, and gen z won't go to the dealer no matter what. There is also the issue that most people look at about 3 brands of cars in person at most before buying, so if you want to expand your audience you have to be online - with something more than a website. The ability to buy or at least see true OTD pricing.

I'm specifically talking about the Service department above, to be clear. They'll have an easier time persisting (avoiding consolidation) due to their current structure. Whether Mercedes keeps the dealership franchise model or converts them to service and display/test drive centres (al la Tesla) they are more viable, due to the cost of service and existing service experience, than the lower cost (and lower margin) marques.

The shift to alternative sales models, I agree, I think is inevitable, in some form. My point has always been that the cost of this transition is likely the quality and price of service; the service experience.

The three largest used car dealers, autonation, carmax and Carvana have already figured this out. Yes there models have struggled at times, but the first iteration seldom works.

Sure, but service is still handled by an indy or the OEM.

The boomers gave up their local grocer, pharmacy, and hardware store for the low cost and ease of walmart, HomeDepot, and Walgreens. B2B got rid of the middleman.

Eh, but Walmart doesn't make groceries, electronics or oil. These examples are just bigger, more efficient distributors; they are still a middle man. Many of the casualties of Walmart and the like, small bakeries for example, were direct-to-consumer models, selling a product produced in-house.

Maybe the dealers come along or not. Service might get worse, and more expensive - to your point - you used to repair your appliance, now you toss it. The EV progression convolutes things.

Which, in a time where we are supposed to be increasing our concern about consumption, limited resources, landfills, emissions...etc, seems counter-productive.

That doesn't change that no one wants to visit the F&I guy, and everyone knows F&I has been online for a decade, hence there really not the F&I guy, there the dealers high pressure timeshare ringer.

Model is broken. Someone will figure a better way, most likely soon.

Absolutely, the dealership sales experience model, is, for a lot of people, the absolutely worst part about buying a car. As I said, my concern is with respect to post-sales service and warranty work and how that will be handled.

 

[TimeFlies]

At age 28, I seem to be younger than most of you on here.
So what I see is possibly coming from a different place than some people here.
I was raised by my grandparents, and mostly hung out with older people, and many were into cars, and I was exposed to some very cool ones. My favorite uncle had several old cars and trucks, and when I was 11 taught me to drive in his 1977 Trans Am stick. They took me to car shows, car people dropped in to visit driving cool stuff, like 1970s stepside trucks, or maybe a Mustang with built V8.
So I grew up around cars, car buffs, spending time in the shop, and wanting to drive.

Most people my age, they didn't have this experience, and don't care about cars, or for some even getting a license.
Driving around they use their parents suv, and they have no desire to own a car, much less learn to drive a stick. For them a vehicle is simply a way to get from A to B.
Also look at what is made now by manufacturers, boring stuff, a camry, rav4, escape, and such brings no joy to ones drive, and forget options like a stick or V8, but it has a place for a cellphone to charge. My grandparents were poor, so I was raised poor, but my grandpa kept his old car clean, waxed, oil changed, and was proud of it. That car had no luxuries, no power windows or locks, crappy radio, it would have to run for 10 minutes to warm up before it didn't hesitate or stall on a cool morning, but he didn't care, he loved it.
The culture, the mentality, its dead.
Now the makers give us the camry and rav4, I've driven both, hated them. Most boring vehicles on earth, but people buy them. Moms drive their kids around, or else they take a bus. If they even bother to get a license, its not a big day in their life when they pass the test. But it is just less burden on the mother, as her son can drive himself and his younger siblings to. Car shows are all but dead, nobody wants to do their own oil changes, much less learn to drive a 77 trans am stick, and smile for the next 10 hours after their uncle teaches them how to do a burn out in it, or a reverse snap turn. My first girlfriend was a car chick, drove a CRX stick, and she put an amp and subs in the back, that car rocked, and she loved driving it, as did I.
Honda went from being awesome and making the CRX, to a CRV, which is the anti drivers vehicle.
Make some cool cars again, and expose the new generation to cool cars, before it's too late, if it already isn't.

 

[TimeFlies]

I'm specifically talking about the Service department above, to be clear. They'll have an easier time persisting (avoiding consolidation) due to their current structure. Whether Mercedes keeps the dealership franchise model or converts them to service and display/test drive centres (al la Tesla) they are more viable, due to the cost of service and existing service experience, than the lower cost (and lower margin) marques.

The shift to alternative sales models, I agree, I think is inevitable, in some form. My point has always been that the cost of this transition is likely the quality and price of service; the service experience.

Sure, but service is still handled by an indy or the OEM.

Eh, but Walmart doesn't make groceries, electronics or oil. These examples are just bigger, more efficient distributors; they are still a middle man. Many of the casualties of Walmart and the like, small bakeries for example, were direct-to-consumer models, selling a product produced in-house.

Which, in a time where we are supposed to be increasing our concern about consumption, limited resources, landfills, emissions...etc, seems counter-productive.

Absolutely, the dealership sales experience model, is, for a lot of people, the absolutely worst part about buying a car. As I said, my concern is with respect to post-sales service and warranty work and how that will be handled.

If I were given a choice between talking to a salesman, or going to get my teeth cleaned, I would choose the later.
Salesmen did it to themselves, it doesn't have to be this way.
They could get some training on cars, stop lying, dress cool, be nice, and just make it a fun experience to walk into a showroom.
Funeral parlors are more exciting than a showroom.

 

[StumblingElk]

Both ideas are incorrect. GM grew through acquisition of smaller companies, buying market share. The whole company was managed to provide varied products at different strata to appeal to the entire market. For many years, GM dominated the North American Marketplace. It is true, that over time, platform sharing and badge engineering pushed the products closer together, with less differentiation, but that was not unique to GM. GM closed divisions because of eroding comparative quality, changes in consumer preferences, reduced investment (in Saturn) and general loss of direction. GM management is responsible, from terrible smaller cars, misreading the consumer, ignoring the Japanese (It was all over when the first Civic and first Accord came out). This is not to say that GM did not kill it's own brands. It did. As proof of the above, look at the current market, where all Korean, Japanese, and German companies still happily sell cars, while and Ford don't. The incompetence continues. Again, the import brands are covering all bases with a throughtful entree to the electric car world. Not GM, which is in for a penny, in for a pound.

Yeah, that's what I said. /s

 

[daves87rs]

Are they pricing themselves out, or is life just getting too expensive? It's pretty hard to tell apart, and since most would rather buy the highly optioned & highly profitable SUV's, it could be that the OEM's are pricing themselves. But in the past we've looked at sedan pricing relative to inflation, and they tracked reasonably well. Ok, sedans are now gone but I think the first tier of CUV's aren't priced that much above sedans.

I'd argue that it's inflation doing the erosion of the public's ability to buy a car, but I wasn't buying cars in the 70's and 80's so that's just my unqualified opinion. I've simply watched the housing market do stupid things over the last 20+ years and consider myself lucky to have gotten in. What's the median house price to median income again? I recall reading, back in 2016, about it. The article I came across said, in 1950 it was something like 2x. In 2015 it was 5x. That data is likely stale now.

People have been wasting money on stuff for all the decades (soda, eating out, whatever) so while it's easy to pick on that and stupid cell phone plans, I'm not sure it's completely accurate.

Nah, the industry had issues well before before the inflation started. For an easy one, look at trucks. Looking at them 20 years ago, there would be a good mix of models (base, high end) on the lot. Back in 2016, I was shopping with family for a truck, and there was only a few. Most were much more loaded, with more high end models. Now, most trucks on the lot are either high end models, or trucks loaded with a ton of options. Even the Maverick, the 20k truck, finds most of their models to be 40-50 on the lot. It prices many folks right out of the market. It’s getting te most profit per truck, not offering the full line to all. Very few dealers even have an XL model around here….

Then again, we live in the land of making the most profit now…..

 

[TimeFlies]

Nah, the industry had issues well before before the inflation started. For an easy one, look at trucks. Looking at them 20 years ago, there would be a good mix of models (base, high end) on the lot. Back in 2016, I was shopping with family for a truck, and there was only a few. Most were much more loaded, with more high end models. Now, most trucks on the lot are either high end models, or trucks loaded with a ton of options. Even the Maverick, the 20k truck, finds most of their models to be 40-50 on the lot. It prices many folks right out of the market. It’s getting te most profit per truck, not offering the full line to all. Very few dealers even have an XL model around here….

Then again, we live in the land of making the most profit now…..

Order a base model, in the color you want, and wait for it to arrive. That way you get what you want exactly, and nobody test drove it.