This is essentially why there are no Ford or Nissan company stores and instead we have “Jim Bob Ford” for example.
Tesla is trying to open it’s own stores but current law might prevent them. I say “might” because it seems Tesla has some great points why the law shouldn’t apply to them.
When Ford Motor Co. and General Motors Co. tried to operate some company-owned stores during the e-commerce boom of the late 1990s and early 2000s, dealers rebelled and the auto giants retreated. Auto dealers have so far stymied various efforts to use the internet to cut them out. You can shop online for a vehicle, but only a franchised auto dealer can actually sell you a car.
Regrettably, two lawsuits have nonetheless been filed against Tesla that we believe are starkly contrary to the spirit and the letter of the law. This is supported by the nature of the plaintiffs, where one is a Fisker dealer and the other is an auto group that has repeatedly demanded that it be granted a Tesla franchise. They will have considerable difficulty explaining to the court why Tesla opening a store in Boston is somehow contrary to the best interests of fair commerce or the public.
It’s kinda ballsy to demand to sell a manufactures cars by suing them. Let’s start out on the wrong foot…
As stated, this has been the practice for 100+ years so we’ll see if Tesla can break the mold.
Ford tried this in Rochester as a “test market” several years back. They lost their ass, couldn’t run a store if their lives depended on it. Eventually all the dealers got their own stores back, coming out on top from the buy back.
Rochester. It was called The Rochester Auto Collection. They also tested it in OK and SLC as well. All the stores were owned by Ford. Their was a committee/board headed by Vanderstyne (who sold his store to the collection). Funny thing is that Jay Vanderstyne also had a Toyota store at the time. So they had a guy who had interest in a Toyota dealer, running a Ford owned store. Failed miserably, and Ford sold all the stores to new owners…for less than they bought them for. Wouldn’t let the old owners buy them back. Ford payed WAY TOO much for them in the first place. Lost millions. This is around the time that Vanderstyne Ford became Vision Ford. Lasted less than 3 years. (I made the statement that the original owners got their stores back, I was wrong. Ford wouldn’t let them buy em back.)
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If you went to one Ford store and recieved a quote for $6,500 for your trade. If you went to the other Ford store in the same area, they mandated that you had to get $6,500 for your trade as well. Not more, not less. Every store had access to everyone elses trade appraisals. It was so stupid.
I think the laws are pretty stupid. A OEM should be allowed to sell to the general public if they want to. I realize that most OEM’s DON’T want to sell their products because they are in business to produce an object in high volume, not necessarily sell them. Just like Beck mentioned Ford failing, they aren’t in the business of selling cars, they are in the business of manufacturing cars.
If a business wants to do it all they should be able to. Capitalism
You can’t even buy a decent bicycle direct from the manufacturer…they pretty much force you through the LBS. To me, the dealer model just seems to favor the well-researched and hurt the stupid. If you’re a smart consumer and you play all sides against each other and don’t allow for any back-end funny business, you end up with the best possible deal, especially if you’re willing to travel, and probably save on the fixed price model. They make that up by hustling the guy that walks into one place and makes a purchase 20 minutes later, who pays more.
^^ Agreed. I worked down a price with Northtown after a bit of haggling (lease payment dropped over $50/month from their initial “offer”) but they didnt want to get me the exact model/color I wanted. Found a dealership out of state with the exact car I wanted, called them up said this is the deal I want, no BS. They said yes in 2 minutes and I picked it up hassle free a few days later. Not too sure if I get the steal of the century but was completely comfortable with the terms. Was very surprised how easy it was.
Yes dealers do own a fair number of stores as far as i know. Mercedes owns several of it’s dealers in Canada and they typically underperform the privately operated ones.
I was thinking about this yesterday when I drove by the overflow lot for West Herr Ford at Millersport and North Forest and it was completely full of brand new F150’s. So not only is their lot full, but a lot a mile down the street that they rent from the guy that owns the Mobil was also packed. What kind of money gets blown on sitting on that kind of inventory and how much would you save if Ford corporate just had a local kiosk where they kept one of each model as demo units and then factory direct shipped the vehicle to you?
that’s a good point but, and maybe Beck will know this, but dealerships do not pay in full for their inventory up front.
some dealerships don’t own any of the cars on their lot, they remain the property of the OE until sold.
There are different philosophies on what works best but we run into this when the lots get hit by hail… the dealerships that own their inventory are in more urgent need of repairing or hail-saling whereas the dealers that do not own the inventory can be more patient.
Dealers floorplan their inventory, we (banks) loan them the money. The manufacturers count the unit sold once it rolls off the line even before it gets to the dealership in most cases.
They have wholesale floorplan insurance for hail.
Also, I checked into it, Canada has much different franchise laws.
Regardless of what accounting method is used there are still these huge inventories in cities and towns all over the world. I find it hard to believe that a model where inventory is more centralized and direct sales driven couldn’t save money.
Think about the huge discounts you see when a dealer ends up with too many of the prior model year vehicle. That loss gets made up somewhere.
Could be partially union driven. Can’t reduce hours so they have to produce / sell more cars and create demand to meet it
If they didnt have those big inventories to build up and blow out then they would have to make fewer vehicles which would be terrible for some reason maybe
