There is a Kerfuffel in California over the prospect of device-maker Scout – which is being financed by VW – selling its devices directly to those who want to buy them, without having to deal with a dealer.
Mark the italics.
It’s actually more than a Kerfuffel – which would be ok in the sense that people often get upset over things and bicker over things. It’s ok to bicker. But this Kerfuffel may involve the courts, which means bringing the government – and thus, force – into it.
Should people be forced to deal with dealers if they want to buy a new vehicle? Or should they be free to buy directly from the vehicle’s manufacturer? That is the nut of the Kerfuffel.
Readers of this column already know this writer’s contempt for Tesla – which was the first device-maker to sell them directly to those who wished to buy them. I never took issue with that – because who am I (who is anyone) to intercede between the seller and prospective buyer of a thing? I despise Tesla’s rent-seeking grift but that has no bearing on whether Tesla – or Scout or any other seller of anything – ought to have its right to sell directly to those who wish to buy respected.
The other day, I needed to buy a part to restore the function of my ’02 Nissan pick-up’s heater (you can read more about that here, if you’re interested). I went to the Nissan dealer to see whether they had the part I needed but I didn’t have to go there for the part – which turned out to be a good thing since the dealer no longer carried the part I needed. I was able to go directly to eBay and buy the part directly from the seller.
Why should buying a car – or a device, for that matter – be any different? One does not have to go to an Apple dealer to buy an Apple device. One can. But it is not the only way to buy an Apple device.
Of course, dealers – and not just those in California – want to protect their business from competition, the “sin” described by John D. Rockefeller. They do not, in other words, wish for buyers to have the option of not having to deal with them – which is an execrable thing when it is imposed by the government because it amounts to a protection racket and those are always execrable things.
For two reasons – one of them the obvious one.
Protecting any business from competition is a sin. Or at least, an affront – because it amounts to the same thing as forcing people who want whatever the item is that’s protected from competition to pay extra for it. More finely, not for the item itself – but for the mark-up that is pocketed by the protected racket. This amount to a shakedown, as seems self-evident. Because that’s what it is when you are forced to hand over money for something you don’t want in order to get something you do want.
But there is also another reason, equally sinful in that serves to reward one of the Seven Deadly Sins – sloth. Protecting any business from competition is the same as protecting it from having to earn your business. You are not only taken for granted. You are bent over a barrel. An excellent example of this being the exclusive monopoly on the sale of liquor in my state – Virginia – where you can only buy liquor at an “ABC” store. That is to say a government store. It is for exactly that reason that liquor costs more in Virginia than in Arizona, for instance – where you can buy liquor almost anywhere. When there is competition, the fact is known to every seller of liquor – who must price the liquor he sells competitively else people won’t buy it from him.
It’s what you might style an incentive.
So – why should car (or device) makers be required – as by law – to sell only through dealers? More accurately, why should people be obliged to buy cars – or devices – only through dealers?
Is this not something that only benefits dealers – at the expense of customers? And how can that be right?
Put another way, what is wrong with allowing people the choice? Dealers can (and many do) provide services, including having inventory on hand for people to “tire kick.” Some people like to physically (rather than virtually) see what they’re thinking about maybe buying. They want to pop the hood and have a look and maybe take a test drive. Others are ok with buying online. Some like dealing with salesmen – who can be helpful. Others prefer not to deal with salesmen at all.
Why not allow people to have the choice?
Dealers can and should be obliged to make themselves valuable to buyers. Make the showroom more enticing than the online showroom. Offer services that aren’t available virtually. Develop relationships with customers that cause them to want to deal with your dealership and then you won’t need the government’s cudgel to make them have to deal with you.
It used to be the American Way. Or at least, it could be that way – if people (and not just car dealer people) stopped trying to use the government to leverage advantages for themselves via the government, using force rather than persuasion.
. . .
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OBD 3 – NO more speeding, NO more modding,
https://www.youtube.com/watch?v=nE9IGgAS-lE
Good video.
Thanks for the link!
You’ll need dealerships now more than ever since they will be the only ones who can update or reinstall the software in your devices, whether ICE or EV. Car Wizard in one of his videos had to tell a customer to take his car to a dealership since he did not have a subscription to download some software from the manufacturer needed for the car after replacing a part. He said it would cost hundreds of thousands of dollars per year to have subscriptions for all the major manufacturers. Not worth it.
Re: Battery cars…..
Colorado dealer leasing Fiat EVs ….e500…..for $0 per month, $0 down
27 month lease includes maximum 10,000 miles per year
at an MSRP of $34,095…….
Those working the calculators take the entire $7,500 federal tax credit, a $5,000 tip from the state coffers, plus another $3,100 in various subsidies to plow into the deal. A few factory-to-dealer incentives and goodwill from the seller….
but…..customer paying all applicable taxes at the time of delivery (reported to be about $1,500)
https://driving.ca/auto-news/crashes/fiat-500e-ev-lease-colorado-free-zero-dollars
You forgot the most important thing that dealers must do to make themselves valuable to buyer… offer competitive pricing. Stores like BestBuy and other retailers learned that if I can find a better price elsewhere, they need to meet or beat it. Or lose the sale. Car dealerships charge an “admin processing fee” that can be hundreds to thousands of dollars, depending on location. I’m guessing that fee doesn’t exist when buying direct.
Stealerships are overpriced and terrible places to have to be involved with on nearly any level.
Usually the only ones with half a brain there are a few of the underpaid mechanics (not to be confused with the parts-changers) and the parts counter guy.
I don’t have a solution, but if you listen to how Tesla service centers work, they sound terrible.
Most all communication goes through an app and you hear stories about broken Teslas being stuck sitting for a month+ waiting for parts – WITHIN A CAPTIVE DISTRIBUTION NETWORK!!!
With the current regulatory environment for auto companies, it’s doubtful that even if they were able to sell direct and trim back the Stealership to essential functions like parts and handling warranty claims, they surely wouldn’t be cutting sticker prices on the merch.
Either way, whoever uses dealer services for anything other than the purchase – and maybe buying parts (as many parts depts will price match to online sellers) – just go to your local, independent mechanic for service.
The parts counter people at my local dealer are worse than useless. All it takes is to have heard of this thing called the internet where EPC and other dealers can compete for your business. An EPC is electronic parts catalog, it’s the software with diagrams and part numbers the counter people use to find the widget for your specific year and model. If you have even a minimal ability to understand the diagrams and know how to navigate the internet you can find parts at jobber prices sent directly to your door.
All dealers, in fact all auto parts distribution, work on a layered pricing approach. There’s the production cost, the wholesale price where the OEM makes profit. Then at the dealer there various mark-ups, ones for a professional high volume buyer (like the dealership service department itself), a low volume pro (like a small shop) and there’s normal retail and finally a full list price. When you walk up to the counter you will probably be quoted retail or perhaps MSRP list. This number is likely A LOT more than jobber and wholesale, not unusually 10% to 25% higher and sometimes even more.
Point being even accounting for regular cost of dealing with high maintenance foot traffic there’s a lot of room on pricing. They’re making way more than salaries, overhead and all that at retail. They’re not losing money at jobber prices, although for inside work they might be close to break even on parts if their labor rate tolerance is high.
But some online dealers will sell you a part based just on part number at barely more than their stocking price. There’s no guarantee of correctness if you go this route but some will verify the part number against your VIN if you ask. It’s literally a 5 second second set of eyes that what you’re buying at least makes sense. The difference in price will have to include shipping, which can be significant for awkward stuff like long blocks or drivetrains. But some dealers will even go the extra mile to arrange FOB shipping if you want.
My local dealer apparently thinks it’s still 1984 and quotes MSRP or sometimes even over that because they can get it from clueless people. I bring them online quotes and tell them I’m willing to meet in the middle to save shipping and support a local dealer. It’s not nothing to have a local source for weird stuff you realize you overlooked but can’t get at NAPA. But they will not budge on pricing. I’ll even go so far as to drive to the next town, about 30 miles, because that one is willing to knock a little off and it at least covers my gas.
So even amongst the lowest bar of a dealer there’s a ranked order where some are OK and some just permeate sloth and arrogance throughout all departments.
Almost as bad as the car insurance you are forced to buy, or the health insurance you cannot buy across State lines. The instant the Psychopaths In Charge touch it, it gets worse.
‘Protecting any business from competition is the same as protecting it from having to earn your business.’ — eric
Beer distributors, for instance, whose middleman role was cemented by fedgov legislation in 1933 that ended Prohibition, but entrenched graft.
Distributors are notorious for not delivering to smaller retailers … because it was raining, or because their pet cat got sick, or because they don’t like Mondays. Whatever.
America’s suck-ass health ‘care’ [sic] system, featuring multiple entrenched levels of cartel graft, sucks up 18% of GDP, even as Americans die six years younger than Japanese, on average.
Lie, cheat and steal — they do.
If any of these businesses would be customer focused instead of sales focused I’d be much happier. The dealer franchise model basically means a dealer gets the exclusive right to sell brand X in your town. So when Chevy comes out with the new Corvette you pretty much have to buy from that dealer or be prepared to drive to the next town over. Or buy a Mustang instead.
What’s their motivation to keep you happy?
The individual sales people are highly motivated to keep you as a customer of course. But the dealership as a whole? Especially when they own every dealer franchise in the city (the rise of the “auto mall” is because of consolidation, not because of great customer service).
I’d really like a third option: A concierge service that would help me find the vehicle I want. I’d pay them a finder’s fee and they’d get me a good price. Maybe they’d offer me three options, that I hadn’t considered. Risks would include unknown kickbacks from sellers, but hey, dealers offer bonuses to their salespeople all the time. The sales managers also do things like charge their salespeople a dollar for selling a low margin loss leader to encourage them to push people into more car than they can afford.
Off topic: Yesterday as I dealt with all the poor drivers on the interstate (including slow passers, tunnel phobic passers and people who cannot merge into traffic), I found myself using Eric’s “Clover voice” speaking what I imagine they were thinking. Dammit, it’s hard to stay mad when I make myself laugh!
I googled and found a car concierge service called Car Edge.
I’d think the OEMs would embrace the dealer model as it transfers the risk of sales from themselves to an individual dealer.
That and it allows the true health of the company to be masked –e.g. GM allegedly sold 2.7M cars/trucks/devices in 2024. How many of those are actually on dealer lots here in the first few days of 2025?
Manufacturers need the massive distribution system, from the ports to dealers, to absorb production fluctuations. When things slow down they can do what’s called channel stuffing. That’s where you’ll see thousands of cars just sitting in huge parking lots at docks and stuff. The dealers carry the vehicles until they can sell them, which protects the manufacturers from showing the losses for a quarter or two.
One advantage of buying from a “servicing” dealer rather than a big box store for a gas powered item is guess who will have priority if/ when it breaks down?
I can see the same thing happening when your new devise breaks down. The dealer who sold it to you has a higher incentive to fix it and keep you happy rather than some one who bought it direct from the manufacturer.
Most people can afford to throw away a neglected weed eater after a couple years but not a $70,000 car. In the end good service might be the deal breaker for many.
Why not give up franchising full blown dealerships and instead sell directly and contract a few local preferred local shops to handle warranty work? Exactly what advantage is there to huge one-stop buildings when half the time the salespeople and mechanics aren’t really any smarter than forums for knowledge and they have to order in parts from a factory warehouse? It’s a dinosaur business model.
Hi Nena. Some advantages of a servicing dealer would be factory training and in stock parts. Your mileage will vary of course. In regards to car repair I suspect the odds of an independent shop being up to date enough to work on a 2025 EV is a lot lower than them working on a 2021 model as most small shops usually stick to 3 or 4 year old cars that are out of warranty.
Time to tell how it will work out. As for me I drive an antique so a lot less of an issue.