Re: Dealerships
US auto dealerships are nothing more than the industry sales channel. They're the 'value added' reseller. That's it. My dad owned nine new car dealerships when I was younger, and screwing about on his lots was what drew me to engineering and away from the little empire my dad had built for me. It's an OK business, but I like the making more than the using.
My point in telling you that, was that there's a huge misconception about what new auto dealers do and how they make their money. They don't own the cars, they pay the manufacturer a small monthly 'floor plan maintenance' fee for each car. Sales people are paid with the money from reaching the monthly volume targets the manufacturer sets. In 1995 a brand new Oldsmobile Cutlass Supreme, completely decked out with Southern Region standards (no block heater, fully vented transaxle, stuff like that, cars in other regions have different standards so the price varies considerably) sold for about $24,000. The dealership got $212 of that for the actual sale, at sticker. On an average credit score with 48 month note the dealership got about $800 from the bank financing the customer. Warranty service is paid by the manufacturer, but as a deduction from the floor plan overhead, so it generates no revenue. Non-warranty service and parts are good revenue generators. That year, 1995, was when I sold the last of the dealerships I had inherited. Prices suck even more now.
The bulk of dealer money is made in the used auto side and fleet sales. Most people are ridiculously upside down when they trade cars and all that negative equity just gets added to the price of their new car, and their trade in is, effectively, the fee paid for rejiggering their financing. My friends and I made scads of money driving the trade ins to the auto auction twice a week. Just endless trips with six-eight cars, get in the van and go back for more (car hauling big truck trailers do more damage to cars than any other thing).
With no incentives, making $2,000 over the entire warranty period of a new mid-$20k car is a fairly good figure. With a good used car that originally sold in that same mid-$20k range I can make $5-6k in the hour it takes to transfer the title and get it to the auction and I don't even have to wash it.
Trade ins are where dealers get the money to send their kids to fancy schools. The customer always gets screwed, but that's the price of 'new car fever'. You're a fucking loon for trading a car in, but it's hard to sell them without a dealer involved. Banks and dealers have 'account performance' arrangements where the bank will finance a buyer sent by a dealer, but won't go nearly as far for a private seller.
Anyway, dealerships are just resellers left over from a long ago time when it really was a long trip to get to another town and color pictures were only available on canvas. States got involved because car dealers were selling things they wouldn't service and other fairly awful behavior. Look at the regulations for getting a auto dealers license, every State has a law requiring any auto dealer to have a lighted public restroom, water and 'reasonably priced' snack foods available. Those universally shitty waiting rooms with horrid coffee, moldy water fountain and pre-Nixon vending machines are required by law, not placed there for your convenience. Post WWII it was a common trick to keep customers waiting for hours for minor warranty repairs and with no restroom (with a light!), water or food customers would just give up and go home.
The lobby with accessories and zillions of other weird, archaic, non car related, laws are in place for dealerships and, truth be told, our society is a lot different than it was in the 1940's. The fact that people are willing to buy a car without actually driving the very one they might buy pretty much says it all. Everybody on your block used to come by and check out your new car. Today I'm nearly positive most people wouldn't even realize it was their neighbors car that ran them over.
Dealerships serve an important function, but should no longer be a requisite to selling, or buying, a new car. If you want traditional treatment go to a traditional dealer. If you're comfortable buying a car 'online', then you should be able to do so.
Biting the hand that feeds IT
