00TL-P3.2

Meh, on the F&I side, that's why I've always gone in with outside financing via my CU.
Much better rates for the term, though you may lose an incentive or two for not opting for mfg finance.
1 less battle to fight & just make it work on the OTD number. However they want to structure the deal behind that, I don't really care.

pttl

there absolutely is reason to distinguish every single aspect of dealer/mfgr. financial relationships. Otherwise you're going to pay your made up "20% more" per transaction. LOL

Seems like someone has never understood how to negotiate a car deal.

Comfy

You may be a better negotiator than someone else, that’s good for you. I’m just advocating to take that uncertainty out and level the playing field for everyone. I’m sure plenty of customers would agree with that, if given a choice (as Tesla has proven).

pttl

If only we knew the actual cost of your beloved muskmobiles vs. their selling prices.

oonowindoo

I buy so many cars for other people every year, i know exactly how painful it is to deal with the dealerships. In the past 2 years, i dealt with high end dealer (Bentley) to Toyota and Honda and everything in between.
Some of them are rude and shady AF but some of them were OK. Just like people, they are all different.

Since there is no real solution here as you said. Between the current Tesla model and Dealership, i would still choose dealerships. At least i have options.
If i dont like this one, i will go to another. This dealership might be asking for 10% over MSRP and next one might be able to give it to me at 3% below MSRP.

At least i can try not to pay MSRP or over MSRP. With Tesla's model, you dont even have that option.
I got 13% below MSRP for my car with the lowest money factor possible. No hidden fees or anything else. If BMW could match that at the time, sure. I have nothing invested in dealerships, so if they are no longer useful, get rid of them. But i dont believe for 1 sec that BMW would give me 13% off.
Like many consumer product, if you want to buy direct from the manuf. You pay MSRP. If you want discount, you go through their distributors.

But if we can make manuf. to sell cars below MSRP, then sure i am all for it. Again i dont believe it would ever happen.

oonowindoo

Let the adults talk.

oonowindoo

Wait, is that guy assuming manuf. would just take that 20% (however he came up with that #..) and subtract it from the MSRP? like My car from $63k would magically become a $50k car before TTL without dealerships?

If so. please make it happen.

SamDoe1

In theory, yes. Automakers already sell a car to a dealer for a specific price and all of their COGS and profit are baked into that price. A dealer does nothing more than mark it up and sell it to you for more than what they paid the automaker. So Ford could, in theory, sell it for wholesale or a little more than wholesale to account for sales expenses. Maybe not 20% but 15% doesn't seem out of the question.

Service departments are self sufficient otherwise there wouldn't be any indy mechanics.

oonowindoo

I am not questioning the 10% or 15% or even 20% profit margin that the dealerships have.

I am questioning if the manuf. would pass those discount to the end users. Cuz that is all it matters at the end of the day. Not in theory. But in reality.
Cuz in theory, all dealerships should be honest and not secretly jack up money factors or install "door protection" and charge you $399 for it.

civicdrivr

iTrader: (9)

20% is a bit much, but the average profit margin for dealerships per vehicle through the first half of 2021 was 13.4%. I don't know if 2H21 data is available yet,

This is old, and specific to the MIC 3, but one analyst firm said 29.4% per vehicle.

https://insideevs.com/news/464539/te...-margin-china/

You're confusing MSRP with what the dealership pays the automaker. And in most cases it's even less than the invoice price.

https://cars.usnews.com/cars-trucks/...-invoice-price

You're cutting out the middle man.

Automaker -> Dealer -> Customer

The Automaker sold the vehicle at invoice (or less) to the dealership. The automaker made a profit.
The dealer then sold that same vehicle at MSRP to a customer. The dealer also made a profit.

You're making it seem like the 13% off MSRP that you got on a lease made the dealership lose money. I can assure you it didn't.

Remember, the only reason we have that 25 year import law is because new vehicles from outside the US were being purchased for less than what dealerships were charging here - even when accounting for import costs. My grandfather did that very thing in 1978 when he purchased a German market 320i. Guess who lobbied for that to stop? NADA.

oonowindoo

Nope i never said dealership lost $$ on my car. I dont expect them to. They are in a business to make $$ one way or the other. But i did get 13% off MSRP.

Will BMW give me the same 13% off from MSRP without dealerships? That is what i am questioning. If cutting out the middleman does not give me anymore discount or even the same discount from the middleman, then what is the point?

In a normal situation (not in this BS mess), Only Tesla is doing direct and they are selling at full MSRP Vs. dealerships that you could potentially and likely get some discount. if you do your homework, you get more. if you do less, then you get less.
I would still choose dealerships. cuz i have 0 interest in paying MSRP for any car.

If one could get rid of NADA, like i said... good luck and hopefully it can be done. But until then you are stuck with Tesla's Full MSRP or dealerships. I would take dealerships. At least even in this 2022 craziness, there are still SOME cars that can be had below MSRP and plenty at MSRP.

oonowindoo

I am sure i am not confused. I even said invoice prices are BS. We are strictly talking about MSRP since that is what Tesla is selling their cars at and the discount you get is a % off MSRP.

The bottom line is Will the manuf. offer the same "wholesale" price to the end users without dealerships? or will they sell their cars at full MSRP to the end users without dealerships?
Because that will determine the usefulness of dealerships.

civicdrivr

iTrader: (9)

I think you just admitted what their usefulness is.

oonowindoo

I am not sure how that is relevant. cuz manuf is also in business to make $$... so is supermarket and malls and all other types of distributors.

Even non-profit organizations need to make $$ to pay their bills.

But it is a HUGE assumption to assume that manf. will lower their MSRP without the existence of dealerships... I personally dont believe that for a sec.
So then it becomes the manuf. will make more $$ but the end users will pay more since there is no more discounts.

The idea of removing dealerships would help the end users is nice. But in reality and practicality, there is no guarantee that end users would benefit at all financially without dealerships. The manuf. could just keep all the profit to themselves like Tesla.

00TL-P3.2

For a marque with only 4 production models, it's not overly hard to stock their showrooms with testers.

I can't imagine a mfg direct Chevrolet or Ford showroom keeping sufficient stock for people to test drive, then I assume order & get what they want. Too many variations between models & trim levels.
I guess if they nixed the dealership model, then the mfg took over a few key stores per area, they could make it work.

oonowindoo

I think it would be much easier to regulate the manuf, so they could put a leash on some of dealerships on their practices.

The "i cannot give you any more discount, but i could give you 50% off on the accessories that you most likely dont want but since they are already installed on the car, then they cannot be removed" should never be allowed.
The extended warranty that cost $4k for 1 person and $699 for the next should not be allowed either.
Any markup should be approved by the manuf and it would be implemented across the board. not on what the dealerships feel like. So the accountability is on the manuf.

oonowindoo

anyways...

i just came across this during my lunch break...

$5000 Tesla? and the cult like comments below

SamDoe1

This is where you mind is leading you wrong. You are seeing a "potential discount" and I see a needless markup on what the real price is. The price I want to pay is the price to design, manufacture, and deliver an automobile to me as a consumer. I don't want to pay for a middle man whose sole purpose is reselling what I want to begin with without any added value. I want to buy my car from the manufacturer for the price that the dealer pays for it, not a dime more. If I have to pay even a nickel more then it's not a discount any longer. I don't care if you got 5% off, 10% off or shit even 30% off, you still overpaid because of the middle man since I assure you they did not lose money on selling you that car.

Meh, they do this in Europe, ordering a car is more common than buying off the floor, already so it's not a huge deal. Just keep a small inventory of commonly specced cars and call it good. Tesla cannot build cars fast enough is why they don't have sales inventory and you have to order it online and wait 6 months to get it.

How is this any different than just letting the manufacturer's sell if they are regulating all of it anyway. Now you're really wasting money on a middle man.

oonowindoo

If you can achieve that, then i am all for it. Cuz Tesla is not that right now. It would requires many regulation changes and probably will NEVER happen. So the reality is still the current dealerships vs. Tesla model.
I am personally not even sure if manuf. wants to deal with the end users directly on their day to day issues.

It is different because it will inevitably create new problems while solving some of the old problems. Remember, not everyone wants or capable of buying a car online and not every car is built to order like Tesla.
When we are dealing with manuf. like Toyota and VW that sells millions of cars every years, they need dealerships as distributors. Cuz Tesla showrooms might be enough for Tesla, but Toyota and others will need something very different.

Now who manages or who owns those dealerships could be changed.

SamDoe1

Are you telling me that if there was a dealer for Tesla that they wouldn't be more expensive because I call BS. They would get marked up to high heaven because of the demand and all the other bullshit that goes along with dealers.

Also, we don't know what the profit margin on a Tesla is but Ford makes about $10k-$15k PER F150 sold to a dealer so they've made ~$8B on F150's in the US alone without any customer interaction.

Just because you don't see a discount on a piece of paper doesn't mean it's not there. You're the best customer for businesses, markup a product by 50% and then slap a 25% off coupon to make people think they got a good deal lol.

Distributors for what? Car dealerships aren't a distribution network, they are a parking lot/delivery center. The automaker does the distribution part already. What's needed is a delivery/service center, that's it. Keep a few common specced cars on hand for people to test drive and have the others be ordered. OR, go the trim level route like Honda/Toyota and don't fuck around with options at all. Pick your trim and color and it shows up a few days/weeks later.

pttl

Lol. The delusions are fantastic! News flash...anyone who has EVER purchased an item from any store or outlet, either E or brick and mortar, has paid a profit to that establishment. Whether it's a loaf of bread, a light bulb or a TESLA you've paid a profit to the selling entity.

oonowindoo

How do you know Tesla is not taking ALL the profit already (wholesale + dealer margin)?

A M3P is already at $70k... $60k without FSD. Other than its EV acceleration it is not close to BMW or Mercedes's level on everything else.
So $60k is the "wholesale" price?
Or Model Y is $70k...does that sound like a wholesale price to you (What the manuf. sell to dealers)?

If you think those are the prices that Tesla would sell to dealers if they had one, then i call that BS.

How do we know if Tesla is not slapping a 50% markup and not even offering you the 25% coupon? and you cant even call it a deal of any sort because you can't even have the option to have a deal.

oonowindoo

I have yet to hear people complaint about the concept of Black Friday sales from the malls, amazon or another retailers....

In the perfect world, all of them should be eliminated and we buy from the manuf. directly. That means we dont need to have any kind of sales anymore. It is bottom price for everyone everyday.

oonowindoo

This is from 2021
https://english.hani.co.kr/arti/engl...s/1016533.html

So please stop pretending Tesla is giving you guys a deal by NOT offering any possibility to get discount because they dont have dealerships.
1 thing for sure, Tesla did not give you guys the "discount" from not having any dealerships. If they did, their profit margin will be around the same as everyone else.

oonowindoo

I expect Comfy to jump in now and say
"Well it is not Tesla fault that consumers are stupid, it is great for Tesla to make ALL the $$ and keeping everything to themselves and you guys actually thank them for it."

pttl

Good video for understanding just how profit margins are not as large as people think.

Skip to 2:57 to get to the video. The dad in these videos is a font of knowledge.

civicdrivr

iTrader: (9)

A loaf of bread, a lightbulb, and even a Tesla have an advertised price that everyone that wants that product pays. No two people can go into a dealership and get the same deal on identically spec'd cars.

When and who said this?

civicdrivr

iTrader: (9)

I can't watch as I've got a sick child sleeping on my chest, but based on the thumbnail, the MSRP has profit built in for the dealers (nothing new here) - that's already been stated. But this goes back to my question from earlier - what value do dealerships add to the car buying process? What does the extra 5, 10, 15% that you're paying over what the dealership paid get you?

pttl

That wasn't the premise being disputed. The premise was, paying one nickel more for something, more than engineering, and production costs, is paying too much, or overpaying. Good luck with that.

I would guess, buying a Tesla means you are paying a higher percentage of profit, to king musk, than the 8% average amount paid at a dealership. But if paying the same as Joe d. Customer down the street, makes people feel better then go for it.

pttl

I guess you guys think I'm advocating for dealerships. I'm not. But the fantasy of "buying direct" and not paying profits for a car is absurd.

Dealerships provide places of employment for many people. I don't discourage people having jobs.

The video basically says that 8% is the average margin made by mfgr. and he qualifies this in some detail.

oonowindoo

None of us here is advocating for dealerships, They are called stealerships for a reason. I personally wanna burn down some of the dealerships i have dealt with before.

But what is the realistic alternatives right now?

I guess the issue is, if the dealerships do not exist, then who gets that 5,10,15% profit? The manuf. or the end users?
Because as of right now, i think Tesla is keeping everything and some. So how is that better?

At least with dealership, we could at least try to get some of that 5,10,15% back.

oonowindoo

There are always 2 sides of a coin.
You say no 2 people could get the same deal. Probably true. But IMO, that is still better than both of them paying full MSRP or whatever the manuf wants you to pay.

Sam said this. That is under the assumption that Tesla is at the price it is because it does not have dealership, so they have passed on the savings to the customers. If Tesla adds dealerships, then MSRP will go up.
Maybe, Maybe not, but as of right now Tesla definitely did not pass any savings to the customer from not having any dealerships at 30% profit margin per car sold.

#1 STUNNA

👀

#1 STUNNA

This guy has driven almost every ev that exists, yet Tesla’s software excellence and vertical integration keeps him coming back

civicdrivr

iTrader: (9)

Oh there's definitely higher profit going to his highness, which annoyed me.

My argument wasn't about paying a nickel over MSRP. It was the doc fees, and markups on everything from parts and service to financing to the cost of the car itself. All for the luxury of being able to negotiate with Slimeball Steve and his clip on tie wearing Sales Manager.

Again, someone will be making a profit with a direct to consumer model. Do you really think the MSRP is what it costs the manufacturer to build the car? That's rhetorical as I know you don't - but a direct to consumer model would cut one layer of profits out.

And those people would still have jobs. Automakers would still need showrooms and service centers and parts departments and titling/registration employees.

Tesla is definitely capitalizing on being the first automaker to offer direct to consumer sales. They have zero competition in this arena. Open it up to others and the competition should help settle that. TBH if I could've ordered a Civic Si online at MSRP, I would've. Instead, dealers throughout Virginia, Maryland, North Carolina and Georgia wanted to tack on $5-10k in a market adjustment or immovable accessories.

oonowindoo

The current markup situation is not normal. we all know that.

We have Toyota dealerships offering MSRP on Highlander and 10 miles away, you got another Toyota asking for 3k over.
When people are not buying it, the dealers would have been forced to lower their price to a reasonable level.
But unfortunately, there are plenty of customers who are willing to buy the car at MSRP or over. In a way, they are the enablers for the current situation. Kinda reminds me of the housing market as well.

As i said, this situation isn't exclusive to dealership. Remember how ridiculously expensive PPEs were in 2020 and part of 2021?

The issue with Si is... it is too new. In a normal situation, you probably would get 1 at MSRP or lower after 2-3 months since it is not something THAT many people want.
But because of the current market conditions, it is all messed up... Even a Civic Sport requires $1k-2k mark up, let alone Si.

When dealerships dont get as many cars as they need, they will markup their existing inventory. when they have too much inventory, they will give you a much better deal.
Even if we remove the dealerships in the currently situation, the manuf. would probably do something very similar as well. See Tesla.

Every business have same or similar practices. When your inventory is low and demand is high, you adjust the price accordingly. There are some dealers that took things way too far. Like that RAV4 Prime at $100k.. or the Si that a CA dealer has for $42k.



I would have picked the model 3 over a Civic Si any day of the week anyway.

Comfy

Exactly. You are picking the words out of my mouth. Thanks.
Onowindoo seems to be making contradictory statements by supporting and then bashing dealerships. Not sure what’s going on.
Tesla has essentially no competition right now. That’s why it’s able to charge the dealership level of prices to consumers and get away with it. The only time this will change is when other direct selling automakers enter the scene in volumes challenging them headon. Market forces will lower the prices to acceptable levels when cut throat price wars start for market share. Right now Tesla can play it easy and they can afford to price is as they like.
Rivian and Lucid are like toddlers aspiring to become an Olympic marathon runner (which Tesla is right now). The current legacy automakers are stuck in this loop of dealership model. That may change if and when the Chinese automakers enter the fray, not sure when that happens. Until then Tesla will ride the profits in USA. Sorry to keep rehashing this all over again. I’m glad that finally people are seeing the dealerships for what they are. An unnecessary middleman. The dealership model is doomed to fail in near future.

oonowindoo

It is called trying to be objective. not something a wannabe fanboy would understand.
If removing dealerships mean better price for consumers i am all for it. But i have my doubts, seeing what Tesla has been doing. But that does not mean i agree with many of their practices. :shocking:

I also bash BMW all the time, yet i am still buying them... i am sure you dont understand that either.

and when you use your baseless assumption as some kind of absolute truth, it will not help your case either.
BTW: where is my Robotaxi at?

Chinese Auto makers? It took Koreans about 3 decades to really enter the US mainstream market. You most likely will not see Chinese cars in the US as mainstream cars in your life time.
Not even going to mention the politics that would prevent that from ever happening in the US.

civicdrivr

iTrader: (9)

I don't think he's supporting dealerships, he's just hung up on this being a dealership model or Tesla direct sales model, no in between. And that's not where I'm coming from because, as we've seen, Tesla has random price hikes.

civicdrivr

iTrader: (9)

I think if we want to continue this though, we should probably start another topic in car talk. This doesn't really relate to Tesla, aside from them having a direct to consumer model.