Things are getting spicy this week as most automakers will report first-quarter financial results. The automotive world is in chaos and chaos is a ladder, but it’s a ladder attached to a diving board that stands atop a pool full of money. Everyone is trying to climb that ladder.
Let’s start with Honda and Volkswagen. Honda is teaming up with Sony to start selling cars, and I guess they aren’t thinking about using dealers because dealers are preemptively mad. The same goes for Volkswagen and Scout/Cupra.
Tesla had a rough quarter in terms of its sales and is hoping that price cuts to its assisted driving systems can perk up rates, but is it going to be enough? Investors will have tough questions for Musk this week, including queries about the price war in China, which is heating up.
And, finally, it wouldn’t be a Morning Dump without talking about Vehicle-2-Grid technology (V2G) and who deserves the money. The answer is, of course, you deserve the money, but you’re probably going to have to share it.
Dealers Publicly Tell Honda And VW To Get In Line Or Else
One of the advantages Tesla had in rolling out its cars is that it eschewed dealers. [Ed Note: Advantages in some ways, yes. But Tesla also historically has had significant issues with service. -DT]. This was a big deal and Tesla faced numerous lawsuits and other threats at the time but, by standing firm (and being the only EV game in town), Tesla managed to sell directly to customers.
Lucid and Rivian followed suit, somewhat successfully, as did VinFast and Fisker, with less success (both are going back to a dealership model/hybrid, assuming Fisker survives long enough to try).
What all those companies had in common was that none of them had an existing dealership network to deal with, which removed at least one vector of attack.
The same cannot be said for Honda and Volkswagen, two companies that rely on an extensive dealer network for all of their sales in the United States. Dealership groups and dealers themselves are extremely powerful from a political perspective as they exist in every single congressional district and give large amounts of money (in fact, car dealers collectively spend more on politics than automakers!)
I mention this because Honda has teamed up with Sony to create a new brand called Afeela, which will sell a sedan in 2026. Volkswagen, for its part, will sell vehicles from both the Scout truck brand and the Cupra EV brand in the United States.
Will they sell them through dealerships? It’s not entirely clear.
Geoffrey Pohanka, chairman of Pohanka Automotive Group in Capitol Heights, Md., and 2023 chairman of the National Automobile Dealers Association told Automotive News early this year that if Afeela and Scout circumvent franchised dealers, they would be challenged by state and metro trade associations with NADA support.
“Silence speaks,” said Pohanka, whose group includes multiple Honda and VW stores. “The fact they haven’t announced that they will go through dealers indicates they may not.”
Dealers aren’t messing around here, and to prove this the Automotive Trade Association Executives group took out this ad in Automotive News:
You can click on the ad to see it closer up, but it’s giving some real O-Ren Ishii The price you pay for trying a DTC model for either Afeela or Scout is, I collect your fucking head.
Specifically:
To avoid potential legal challenges across the nation and ensure full compliance with applicable laws and regulations, the surest path to sales success is through franchised deal
Bolding not mine. What this lacks in graphic design it more than makes up for in vibes.
I’m not sure many automotive execs would ever admit it, but in their private thoughts, I assume most of them, if they could, would go back in time and get rid of the dealer model and instead sell and service cars directly. [Ed Note: I’m not sure about this. Pre-internet especially, dealerships were critical to any company’s success. And even now, being able to test-drive and also service your car near your home has value, not to mention the jobs that dealerships create in communities across the country. That said, I get that the reputation of dealerships these days isn’t so hot due to markups and the often-frustrating negotiation process and sometimes frustrating service issues and on and on. -DT].
Using new brands to try and attempt this makes sense. At the same time, it makes sense for dealers to try and stop this.
How Many Tough Questions Will Elon Musk Answer?
Tesla CEO Elon Musk will face investors on Tuesday as the company announces its Q1 financial results. We’ve already seen the company’s sales numbers and they’re not great.
Additionally, heavy discounting on the existing inventory of the Tesla Model Y likely cut into margins. How long will Tesla have to keep that up?
I have my theories about why Elon Musk might try to kill the $25,000 car, and it’ll be interesting for Musk to try and explain it (or, honestly, he could just switch directions and announce it’s happening).
You can see the most popular questions here, and they include a lot of what you’d expect (cell status, how are the robots doing) and a lot of questions about the cheap car, including:
- The recent reports that the low-cost Tesla (“Model 2”) is being put on hold in favor of the robotaxi initiative seems to be a huge/risky gamble. Could you please share thoughts on why you feel this is the right approach, to settle concerns of investors such as myself?
- What is the progress on the cheaper next-generation vehicle?
- When will Model 2 be available?
- How is babby formed?
And then there are tougher questions like:
Elon, can you please let investors know how you prioritize TESLA vs. X/Twitter vs. US immigration policy? A few years ago it seemed clear to me the ranking, but today it’s not clear to me as an investor & outsider
I want an answer to that one, too.
Can Anyone Actually Win The Chinese EV Price War?
While the Chinese EV price war is an obvious win for Chinese consumers, it is otherwise a potentially perilous exercise for both Chinese automakers and the Chinese economy.
I bring this up because Chinese automaker Li Auto doesn’t get talked about here in the same way BYD does, but the company makes China’s most popular plug-in hybrids. It’s also under pressure like everyone else and so it’s also cutting its prices by 5% on already desirable models.
Where does this end?
It’s unclear, but China’s official National Development and Reform Commission (NDRC) just announced that it’s going to get worse before it gets better.
Via Reuters:
China’s state planner expects an intensified price war among automakers of electric cars and plug-in hybrids this year because of overhanging supply, among other issues, the government body said in a statement on Monday.
The National Development and Reform Commission (NDRC) expected more than 110 new energy vehicle models among a total of 150 new cars launched this year, intensifying competition.
China is such a fascinating market and I think the NDRC’s analysis is probably correct. Demand is slowing, there’s rampant overproduction, and now 110 new models are coming! Can China’s economy maintain this forever or are they in for a Gabon Surprise or maybe a Mongolian Thrust?
Who Deserves V2G Money?
David got his power company to pay for half of his car, because his car is a piece-of-crap Leaf (that I love, actually). He listed a number of reasons why it makes sense for power companies to do this, and a big one is that a battery full of energy that’s charged off-peak can be used to provide energy back to the grid when necessary.
Charging can also be used to balance a grid if, say, A/C use goes up then chargers can be slowed down. It all makes a ton of sense. So much so that GM has a subbrand, GM Energy, that’s going to sell bi-directional chargers that can send energy back to a home or back to the grid.
“We believe our EVs will afford customers ways to use that excess energy from their EV to power their home,” said Aseem Kapur, chief revenue officer for GM Energy. “In certain cases, such as Texas where the grid incentivizes that, they can take advantage of that and save money.”
That could be a win for consumers and for automakers, as the kits cost up to $7,300 if you want the charger ($1600 standalone) and the vehicle-to-home kit ($5,600 standalone).
But, as hinted at in this Reuters article, what if automakers want a piece of the energy trade?
Automakers’ energy units will mostly lack the scale to aggregate enough EVs locally to sell power to utilities, so emerging platforms, including Kaluza or The Mobility House, aim to act as intermediaries, aggregating EVs across multiple brands.
Those intermediaries will also need to ensure EVs do not overburden grids if everyone charges when prices are low and discharges when they are high, Timo Kern, director of energy systems and markets at Munich-based energy research institute FfE, said.
As with all things these days, rather than a direct 1:1 between an energy company and a consumer, look for intermediaries that want to act as middlemen to charge everyone a little extra with the promise of doing a little better.
What I’m Listening To While Writing TMD
The Boygenius album came out last year and the merger of three great solo artists into one super group ain’t bad. Also, this video has monster trucks.
The Big Question
Do you think Honda/Sony and VW will be able to withstand a dealer onslaught?
Screenshot: Miramax
Over the weekend I visited the local KIA dealership. That would be Towbin “The King of Cars” KIA, for those who remember that show.
Last year, the ADM sticker on a base Soul was over $10k (!!). This year it’s down to a mere $5k! I guess that’s progress??
if only you could get a Chopper Edition KIA Soul
They mark up Kia Souls? What is this world coming to?
Dealer down the street from me is knocking $3500 off according to their website.
This doesn’t even include SpaceX!
HAHAHAHAHAHAH I missed that!
Neuralink and the Boring Company would like a word
Starlink, and the good ol’ taxpayer is funding most all of it. So there is that.
I know that it may come back to bite me in the a$$ someday, but I am currently happy to watch dealerships get screwed over.
We need service centers but even that part is terrible.
Say it with me folks, “Dealers add value to the car purchasing experience!”
…Dealers ass value to the car purchasing experience!
Yes, Reverend Jones.
Dealer ask you for more kissing ass hence.
No
I was gonna write this on the original DT article post, but that is basically dead. So here goes it:
I don’t understand how anyone thinks these rebates are anything but hypocritical. Sure, DT got a whole whopping $1k check. But what was the net effect? I’ll tell you…
DT gets to pay more in carrying costs to own an extremely inefficient car that basically serves as a storage portal for a huge energy conglomerate (which would cost way more to store anywhere else). As a bonus win for the energy company, it frees up storage space for them to produce MORE energy whose usage is “to be determined.” which they make a tidy sum on. Meanwhile, the subsidies are net effectively paid for by ALL taxpayers under the guise of the (figment of someone’s imagination) “Carbon Credit” that evolved out of nothing.
The end game? The energy company gets to churn out more juice at up-marked prices, using the same consumer as the power bank that they are already paying for, and double dips on both. Since energy production is not at the level of actually being carbon-neutral, it effectively creates MORE harm to the environment by allowing the company to run full bore 24/7 on dirty fuel sources. (i.e. coal or natural gas flowing at max rates.) As an added bonus, the consumer is duped into thinking they are “helping solve the climate ‘crisis'” by inadvertently creating more of a problem.
Guess who wins? That’s right, the energy company and the State. The loser is the consumer who gets baited by the shiny object, in the form of a one-time check, who pays way more in the long run, in order for the State and the energy provider to churn, churn, churn.
It’s a Three Card Monte game, and people are happy to just somehow grab the stale crumbs that fall off the table.
If you fall for the idea that it is a “good thing”, you are a sucker.
You will own nothing (not even electricity you paid for) and you will be happy about it.
Preacher, you are already familiar with the choir. Sure, our audience might not be as big, but they know when to stand and how to interpret the readings.
Did you think that before, DT was distilling his own gasoline out of garbage? In our society, you’re going to get screwed by big corporate entities no matter what you do. Cali’s problem at the moment is that they’re generating too much solar electricity, they don’t have any place to stash it.
I read a few years ago Honda and several other automakers were forging ahead with an agency-style retail network in Australia, which would eliminate the dealer franchise system altogether. That led to a massive lawsuit. I don’t know what the outcome was, but it did get me to thinking: Could Honda actually do that in the US? And could VW give it a shot?
To answer my own question, Honda could try it and possibly get away with it, considering the next group of showrooms are company-owned, and they start buying out retiring and distressed dealers. The consumers probably wouldn’t know the difference. VW is a different case. Their relationship with their US dealer network is already stressed, with Corporate continuing to deny them a competitive pickup product (see Amarok, Saviero, ant the Tanoak concept from 2019 that was destined for production but cancelled at the last moment), and the recent UAW victory at Chattanooga now means the union will likely back the dealers in a lot of issues.
Does anyone here remember Daewoo’s retail plans from the late 1990s? They used a company-owned retail operation in the UK in 1996, omitting the traditional dealer franchise completely, and planned to use a similar model here in the US (That was a mega-fiasco: 16 retail centers across the US, with repairs and service performed at the local KMart and Penske Auto Centers, and cars sold via an independent sales representative, similar to Avon, Mary Kay, Amway, etc. I actually considered applying, but chose to opt out.). The British dealer groups rallied against Daewoo and forced Daewoo UK into bankruptcy, while Daewoo US tossed those plans away and signed dealers. I’ll bet Tesla looked at the Daewoo case and fine-tuned it.
I’d have a lot more patience for dealerships if they had a few cars to test drive or get someone into a car right away, but mostly assisted in ordering the car someone wants. Instead, if I go to a dealership and tell them what I want, they’ll almost invariably try to convince me that I should buy what they’re selling.
“Well, I could order something for you, but you never know what the incentives will be like.”
“You want something with these features? Here’s something with some of those features in an entirely different category of vehicle.”
“What would it take to get you into a car today?”
My ideal dealership would have a couple examples of each model, which would hopefully cover most/all the common options, so a person would be able to test the ventilated seats or see the color, just maybe not on the model they want. You’d order exactly what you want (or, if you need a car now, buy one of the test drive vehicles or a used car). Salespeople would not rely on commission, but have a fixed salary or hourly pay. And, of course, they’d have a service and parts department to maintain your vehicle.
Realistically, we’re never going to get rid of dealerships. But we could clean up the dealership model. Does that mean manufacturer-owned dealerships? Probably not. It just means manufacturers actually follow through with things like enforcing markup restrictions, while also being sure to provide good support for ordering and plenty of accurate information for the dealers to access.
“What would it take to get you into a new car today?”
My least favorite question as it directly relates to their interest but not mine. What they’re saying is, “I want to sell you ANYTHING today, regardless of it’s what you really want.”
The exception that proves the rule is the rare alignment of the planets when the car you’re interested in is also one the dealer wants to offload. In which case it’s game on!
“what’s the most you can spend a month?” is my least favorite question. I am an accountant, so already come dialed in on the numbers. Monthly payment is relatively inconsequential, the actual price and payment term of the vehicle is far more important.
That’s the one that gets me angry. I was trying to put in an order for an Equinox EV and the salescritter called me to hammer out the numbers before they’d put in the order (while not being able to lock in numbers until they had it).
He wanted to know if I wanted to finance, buy, or lease. That depends on how the numbers shake out once we know when the car would be there and is entirely irrelevant to ordering.
He wanted to know what monthly payment I wanted. I told him that I would take the monthly payment that gave me the best deal, and it would be dependent on what was offered at the time. He tried to come back at me with “oh, so you’d be fine paying $2000/month?” Sir. I know how much the vehicle will run, I know you can do the point-of-sale tax credit, for which I qualify, and I have an idea what interest rates will be like. If the best deal is a high payment three year loan, there’s a pretty good chance I’ll make it work. And it won’t even be that much.
They always hate that I don’t want to play the four square games. One got really frustrated when I told him the price I wanted on the car and he came back to tell me he got me there by adding to my trade. I told him that he’d added just enough that the trade was in play, but that he’d have to get the car to the price I was asking for. I also don’t subscribe to the idea that $19,900 is $19k, which frustrates them, too.
You had not made up your mind on whether you wanted to purchase, rent, or, finance a massive purchase before you wanted final numbers?
That seems unlikely to result in the best outcome…
The order won’t be in for a few months. I know what interest rates are from my credit union, but Chevy won’t promise an interest rate in advance. I’ll consider their financing when I know the rate. And I’ll take a look at the lease numbers to see if leasing is the best bet (it probably won’t be, but I do not reflexively rule it out–it can be surprising if they have specific lease deals).
Chances are, I’ll finance with Chevy, because I suspect they’ll be offering the best rates. But I’m not going to commit without all the numbers available. That would not result in the best outcome.
Fair enough in this instance.
It seems to me, though, that knowing whether you want the car under warranty for 24/36 months or whatever, or if you want to actually own a substantial piece of machinery long term, might be worth knowing ahead of time considering it is the primary driver of price.
It kinda sounds more like you walked into a Baskin-Robbins and wanted samples of 3 different scoops before making up your mind.
That’s a good way to piss off the employee, and assure the worst deal. In fact, that’s the worst way to spend multiple thousands of dollars.
If he can’t actually give me the interest rates (he can’t, since they deal based on the month, generally) and wants to get me to commit to some payment/month, I’m not even getting to sample the three different scoops. My credit union is the one sample I have, then I have the clever name they gave a flavor that doesn’t really tell me what it tastes like for the other two. Until they can give me the actual numbers, I’m not committing to their financing or leasing deals.
I want to own the car. But I want to own it in the way that is most financially advantageous for me.
Never commit to something without knowing the options. Including that ice cream. Try the flavors.
But you can certainly ballpark the numbers based on what they offer for lease/purchase/finance on your own to get an idea of which one is gonna work best for you over the phone.
You say you want to own a car, so that should eliminate leasing. However, if you are considering a lease buyout, you can ask what today’s buyout would be over the phone and then crunch numbers that way.
I don’t see how a visit to the actual desk in the dealership makes anything change as far as ratios of value per month. Know where the gaps lie and if rates change, you can see if the gaps remain consistent.
I just don’t get all the confusion when it’s 9th grade math made easier with online calculators. Be informed and know their spread margins.
That’s all there is to it. No need to kick rocks like you got screwed somehow.
There’s no confusion, he just wanted to know how I wanted to finance/lease/buy without providing the numbers. He literally could not provide the lease buyout or the interest rate, since he doesn’t know when the car will arrive or what the rates will be then.
I know how to do the math. That part’s easy. I know I’ll get the best available rates. But I can’t compare my credit union rate to the loan he’s not offering a rate for. Or the lease he doesn’t have numbers on.
Cars are one of many possible uses for a pile or flow of cash. I bought a car last month, walked in with a similar approach: if the dealership is offering interest rates that beat my alternative uses for that cash, I’ll finance. If not, I’ll pay cash up front.
You spent the time to go there first before knowing the offered interest rates? Did you think they were gonna run a “From 12-2 Only” finance special?
You trust advertising to precisely match real-world availability and what you end up walking out the door with?
No, but I do trust an informative and directly to the point phone call with a specifically named salesperson, including an email with what has been discussed.
Promise and proof are the hallmarks of any transaction.
I was getting an EV last year and given the vagaries of tax credits where I live, the decision to purchase v lease was contingent on how the credits stacked on top of the purchase price.
Not sure how similar this is to what Drew is talking about but I was kind of in a similar boat.
Since I’m here, lol. NEVER buy an EV. Leasing should be the only thing considered.
If you buy a new EV, you must have trouble tying your shoes.
I mean, there’s probably a price point where it would have been reasonable and I’m not a super big fan of leasing but yeah it was pretty hard to come up with a model where purchasing was a good idea.
There’s a dealer near me that was trying to sell me a Blazer EV instead of the Equinox EV I want (and has the price low enough to make it competitive). They’re getting there by offering a significant amount of incentive to go with finance. It was enough that I considered it. But I think the Equinox will allow me to keep my options open and consider leases and financing, while also being a touch smaller, which I like.
That said, if they won’t give the tax credit on the lease, that’s $7500 that is hard to hand over, so we’ll see how it all shakes out. I decided an Ultium EV seems worth owning (the battery design makes it more repairable than a lot of others and they have good charging times as they stand), so I’ll do whatever makes sense.
Dude, must you be so negative and insulting? People make different decisions from you based on different factors. It doesn’t make them idiots.
The last time I was handed 4 squares I crumpled it up and threw it in the trash the first moment after the sales man got up from the table. He seemed really caught off guard by it, and I told him all I need to know is the rate they would currently finance a certain amount of money for over 4 years. He attempted to do everything but what I said. About 10 minutes later I pulled a preapproved credit union check from my pocket and said we’ll handle this like a cash payment now.
Many years ago I was in a Toyota dealership just to investigate what it would cost for a cheap commuter car. When I was handed the 4-square, I genuinely did not understand what it was! I just told the guy the only number that matters is the final price. I had no trade-in. I didn’t need to finance, I would just pay cash. Of course, I’d consider financing if it got me a great deal. But to this day, at 50 years of age, I’ve still never financed a car. Even when interest rates were very low, I just never felt the opportunity cost would make a difference in my overall wealth. I preferred to just have the title in my file drawer and actually “own” what I bought.
I’ve financed, leased, and bought outright. As the rates increase, there’s a good chance I’ll be going back to cash purchases for the most part, but I’ll always compare the interest rates with what the cash is likely to earn me, because there are deals to be had.
The lease was the worst deal I made, because I could have gotten the PHEV tax credit when I filed taxes. I was afraid I wouldn’t be able to get the whole credit because I was claiming a small loss on an investment, but it was not nearly enough to reduce my overall tax burden. But it still actually shook out to about the same as financing, other than early payment giving me slightly more benefit on the financing side.
I walked into a Toyota stealership in an MIT Engineering shirt, and they still tried to screw me over on some basis lease number. Does he expect his customers to be braindead?
Most of these sales guys were told to do it a certain way. That is what they know, and they will actually get reamed by the sales manager if they come into the office without the pieces of information the “script” tells them to get.
“What is his monthly payment”
“Umm, he said he doesn’t care about monthly payment, he wants the total price”
“Go back out there and find out what he wants his monthly payment to be”
I had a mattress sales guy pull that on me twice during a visit when I had opened with I’m not buying today, I’m doing advance research to narrow down options and my spouse has to try it and they’re out of town. When he started for the third time I just left.
Ironically we did buy from that store after all the other local places had failed us, because the guy who owns the franchise was nice, educational, and not pushy.
Well, going by that list, I now learned that the third largest state in the US, New York, has like 5/6 different dealer associations. Knew Syracuse has one, and just assumed the rest of the state was in their own association. Guess not.
It’s wild to me Rochester has their own, but not Buffalo. Might be a part of the Niagra one.
Got to be ready to fight to keep your middleman status at every level.
LOL
Anyways, I was surprised to learn that dealers are aligned with consumer interests. They hide it well, presumably out of modesty.
The only consumer interest they have in mind iswhat they can charge on finance contracts.
Anyone who thinks direct sales are going to eliminate pricing shenanigans need look no further than Tesla over the last 2 years.
I’ve been on record here saying the dealer model has worked for me in the past, works well for most of the items we buy on a regular basis without even thinking about it, and is not inherently more or less predatory than a direct sales model.
No matter what, someone is always trying to reach into your pocket.
It’s an interesting point! Tesla theoretically saves you time and money by not having dealers, and then so dramatically swings the price on the open market that essentially everyone who bought a Model Y before the beginning of last year got entirely screwed on resale value.
Whether you get screwed buying the undercoating or by the company changing prices the next day with no warning, it’s all the same to your wallet.
That’s why I think the appeals for direct-sales are rooted in emotion rather than logically saving money. As if Honda or Toyota has your interests at heart either, and would automatically sell you a car for what they sell to their dealers for.
At least you knew what the price is when you walked into the Tesla store and could make a fair assessment of whether that was a good deal that day or not. And you didn’t have to worry about hidden bullshit fees and the finance guy trying to squeeze extra money out of you.
It’s a depreciating asset. You buy a newly launched phone and eventually that phone will be on sale when the next phone comes out which in turn hurts your resale value. That’s just how it works.
If you don’t know what the price of a car is before you walk in a traditional dealership, you’re doing it wrong.
I know what I’m willing to pay. I know the price they have listed. I might even know what they said the out the door price was going to be in an email if I was at that stage in my shopping experience. None of that means the price of that car is in any way 100% certain before I walk into the dealership that day. If I can buy online without a dealer getting in the way, that price is right there on the screen. And I’d bet someone is tracking that price for me over time so I can see if it is currently at a nadir or close to it.
If I have a price in writing and they go back on it, I’m out the door and they don’t get a chance to fix it.
“No-haggle” dealerships exist. And any dealer will take your money in a heartbeat if you come in and offer to pay MSRP. For some people it’s worth thousands of dollars not to haggle. That’s fine. For me, doing the prep work ends up saving a lot of money over someone less informed.
It’s like talking to people with slumped shoulders sometimes.
And then they’ve wasted your time. Hell, even if they honor that price you’re still going to be stuck in the damn finance office saying no for 30 minutes.
Sure, any dealer will gladly sell at sticker. We’re talking about price transparency and the smoothest possible transaction for the best deal of the moment, not just forking over money blindly and praying for the best.
The dealership model is a relic of the past. Cutting dealers out is a net-positive. I have no idea why anyone (who isn’t a dealer themselves) would argue in their favor.
Not everyone’s top priority is the smoothest transaction or price transparency.
I’ve bought most of my cars far under sticker, in some cases many thousands under. Nothing I’ve done to get those prices is anything that millions of others couldn’t do as well.
Changing to an everyone-pays-MSRP model hurts me and anyone else who puts in work to do better. Why would I want that?
I should also add, the major OEMs do not want direct sales for their volume brands. Oh they might play around the edges with these start-up style “order online” things, but there is zero chance Ford, GM, Toyota etc want to be in the trade-in business, or directly employ thousands of salespeople and technicians, or keep hundreds of millions worth of product on their own books rather than offloading it to dealers.
If they wanted direct sales, they could squash the auto dealer lobbies like a bug. But the status quo suits their purposes, so they won’t.
I think some of the best things that have happened for consumers are the online configurators with pricing (so you should be able to track how much various options/add-ons are worth). The online order stuff is a nice expansion of that. It does seem that the domestic brands are more consumer-friendly if you want to order these days.
Toyota, Subaru, etc. have the allocation systems that mean buying what the dealer can get because you might wait forever for what you want. Those are where you see the most markups for popular models, since all the dealerships in the region are trying to pull those models from the same limited pot. And the manufacturers don’t seem to mind limiting production of popular models, so they must not have a problem with the markups, either.
And, yeah, the automakers are absolutely complicit. If the dealerships playing games with people (such as the reports of markups on ordered Broncos after arrival when they were in high demand) were actually punished with reductions in allocations or the like, they could be brought in line. But it doesn’t actually hurt Ford or whoever, so they say they’re going to fix it and continue to look the other way.
And, yeah, the automakers would definitely not be our friends in the process, but I think most people look at it and wonder what value a middleman adds. With most other commercial goods we don’t buy directly, the store tends to carry competing brands, so you are able to comparison shop more easily. We don’t get much of that from the dealership model, just franchises selling individual brands.
I agree that this is a problem and wish it was addressed more harshly.
There’s a lot of it around here, or at minimum the competing dealers are literally next door to each other.
Around here, there are few combined brand dealerships. There’s a Kia/Mazda, and one tiny lot that throws a few Hyundai and Mitsubishi together, but the rest stick with their brand umbrellas. And going from dealership to dealership means jumping through the hoops with someone at each dealership and sometimes bouncing back and forth. I’d really like to find a decent salesperson and work with them to find the car and deal that works for me, but that’s not an option for new vehicles.
Your point on the OEM’s not wanting to be in the trade-in business is why Tesla is notorious for giving low trade in values on all vehicles now.
I would argue that after the bullshit the dealers pulled during Covid, most people I know would roll the dice on the direct sale model. People have had enough. I don’t know anyone who “likes” car dealers.
I also think our pal V10emous has probably had slightly better experiences than the norm because he’s mainly been looking at more expensive/rare cars outside of his wife’s Sienna and…while I don’t want to be “that guy” and bring this up, he’s a dude and if I’m not mistaken (sincere apologies if I am), he’s white.
Many of the horror stories I hear about dealerships come from women. At least in my area most dealerships are good old boys clubs that have a bit of a frat house vibe. I’ve accompanied multiple friends and family members when car shopping since I’m “that car guy” and the contrast between how my dad was treated and how my mom was treated were pretty staggering.
I also have to run through all our maintenance documentation whenever my wife takes her CRV in for service because every single goddamn time she goes in they tell her something expensive needs to be done when it doesn’t. I’ve actually had to get on the phone and tell them to fuck off before. OH YOU NEED THIS $900 SERVICE…the fuck we do, we took care of that at 60k and it’s not due again until 120.
There’s also the highly publicized incident that happened at a dealer network in the DC area who was offering significantly worse financing to minorities and had to pay a big settlement. There was an article on it on this very site, this isn’t even me trying to stir the pot or anything.
Oh, good grief.
It’s not about being white or a man. It’s about who holds the pen to sign the paper and whose tongue speaks the language.
Only knowing your shit and being unapologetic about getting it done right is the key. Nothing else matters.
That’s the whole shebang.
I mean, it actually is though.
https://www.ftc.gov/enforcement/refunds/passport-automotive-group-refunds
No it’s not. It, again, boils down to knowing your shit. The dealership group may be shady, but those folks signed the paperwork without understanding it.
That’s on them.
(we are getting to close to the limits on replies to each other for one day, lol)
“You have to do extensive research to not be screwed over” is a really poor case to make for dealers, dude.
How so? Do you not do your due diligence on your roofing contract or even check the ripeness of your bananas?
Unlike a car dealership, roofers will send you a straightforward price and not demand you “come on down” to the roof dealership or whatever.
Again, that’s on you to decide whom you choose to do business with, and to why you would or wouldn’t.
How can you be a victim when you volunteer?
Hey if the F&I guy bullying people into buying extra warranties and dealers keeping the keys to your trade is how you want business to operate in this country, then there you go.
But you’ve summed up why most people deal with car dealerships as little as possible: they aren’t “volunteering”.
They sure as shit are! There is no law saying you need to go to a shitty dealership or talk to someone unethical.
Not directed at you, well, directly, but grow a pair.
It’s your money. Fuck them.
Us: “It’s crappy that you have to run a gauntlet of bullies, shysters, and straight-up liars to buy a new car.”
You: “Grow a pair!”
I guess we’re done here.
It’s not crappy, it’s called acting in YOUR best interest. Why would you knowingly choose to transact with people whose interest least align with yours?
I don’t get it at all. You are only a victim of the circumstances you choose to participate in.
Jeez. Is it that complicated?
I guess you and I just have a different moral compass.
Yeah, but he’d REALLY like to believe it isn’t, and that’s almost the same, right?
A few things with this:
-Looking for rare cars would tend to make the dealership experience *worse*, not better. When I went to buy my van or my truck, every Toyota or Ford dealer in the country had one in stock, or could order me one in the case of Ford. Theoretically, hundreds or thousands of entities competing for my business. There weren’t that many Dodge Vipers in stock on dealer lots.
-I’m not a woman, so I can’t speak with certainty about that part. My wife doesn’t seem to complain about differential treatment, and the Ford dealer just tried selling me a bunch of services I didn’t need for my truck, so that at least seems equal opportunity. Again, I’m not seeing how this would be different if Ford was paying these guys directly, rather than a franchise.
-I don’t question the statement that I’ve had better experiences than most when buying cars. What I do question is the idea that anyone with an IQ above room temperature can’t do exactly what I’ve done. There’s nothing radical or complicated in asking for pricing before one enters the dealership, firmly declining add-ons, etc. Project a “no-BS” attitude and you won’t get any. Be willing to walk away, and they won’t want you to.
To your last point: okay, and if you know what you’re doing you won’t lose too much money at casino poker, either. But why should we legally mandate a “vibe check” to buy a car, where if you fail, you get charged thousands of dollars extra?
Who said anything about legal mandates?
I have never opposed making direct sales legal, I just try pushing back on the idea that it will somehow solve all our ills.
For most of the last several decades, if you went into any traditional dealership and offered to pay MSRP for a vehicle they had in stock (aka what direct sales advocates are asking for), they’d agree in a heartbeat.
Getting “charged thousands extra” is the worst possible way of saying “didn’t prep before buying one of the most expensive things of your life”.
No, you admitted it’s not about prep, it’s about the attitude you project. So isn’t it obvious that people more uncomfortable with the process – young people, immigrants, etc – are going to get a worse deal?
This is exactly what I said:
Attitude/confidence is certainly part of it, but not the only thing.
Again, if you walk into a dealer and say, “I’ll pay MSRP as long as you don’t try to sell me anything extra”, 99% of dealers are going to accept that for 99% of models currently on sale. But that’s exactly what direct sales would be! So what you’re really asking for is for everyone else to get as bad a deal as the least skilled or least confident negotiator, whereas I’m trying to educate those people so they can get the same kind of deals I do.
Yeah, if you walk in and volunteer to get taken for a ride (i.e. buy for MSRP, for most cars), they’ll agree to your terms. Great.
LMAO.
What do you think direct sales is?
GM, Ford, etc aren’t going to all of a sudden decide to sell you a car at invoice or holdback because you ask them very nicely.
Your admission that MSRP = “being taken for a ride” just means that any direct sales buyer is going on that same ride with them.
The direct sales companies change prices all the time. The difference is, everybody gets the same price on the same day. The dealership model, as you’ve laid out, means that less “confident” people pay thousands of dollars more than more “confident” people.
I don’t see that as a problem.
Your solution is affirmative action for confidence, and would mean people like me pay more for cars, while people like you don’t pay any less.
Even if you do find that better, your premise isn’t accurate. Tesla changes prices at random, and someone buying a car one day might have paid thousands more than someone buying the next day through no fault of their own. So how is that any different? Unless the whims of Elon Musk should count more for fairness than hard work and research on the part of the consumer?
Dealer-mediated car sales change official incentives all the time, too. So the “base price” is different day to day in both models.
This is an interesting statement to me. I am pretty smart, but I am emotionally stupid. Salespeople, if they are good, are trained to sell to your emotional needs, not your intellectual ones. I VERY MUCH get thrown off in MANY situations because of my low emotional IQ. Once I get away from a situation, and have time to process what happened, I typically pick up on what just happened to me.
Even though I have the intellectual ability to understand what is being sold to me, at the “point-of-sale”, I often don’t emotionally.
The difference is that when the manufacturer raises the prices, that money goes directly to the mfr and can be invested in R&D and other investments. A dealer markup just goes to some shitty dealer that provides no added value.
Please be honest with yourself and ask whether that is more or less likely than raising executive pay.
Do any of the major automakers seem constrained in their R&D spending because they don’t charge enough for their vehicles?
Scouts honor, Afeela a storm a’comin’ twixt dealers and OEMs.
Dealership owners can just tighten their belts and learn to live a little more frugally. They’ve definitely gotten a lot more than their fair share over the years of massive advantage, so their share shrinking won’t make me shed a tear.
lolololol not that I disagree with your stance, but there’s no way in hell they’re just going to “tighten their belts” voluntarily.
Oh, I know. It’s complete snark. They’ll never give up the gravy train if there’s any chance to keep it going.
“car dealers collectively spend more on politics than automakers!”
A government of the lobbyist, by the lobbyist, for the lobbyist. Is Not what our founding fathers had in mind! Now the manufacturers want to cut themselves a slice of the electric grid supply. Everyone wants to be a middleman, take a cut while contributing as little as possible.
The only way to fix America is by making lobbying illegal. No company should have influence on politics. They are too profit motivated.
Influence peddling, and middlemen are as old as society, and can’t be eliminated. The best we can hope for is to mute their power by heavily taxing their spending. Make them pay $3 directly to the national debt before $1 towards their cause.
There is something to be said for lobbying in the sense that the people that are most expert in a subject are often the people that work in the related industry. Those people should be giving input as laws and regulations are being considered.
The money aspect of lobbying, however, should be completely eliminated.
Unfortunately there are plenty of laws that were literally written by lobbyists to be rubber-stamped by elected legislators. Shit is broke.
Oh I totally agree. All involvement is problematic. I just think some is necessary (although it needs to be critically examined by government officials lolololol, who am I kidding?).
The reason that wealthy individuals & corporations can buy unfair favors from the government is that the government has unfair favors to sell. Almost all the lobbying proposals I’ve seen focus on the demand side of that equation while wholly ignoring the supply.
Our founding fathers kept the supply side tiny: didn’t have a federal income tax, and “interstate commerce” actually WAS just interstate commerce until 1912 or so. Return to an unimaginably limited government, and all that lobbying goes away on its own.
Notorious B.I.G. skipped the first part of his iconic line: mo’ power, mo’ money, mo’ problems.
I’m not sure that DTC would actually benefit consumers financially in every case (but it’s not surprising that one major intangible benefit of DTC is “don’t have to go to a dealer and put up with their bullshit”, which is something that can’t be ignored), but I hate dealers enough that I want to see them go down in flames.
As for VW specifically, I can imagine they can set up entities that are not under the VWOA umbrella and sidestep most of these franchise laws.
Honda and VW should do like Tesla did and make an attempt to cut dealers out entirely. If ordinary people have to work for a living, they shouldn’t be forced to pay for the lifestyles of rich men in suits who do nothing but skim off of investments.
Well that makes me not want to buy anything from a Pohanka dealership.
In reality, even if I could go on to Honda’s website and order an Accord for delivery, most people probably won’t do that if there is still an option to go down to a lot and drive off that night with the car you want. Lots of cars are sold because of the want for gratification. Yes, people don’t want to deal with “haggling” at the dealership, but they also want their shiny toy and don’t want to wait for it.
Most people also want, probably “need”, the dealership to buy their current car. They can’t afford the new one without the trade in. So the dealers wouldn’t go away.
It’s also trickier with high volume/NPC cars. I’m sure any of us would be happy to custom order something to our specs and wait for it, but the reality of stuff like Accords, RAV4s, etc. is that the people that buy them often need them fast. I wouldn’t even necessarily say it’s a want thing.
A lot of times cars wind up totaled in one way or another, and a lot of the folks driving high volume cars need them for work, their family, etc. and wind up in situations in which they literally can’t wait a few weeks. A lot of those cars also wind up in the gig economy for ride sharing/food delivery/etc. and if you’re in that hellish and unforgiving industry a day or two without a car means a day or two with no income.
Obviously enthusiast cars are a lot different since they’re usually wants rather than needs. When it comes to being useful transportation my car doesn’t do anything a normal Kona can’t. The same can be said for a sports car, Civic Type R, etc. Anyway I live in DC and I was already skeptical of Pohanka because they’ve been hoarding enthusiast cars.
I want to say the last time I checked they had 5-7 Integra Type S-es on their lot, and you know what that means! Markup, baby. So color me shocked that the fat cat behind the network isn’t too keen on doing anything that’ll help consumers…
Their Lexus and Acura stores are closest to me, so they’d be the place I’d look first by default. Just because I don’t want to drive 45 minutes in Northern VA traffic just to look at a car.
Average people might have less an issue with the Dealership argument if we didn’t see 4-years of price gouging by dealership networks where the OEMs couldn’t/wouldn’t enforce pricing models.
Honestly: seeing markups on a Honda Civics at dealerships past the sticker price of a BMW-3 doesn’t make me want thank dealers.
But, such a statement put out by the ATA, just reeks of grandstanding. It’s unlikely they have such legal standing, but will purport that they have such a position – in having worked with automotive OEMs and their own unions, they all puff out their chest and wave bold statements and claims despite their actual positions being far weaker than they portray. In hopes that either you back down, or that they can negotiate a better position.
Its tough as a consumer to see how much value dealers add to the sale when they spend so much of money they get from consumers on lobbying.
I’m going on the record-I’ve never understood the Boygenius hype. I like each of their solo work, particularly Phoebe’s, and Lucy is local-ish (Richmond) and I always love it when one of our own makes it big. But the music they make together just kind of sounds like…exactly what you’d expect it to, I guess?
It’s fine. I certainly wouldn’t rush to turn it off when it comes on. But idk if it’s worthy of the, what was it…5 or 6 Grammies they won? Sadgirl indie is definitely a thing and a real darling of music critics but I’m just not sure that I think Boygenius is necessarily the most noteworthy stuff to come out of that scene.
I personally find Soccer Mommy and Mitski to be a bit more interesting. And I’m not sure if you can really count her as sadgirl indie as she’s more of a surrealist pop artist but Caroline Polachek’s solo stuff has been incredible so far and has really interesting visual elements paired with it. I’d almost say it’s like if someone added several tabs of acid to Taylor Swift’s poppier stuff (like 1989) but I don’t think that even does it justice.
Music doesn’t have to be interesting. It can resonate with a person and their personal experience. When it comes to that aspect they have very nearly perfected it and the rabid fans have demonstrated how powerful the effect is. Another (mostly) local and comparatively uninteresting act is Oliver Anthony. Its not the delivery, its the message.
I mean that’s basically 90% of the reason why Taylor Swift is as big as she is. The vast majority of her discography is more or less just varying shades of inoffensive but she writes lyrics that make pretty much every single 12-40 year old woman feel understood.
I’m a huge Caroline Polacheck fan (also Mitski and Soccer Mommy and most of all Angel Olsen). I should do a Caroline Polachek TMD song, but which one? Bunny is a Rider maybe?
My sense of Boygenius, being a fan of all the individual artists as well, is that I have to be in the mood for it, but when I’m in the mood for it there’s little that hits quite so well.
If you’re going to introduce CP to the gang I think it makes the most sense to start with So Hot You’re Hurting My Feelings since it’s such an easily digestible bop. They can then go deeper into the weirder stuff when they’re ready haha.
I don’t get them either. I guess what they make is fine for what it is, but it’s not “good”. To me they reek of overproduction to present a product, rather than anything honest. I get the vibe of a very Holden Caulfield-esque phoniness about it all.
I struggle with music in general (and I’m not saying this to brag at all) because I know so much about it. I’m a multi instrumentalist that’s had some classical training, I’ve probably seen close to 100 different acts at this point, I have an extensive record collection, and I’ve studied a wide variety of stuff over the years.
That being said I do really try hard to be in the “let people enjoy things” camp and operate from the assumption that probably 90% of people don’t perceive and understand music in the same way that I do, and that that’s not a bad thing. As a musician I also connect with music much more than lyrics other than in rare circumstances, so a lot of the more stripped down/basic stuff that’s focused mainly on lyrics very much isn’t for me by its nature.
However, I really don’t get the Boygenius hype, mainly because I don’t think the final product is greater than the sum of its parts. It’s literally just Phoebe, Lucy, and Julien doing what they all do well as a unit rather than individual artists. It’s not bad, if anything it’s pretty decent. But I don’t think there’s anything particularly extraordinary going on…although that’s usually how it winds up going with supergroups.
We are basically on the same page here. Also, I used to put on concerts for some nice acts back in the day.
For your supergroup point, The Traveling Wilburys, Temple Of The Dog, and Tuxedo are pretty awesome outliers to that point.
Giraffe Tongue Orchestra and Arcadea are other “supergroups” that work well.
Is the dealership thing relevant since they’re talking about new brands? Every Honda dealer is not also an Acura dealer and I can’t go buy a Tiguan at a Porsche shop. New brands, new rules.
Unrelated: I applied for a gig with Scout and got nothing back. Jerks.
Depends on the actual words in the franchise agreements. Even if it isn’t relevant, the NADA will try to make it painful for Honda/VW to do it, and hope they just cave and let Crazy Joe sell Afeelas and Scouts.
Afeela is a terrible name by the way, now that I type it out.
Would you like to play a game of chess?
The phrase “full compliance” always reminds me of the scene in ‘Fargo’ where Steve Buscemi’s character (with Peter Stormare riding
shotgun9mm) has been pulled over by the police and is unsuccessfully trying to talk his way out of not displaying a temporary tag/license plate. The situation does not go well.I’d like to think the listed dealerships were not alluding to that scene but who knows.
OTOH maybe Jerry Lundegaard is sort of a dealership hero based on his handling of the Tru-Coat conflict.
I have to think some creative lawyering with subsidiaries and/or spinning off separate companies would get the automakers around the various laws, but I have no idea and it probably varies by state.
The dealers of course have tanked their reputation so badly during and after covid that Congress probably has a higher approval rating. It’s shocking how successful they’ve been in entrenching their position via lobbying and since there hasn’t already been a popular uprising to get laws changed, it won’t happen now that prices are coming back down.
It’s like one of those shows where everyone is a bad person. I don’t trust the OEMs to not engage in bad behavior at service stations they own, but the dealerships have proven they are unscrupulous already.
If one day I find a stealership owner and Benito Mussolini in the river, I’d have a hard time deciding whose head to push deeper into the water.
“If I saw you drowning, I’d toss you a barbell.”
Woody Harrelson to Matthew McConaughey in True Detective.
“Everyone deserves a respectful burial. I’d buy him some concrete shoes.”
–me, being on Autopian while in work meeting
Ugh, if you stick me in a meeting that lasts over 30 minutes I’ll start fitting myself for concrete shoes. The exceptions are meetings that go wildly off topic or where they serve lunch. I’ll put up with a longer meeting for free food.
I’ve long discovered that if I split my screen with Autopian on one side and Teams/Zoom on another, no one can tell I’m not paying attention to the meeting.
As a structural engineer in large projects, I’ve been in meetings in which my contribution can be measured in individual syllables. In single digits.
Well dealers, it’s time to step up and demonstrate the value you provide that isn’t a mark-up.
Dealers provide lot$ of value to $tate repre$entative$ and $enator$.
Which they will thusly do by adding on even more mark-ups. For further explanation of their strategy, see: Eric André shooting Hannibal Buress.
I was in a Kia dealership this weekend looking at a Sorento PHEV. I looked at the window sticker and said “And you’re kidding with that $4995 markup on a leftover 2023, right?” The salesdude waved his hand and said “Oh, that’s my job to make that go away.”
Greaaat, thanks for that value-add, dealerships.