People often view dealers as on the side of automakers in a transaction, but the last couple of years have been dominated by dealers pushing back against their brands, often for the at least incidental benefit of consumers. None of this is black-and-white, of course, though it’s likely more strategic if you go into a purchase or warranty claim with the goal of working with the dealer to get a better deal at the expense of the automaker.
I mention this because, of course, Tesla showed that it was more profitable to skip the dealership experience. Is Tesla the rule or the exception to it? European automakers have been attempting an “agency” model to try and augment dealers, similar to how Hyundai is trying to work with Amazon to drive sales. So far it’s been a failure.
If you read The Morning Dump regularly you know it’s not like Germany needs any more automotive failure. The three big German automakers had a rough year and now Chinese automakers are sniffing around Volkswagen factories in Germany. It makes sense, right? At the same time, China is raising retaliatory tariffs against Europe and the United States.
And, finally, the Feds made a deal with Toyota over diesel emissions cheating. That’s right! Dieselgate never ends.
Mini And The Agency Problem
Automakers seem to be enamored with the idea of transacting directly with consumers, yet, for all their efforts it doesn’t seem to work. Audi bought the rental agency Silvercar, only to shutter it. Cadillac, Porsche, Volvo, and many others attempted a so-called ‘subscription model’ for car ownership, only to abandon those projects.
Hyundai is trying to get dealers into cars via Amazon, which has sort of worked, though all of those customers do still end up at a dealer. For traditional automakers, state franchise laws mean it’s almost impossible for them to completely ignore the existing dealer network. The idea that Volkswagen might sell Scout and Honda might sell Afeelas directly to consumers has dealers revolting.
In Europe, companies have tried to use an agency model that outsources some sales, mostly to online portals. Dealers in this model have less work to do as the customer comes to pick up the car with the details of the deal worked out, but dealers also make less money.
It hasn’t been working. Here’s Cox Automotive on the logic of it all:
The pitch for agency was that it would allow established OEMs to cut their cost of distribution in half to match the reported 15% level of Tesla, with ‘fixed’ or ‘transparent’ pricing preventing dealers from ‘giving all our money away’. This is wrong on every count.
Tesla probably did have a much lower cost of distribution until around 2021, but that was when there was very limited choice of premium BEV product and capacity still lagged demand. That has now changed, and Tesla has repeatedly slashed prices in a highly visible way and now sells from inventory rather than from the order pipeline. Its volumes have dropped for each of the last two quarters, and it has slashed headcount by 10%. It has become ‘normal’.
Cox’s Steve Young blames consultants for dangling the idea of savings in front of automakers, who jumped at the idea without actually taking the many important steps necessary to make it work. Here’s the other issue:
The almost universal problem with agency implementations to date is that OEMs continue to push excess supply into the market, and they have not developed new pricing mechanisms that allow them, or the retailers on their behalf, to achieve a matching demand. Beyond the unlikely scenario of OEMs following a strategy of matching supply to real demand, the theoretical answer is a sophisticated, centralised dynamic pricing approach that adjusts the offer continuously through promotions and deals that result in a supply-demand balance on each model line to meet the targeted volume. This is effectively a more precise approach to metering out how variable marketing funds are applied compared to current approaches that often result in knee-jerk reactions that result in deep discounts in some fleet channels and pre-registrations by retailers.
Carmakers are going to carmaker, and there are reasons why a company will continue to produce a car even if it ends up not being exactly what the market wants. See: Almost every car Nissan and Stellantis sold last year.
Ford planned to do an agency model, and then changed its mind. Volkswagen and Audi had to apologize for how much chaos the model caused in Europe.
BMW’s 2024 wasn’t as bad as the one Mercedes or Volkswagen had, and BMW even managed to improve its electric car sales. One obvious weak spot was Mini, which saw sales decline by 17.1%.
Why? From Manager Magazine (translated):
The brand has “renewed its entire portfolio” in 2024, it simply says. Model changes can cause dents in sales figures. Production of the old vehicle is being scaled down, and the new one is not initially being built at top production speed. Mini also had production problems during the year, and in the first half of the year dealers complained about too few cars being available. This explains some of Mini’s lean months in 2024.
But a closer look at the statistics reinforces the impression: The brand, which has a winged wheel as its logo, crashed last year for other reasons.
Dealers are happy to point out that Mini’s attempt at an agency model isn’t helping:
It is often the details that are annoying. The purchasing process has become too complicated for customers, complains one dealer. For example, they have to register again with BMW even if they have been buying cars from their dealer for many years. Mini demands too much from prospective customers, confirms another dealer: “The customer does not want to answer 1000 questions before he gets his car. He has not had to do that before.” His salespeople “don’t want to be the buffers.”
Obviously, this is mostly from the dealer perspective and a lot of the problems seem solvable, of course, as the rollout of any new and complex system isn’t going to be smooth. If the sales model is aligned with the production model then maybe it can work, but that’s a big maybe. As one dealer said about BMW’s move to make all sales via agency in 2026 in Germany: “We cannot afford a disaster like the one at Mini.”
Chinese Companies In German Plants Make Sense
Germany was one of the countries that didn’t vote for EU tariffs, presumably because German companies really need China as a market. This is tough for Volkswagen, which made a last-minute deal to avoid plant closures in spite of financial headwinds.
What will happen to our poor VW worker, pictured above, in the future? One outcome, according to a source familiar with the thinking of the Chinese government who spoke to Reuters, is Chinese car companies moving into these plants:
Buying a factory would allow China to build influence in Germany’s prized auto industry, home to some of the oldest and most prestigious car brands, the person said.
Chinese companies have invested across a range of industries in Germany, Europe’s biggest economy, from telecommunications to robotics but have yet to set up traditional car manufacturing there, despite Mercedes-Benz having two large Chinese shareholders.
Any such move could mark China’s most politically sensitive investment yet. VW has long been a symbol of Germany’s industrial prowess, now threatened by a global economic slowdown hitting demand and a creaking transition to green technologies.
Yeah, it’s not a great look for Germany as an industrial powerhouse, but there’s a lot good here for Volkswagen potentially. It can be the beneficiary of EU tariffs it voted against, as a plant within the EU building BYD Seals won’t be subject to those tariffs. It reduces the company’s overhead and I’m sure VW could get a good deal for its plants.
China Has One Word For The West: Plastics
Europe, Taiwan, Japan, and the United States have all been variously antagonistic towards China when it comes to trade. Whether you think that’s fair or not will depend a lot on which side of the Taiwan Strait you find yourself on.
In response, China is launching a series of retaliatory tariffs according to Reuters via Nikkei:
China said on Thursday it would apply provisional duties on imports of industrial plastics from the United States, European Union, Japan and Taiwan after a months-long anti-dumping investigation.
The provisional anti-dumping levies on polyacetal copolymers range from 3.8% to 74.9% depending on the country and company and will commence from Jan. 24, the Commerce Ministry said in a statement.
China launched the investigation in May, the same week that the U.S. hiked tariffs on Chinese electric vehicles and the European Union launched a trade investigation into certain Chinese steel imports.
All governments are establishing a starting point for negotiations with the United States and Trump, so we’ll see if the President-elect can work a deal.
Toyota Settles Its Own Dieselgate
I don’t think about Hino very often as we don’t regularly cover big trucks here, but you’re probably surrounded by vehicles powered by motors made by the Toyota subsidiary. While most of the attention was paid to Volkswagen for its “Dieselgate” emissions cheating scandal, most automakers that sold diesel-equipped vehicles globally had to admit to at least some small amount of malfeasance.
And, now, it’s Toyota’s turn. The company will have to pay $1.6 billion in a settlement with the US EPA. What did they do? Cheated on the tests.
Here’s what the Feds had to say:
“Hino knew the requirements that engines must meet to be certified to operate in the United States, yet it falsified data for years to skirt regulations,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division (ENRD). “Hino’s actions led to vast amounts of excess air pollution and were an egregious violation of our nation’s environmental, consumer protection and import laws. Today’s plea agreement and civil settlements, on behalf of myriad federal entities, mark the Justice Department’s commitment to protecting our environment and holding companies accountable for corporate wrongdoing.”
“Corporate crimes such as these endanger the health and well-being of innocent Americans, as well as the environment in which we all live,” said U.S. Attorney Dawn N. Ison for the Eastern District of Michigan. “My office is committed to aggressively seeking justice when corporate actors violate air quality standards and place our community at risk in order to increase their sales.”
In addition to paying the funds and recalling some vehicles, Hino is prohibited from important engines for five years.
What I’m Listening To While Writing TMD
Ok, let’s do The Roots again. This time it’s from my favorite album “Things Fall Apart” and it’s “You Got Me” featuring the incomparable Erykah Badu. Also, what is it with videos having people lying on the ground?
The Big Question
Do you want to buy your next car entirely online?
Never bought online debated about getting a Miata or Polestar 2 off Carvana before I got a used 23 Miata at a local dealer. But my god I don’t want to deal with the bs dealer crap again. Got there at like 1030am and not out until 5pm and they kept bothering me for some bs warranty crap after we agreed on a price and loan terms. I kept saying no to them used typical dealer talk saying it would be the same monthly payment without emphasizing that it would add on 6 months of payments (so like an extra 3k) should have just walked at that point but nope I was tired and wanted to be out of there and just said okay luckily it looks like I cancel that warranty crap it will just be prorated to the date I cancel.
I would be fine with solidifying a price online, but would require a 30 day, no strings, return policy similar to Carvana advertises.
Hino is prohibited from importing engines?
No, just the important ones. So I guess no Hemis?
“Do you want to buy your next car entirely online?”
No. I want to personally inspect and test any car I buy even a new car. I’m fine with getting a price quote online though.
I don’t see myself buy a car ENTIRELY online. I have done online vehicle purchases, but I’ve always test drove a representative vehicle locally.
I’ve been up front with the local dealer telling them that I was only test driving that day. If or when I buy, I’ll be price shopping any dealer in a 200 mile range. If the local dealer is the most financially advantageous, then I would by from them. My last purchase was just that. A dealer 4 hours drive away had it for less $275 less, but I went with the local because the convenience savings was worth it.
One thing I do is if I buy from a different dealer than the local test drive, I give the local salesperson something for his trouble. Gas card, grocery card, cash, something just to materially let them know I appreciate their time. Unless they were bagas de douche.
There have been several vehicles that after test driving them, have been stuck from the list of possibles. Maybe it had to do with NVH, AV, driving position or mechanical performance. Regardless, buying stuff that’s the second biggest expenditure(s) you will make in life isn’t the same as ordering some easily returnable item to Amazon.
Two possible solutions:
A reasonably priced 3 day rental period where the rental fees are refunded with purchase (e.g. Hertz rent to buy)
7 day money back guarantee. (e.g. Hertz Buy Back Guarantee)
https://www.hertzcarsales.com/
Both should be better than basing such a decision on a 20 minute test drive.
Having bought rentals before, I’m very reluctant to buy another one. Rental fleets these days are being kept longer and pushed to be ‘in-service’ at the expense of maintenance. Not sure they make as much sense to buy as they used to from a bargain perspective.
I think Toyota used to have something like that. Certain dealers had “rental” vehicles. Haven’t heard about it in years though. Might have been Service Loaners. These days service loaners are hard to get and usually require a couple weeks of lead time, if the dealer deems the repair ‘qualifying’.
I’d definitely rent a representative new vehicle or a specific used vehicle I was interested in. Alas, dealers don’t do that. Sometimes if a dealer has a used vehicle, they will allow you to take it overnight, but that is the exception rather than the rule.
Once I narrow it down to one or two vehicles, I’ll try to drive them again and ask the salesperson for a longer drive.
Alas, dealers don’t do that.
Which is why online sellers will 😉
Toyota does have a rental car program, but not all dealers participate or may advertise it, and of course you’re subject to what they have available. Usually will have it featured on the dealer’s website somewhere if they do so you can call or book online.
I remember GM advertising overnight test drives in the 2000s too. And I’ve known dealers that will put one of their tags on the car to let you take it home overnight too, but not quite the same, usually more if they deem you serious enough that it will tip you into doing the deal. Probably less likely nowadays with smaller inventories too.
I’ll have to look into the Toyota option. My wife is interested in a Grand Highlander sometime this year. For as much Toyota wants for them, I definitely want to be sure of the purchase.
I have joked that the 2 big purchases you negotiate over (cars, houses) are also the 2 things going up faster than inflation and have for decades. (I know correlation is not causation). I do not negotiate the cost of a fridge at best buy. I hate the 2hr-all day process of buying a car at a dealership but I also like getting exactly the car I want as new as possible without rust and mechanical problems. I just dealers were better.honest/trustworthy but that will not happen under our current Kakistocracy
I have joked that the 2 big purchases you negotiate over (cars, houses) are also the 2 things going up faster than inflation and have for decades. (I know correlation is not causation).
I think the causation is realtors and dealerships, two very powerful organizations with strong political lobbying groups and even stronger motivations to make prices as eye bleedingly high as possible.
Well said and toss in the Financial sector who provides loans, they also like to buy politicians
Yep
Maybe a brand could loan some cars to college students? Call them “campus advisers” if you will. That’ll be the day. /s
I think I said something to this effect the last time the Hyundai/Amazon thing came up, people want to look at cars but don’t want the sales pressure at the same time. Doing the deal online first and then test driving before delivery is as close as one can get, it at least takes the sales pressure off before accepting the car.
In the mid-90s I remember a local mall having “Plymouth Place” with cars from the brand in one of the centers. Cars in a mall is nothing new, but that’s usually dealer backed, this seemed manufacturer-backed with a computer you could fill out to get information on, if my childhood memory is correct. This was around 96/97. I think I once found some info on it but it’s hard to search for “plymouth mall.” But doesn’t solve for the test drive.
Both of my last 2 car purchases were from dealers a couple hours away. The more recent one I had driven but the deal was done a week or two later. It could/should have been delivered, but there was some hemming and hawing about paperwork and notaries.
I’ve purchased three used cars and one used three-wheeled moped entirely online since first doing so in 2007, in each case never actually seeing the vehicle until after paying for it, when it was then shipped to me, or at least shipped to a nearby point for me to retrieve. So far, so good. I have no inherent objection to doing this again, so it simply depends upon the circumstances. Mostly it’s a question of distance.
Then again, I’ve purchased many more vehicles than that over a much longer span of time using the tried-and-true method of showing up at someone’s house with cash in response to a sketchy ad posted somewhere, so I’m generally okay with that approach, too. The next time probably will be one or the other.
Online only? No. I am also not interested in buying ANY new vehicle period, so it doesn’t really matter what people do.
I think that only people who treat cars like appliances will enjoy buying them online. Car people prefer to look it over and drive it before making the decision to buy. Maybe im wrong. Also, do we really need to Chinatize the entire world? That would make me really sad.
That’s where it’s headed, especially with Computers on Wheels (aka cows) I mean EVs.
Tho some people would prefer to buy online because we don’t want the dealer hassle.
We know the brand, we know what we like, we know what color and options we want, and we don’t want to be limited to/coerced into buying what the dealer has in stock.
If we want a red with beige interior, 5 speed and Premium Package – we want to be able to order that and are content with waiting the 4 weeks-3 months to get what we want.
We don’t want to call around, look online, drive a hundred miles to the place who has what we want only to be told that it was sold an hour ago – and we also don’t want to be forced to buy the grey and black one with automatic that the local dealer has in stock.
We also don’t want to spend three hours in the F&I Office being told we need to pay for the tire warranty, the Tru-Coat Paint Protection, the VIN number etching, the LoJack Dealer Security System, the Market Value Adjustment, the Fabric Protectant, the Gap insurance, the extended warranty, etc, etc, etc.
I personally have identified the car I wanted on the trailer, and put down a deposit for that exact car As-is – and be told that I needed to come back the next day to finalize after the dealer did their preparation – only to come back to close and discover that the dealer installed their decklid badge (which I said up front I did not want), replace the factory installed AM/FM cassette player with an AM/FM unit, and put a sticker on the car saying they had put some paint protectant on the car.
I had to dick around with the F&I person and threaten them with cancelling the deal to get them to remove the dealer badge, replace the radio with the proper unit and ignore the “Paint protectant” markup – while I spent an extra hour+ in their garage waiting for them to undo the things they were not supposed to do in the first place.
So yeah – Ordering online is pretty much exactly what I want.
Right! I want to build and price online what exact model and specs I want and then just order it. I was playing on a build and price last month and there were only 2 of what I wanted within 500 miles. I was not actually buying I just like looking.
Oof, that Hino truck has a fivehead.
Why, oh why didn’t they use the Toyota Tundra cab? It would’ve looked more like the traditional American medium-duty conventional-cab truck which almost always shared the pickup cab, and provided the volume to keep the single cab in the Tundra pickup line.
Visibility. Put a Tundra cab on a commercial vehicle and you have huge liability. You can’t see over the fenders of a Tundra nearly as well as you can this, and this is much bigger and much more dangerous to its surroundings.
I know that if I’m purchasing a vehicle for a business, I’m going to assume the driver won’t be the most attentive or careful person, even if I try to hire the most attentive and careful person. And I wouldn’t care what the cab looks like much, if at all.
Do I want to buy my next car completely online?
Cars are sort of like shoes. They’re all pretty much going to do what they’re supposed to do, but finding the right fit is important. I buy shoes online when I’m replacing a pair with a similar pair from the same brand. If I’m looking for something in particular, I want to go and check it out in person. Is it the right size? Different brands vary. Even if a test drive isn’t really going to reveal much about the car, it can show you that it doesn’t really fit. What seems like a great deal may not be any good because it’s just not comfortable. Maybe the headroom is lacking. Maybe the seats don’t fit you well. Maybe everything is perfect, but you still need to check it out in person before committing.
TL;DR Nope, Test drive is important.
The only time I’ve bought shoes online was when they were so cheap it was F-it money, and if they didn’t fit I could just take them to Goodwill and not feel bad about the waste. I don’t see cars ever falling into that category.
The Big QuestionDo you want to buy your next car entirely online?
I bought a car last summer mostly over text with an out of state dealer. It was during the CDK Cyberattack so all the paperwork was fedex back and forth.
easiest purchase I’ve done.
I’m kind of surprised the Amazon Hyundai tie up needs you to go to a dealer at all. I would’ve guessed they just have Amazon as the “dealer” in the transaction which as a seperate entity should sidestep the franchise laws and just drop off cars directly to consumer.
Probably an element of service retention there, knowing where your closest dealer is for service. Even if you’re anti-dealer, pretty much every manufacturer comps your first service or two for free so there’s incentive to going. Little bit of a bone for dealers so you’re in their system and they know when to bug you to come in again for service, ideally increasing the likelihood you’ll trade to a new model down the line, and so on.
So am I. Reminds me of the first time I bought a car “online”. The year was 1998 and Autobytel (and the internet!) was in its infancy. I put in the data for the car I wanted to buy, and waited for the smoking hot deal I was going to instantly get. Instead, I got a phone call from a local dealer who asked me to come in and meet with him. Basically it was a tool for car salesmen to generate leads, not for actually buying a car online, which sounds a lot like what the Amazon tie-in is.
On the bright side, I did get that smoking hot deal because the “internet sales” guy at the dealership was also the fleet guy because this stuff was all brand new. The price he quoted me was a grand less than what I expected to pay.
That idea may have dealers rebelling, but dealers have been revolting for far, far longer.
You phrased it that way on purpose, didn’t you?
Revolting Children (Full Song) | Roald Dahl’s Matilda the Musical | Netflix – YouTube
“The dealers are revolting!”
Yes. Yes they are.
Bought my Tesla entirely online. It was bumpy. Zero communication about an important issue about locked credit reports that I had to figure out with the help of a friend who works in auto finance. As they said, any competent finance person should have spotted that issue and told me how to properly unlock (call the agency on the phone) in minutes. Then not giving a firm delivery date after taking my down payment. Ugh. Tesla was useless in all this. Everything had to happen through the app.
It can work, but everything needs to happen correctly.
Is this supposed to be prohibited from importing? Seems like a big deal.
They just aren’t allowed to make HEMIs.
Sorry I duplicated your comment elsewhere. You were first.
Not that big of a deal. They’re still free to make irrelevant engines during that time.
My perfect scenario would be the at-home test drives that were common during the pandemic, and all the actual paperwork online.
Dealers are punching it all into the computer anyways, let me do it on my own time in the comfort of my home.
Also, Things Fall Apart and How I Got Over are timeless albums in my eyes. not a skipped song in the bunch
I just go to Carmax about once a month just to stroll/sit/touch, and about every 3-4 months I take a test drive or two (my sales guy is really cool). I always like to have a head start on my next purchase, regardless of whether it’s from them or someone else. But I like them for a multitude of reasons, not least of which is they always give me leverage to walk away from traditional dealer shenanigans.
I would never, ever buy online unless I’ve seen that exact one in person. Not one “similar to it.” Just too much at risk, even with new vehicles.
I would love to work out a deal online prior to going to a dealership so long as I can make it contingent on a test drive.
I’ve done this buying a Focus SVT from across the country when I moved. Worked out the deal 100% via phone and email and then signed the final paperwork in the Jack in the Box dining room while I ate a burger. They even picked me up from the airport in the car and I did my test drive as we drove to get food. Also, if the dealer is willing to drive the car several hours to pick you up from the airport then there is something wrong with it lol. Most unreliable car I’ve ever owned.
I’m not playing 20 questions with the car dealer to get my damn car.
If you’re financing/leasing the car – you’re answering far, far more than 20 questions.
I like to have everything worked out before I walk into the dealer, but I will not buy without the test drive so once I get there it’s 90% done, and all communication is via email prior to that as well. I want it all in writing. But no, I will not be buying my next car, or any car, fully online.
Not until they offer online test drives.
How good is your racing sim setup?
If nothing else, I need an ergonomics check. Do I fit?