View Single Post
  #6  
Old 01-21-2010, 06:44 AM
iamthewalrus iamthewalrus is offline
Officially Welcomed to the 'Fest
Location: Seattle, WA
 
Join Date: Apr 2007
Posts: 863
Mein Auto: 2006 BMW X3 3.0i (manual)
Quote:
Originally Posted by x3man View Post
Salesmen are not to be trusted. They will say anything to make the sale. It is rare that one is truly knowledgeable about the product they are selling. They do exist but rare.
Then why on earth do we have to deal with them? Why can't I go to www.bmwusa.com, configure what I want and submit a deposit? I do this with a Dell or Apple computer, so why not a car?

The manufacturers should do build to order with no inventory, or hold very limited inventory in1 or 2 locations nationwide. Scattering thousands of cars across hundreds of dealerships is wildly expensive. Personally, I have no problem waiting 4 months to have the car built to my specifications. I have to do that anyway since I drive manual and most dealerships stock very few manuals.

Think how much money we'd all save!
1) Holding all that inventory is expensive. The dealership is paying the bank ~5% for the loan to hold onto all of that inventory. A $50K car sitting on the lot for 4 months adds $50K*5%/3 = $833 to the cost.
2) Dealers need to inflate prices to keep a cushion so that they can make a deal with the guy who wanted silver but settles for white, because white's on the lot. You're also paying more because at the end of the model year the dealer has to drop prices to move the old inventory. If they pooled their inventory in 1-2 centralized locations nationwide or had perfect forecasting, you wouldn't have this over/under inventory situation.
3) You're paying for multi-tiered advertising: ever see those really cheesy, low quality BMW ads on TV? That's because you local dealer is also advertising in addition to BMW's national campaigns. But, the dealer's ads aren't relevant nationwide, so they get limited local runs which are less efficient than leveraging the manufacturer's ads nationwide. But, you're paying for that.
4) You're paying for the dealership itself, the lease, insurance, employees, benefits. Working directly with a website is much, much cheaper.

Lastly, service and sales do not need to be bundled. The fact that they've been bundled historically is not a reason to keep it that way going forward. When my Audi was out of warranty, I took it to a great, high-quality, local (walking distance) independent German car garage. It was great. As soon as my BMW goes off warranty in 2012, I will go back to FatCity here in Seattle.

People say, "The majority of people aren't yet willing to buy online." Well, I bet if word got out, that you got a great price, a really hassle-free experience, and avoided clueless salespeople by shopping on www.bmwusa.com, I bet that would change. Who had heard of Amazon.com ten years ago and look at them now!

So, imagine an experience like Apple's stores: you go in, there's a showroom for you to play with select models. But most purchases, particularly those that require configuration are ordered online and shipped to you. www.DWR.com works the same way. You go to the showroom to buy a $5K couch; you sit on similar couches and then custom order the combination of fabric and options you want. But there's no bargaining. There is only one price. You don't come onto boards like this and ask, "Did I get a good price?"

Why isn't this happening? Politics. The North American Dealers Association (NADA) has strong political clout and is lobbying against online car sales to "protect the consumer." They also have language in their contracts with the manufacturers to prevent the manufacturer from going direct and leaving the dealership with "stranded costs".

The first manufacturer to go out and acquire all of its dealerships and go direct could do incredibly well. Note that Tesla, which is starting a car dealership from scratch, is NOT building a dealership network. They're doing manufacturer-owned stores/showrooms (like Starbucks and Apple) and a built-to-order model (like Dell). Once they get big, they're going to have a $2K/car price advantage on every other manufacturer. There's a lot of cost built into the current supply chain. And as all of you know from WalMart, Amazon, Dell, etc. tightening up your supply chain is a huge opportunity.

This might seem revolutionary today, but think about when my 5-year-old niece goes to buy her first car 15 years from now. "What do you mean I can't just buy it online? I buy everything else online!"

-James
Seattle, WA

Last edited by iamthewalrus; 01-21-2010 at 10:37 AM.
Reply With Quote