[Bongoxxx]

Originally Posted by Efthreeoh

I think the majority of the market still likes to test drive the car they are considering prior to making a buying decision. For the legacy manufacturers, that's only done at a dealership. An internet sales model direct from the manufacturer does not provide for price negotiation, so the idea of test driving the model of choice then going online to buy it direct from the manufacturer (at a better price) will not be an option. The legacy manufacturers are not going to compete with their franchise dealerships.

Go on the Bronco Forum B6G.com and read some of the threads on this very topic, about how screwed up the dealership allocation system interacts with Buyer's placing a direct time-stamped pre-order (reservation) with FoMoCo. The Pandemic created commodity shortages resulted in production delays that have played havoc with the time-stamped reservation system. The majority of Bronco order-holders are piss beyond human recognition.

For highly-desired model introductions such as the Bronco, direct ordering from the manufacturer with distribution through the franchise dealership system just doesn't work. The legacy manufacturers will not be able to rid themselves of franchise dealerships because the business economics will not allow for it. For example, Ford has over 3,100 franchise dealerships. It would essentially have to buyout each dealer to achieve a direct-sales and local customer support model (like Tesla has now). The increase in revenue from theoretically selling vehicles directly at "MSRP" (vs. to a dealership at "invoice") would not return the investment of buying all 3,100 dealerships. The dealership is a very efficient business model where each dealer has an optimal amount of salaried employees to operate the service side of the customer support business. Buying out the dealerships might reduce that employee workforce a bit (guessing 10%), but Ford would have to maintain and manage a minimal staff of locality employees who are the company's customer interface. With a manufacturer as large as Ford, that is a whole lot of employees (management and direct-line staff) that just would not go away; they are all franchise dealership staff under the current business model.

The majority of the enthusiasts want to test drive, but many regular customers don’t care how a car drives, if they did many of the manufacturers would be out of business

Where have I said anything about price? I’m not saying it will be cheaper one way or the other. What I can tell you is that the vast majority of buyers do not like (hate) the current process to buy a car at a dealer.

But I digress, regardless of your statements above I know of two manufacturers that are working on it, one considering a separate sub brand for the vehicles ordered direct.

[Efthreeoh]

Originally Posted by Bongoxxx

The majority of the enthusiasts want to test drive, but many regular customers don’t care how a car drives, if they did many of the manufacturers would be out of business

Where have I said anything about price? I’m not saying it will be cheaper one way or the other. What I can tell you is that the vast majority of buyers do not like (hate) the current process to buy a car at a dealer.

But I digress, regardless of your statements above I know of two manufacturers that are working on it, one considering a separate sub brand for the vehicles ordered direct.

Well a test drive is more than how the car dynamically rolls down the road. Test driving also includes test-fitting the car to see if you like the seat/pedal/steering wheel fitment, sightlines, luggage space, infotainment attributes, and seeing how the car looks in 3-D, etc. I think it's a bit more involved than just picking out a knife set, or TV on line. Even non-enthusiast automobile buyers want to make sure the vehicle fits them.

But it is about price though. If you walk into dealership to buy a vehicle and just pay full MSRP why would that be a hassle for anyone? Are sales staff at a dealership that obnoxious that trying to help the person decide what trim level or explain what options a particular car on the lot has? I've never had that experience. The whole reason people don't like the dealership experience is (a) negotiating the price below MSRP, and (b) service of the vehicle after the sale. The internet buying experience does not solve (b), even for Tesla.

There are two other buying processes that are frictional, (c) acquiring financing and (d) dealer up-sell options like undercoating, wheel/tire insurance, interior protection packages, and extended warranties, etc. Financing will be a hassle if your financial history is problematic regardless of the institution chosen regardless if it is online or in the back office at the dealership. Upsell options is just easy to deal with; "just say no" at the dealership or click no on the web page.

So the only reason to HATE the dealership sales process is if one is trying to negotiate down from MSRP and deny upsell options. The online buying experience direct from the manufacturer involves no negotiation of price, including protection packages and extended warranties, so there is no creation of and no experience of human-friction in the buying process. The argument that online sales direct from the manufacturer is that much better of an experience than the dealership is a bit unfounded IMO.

[Bongoxxx]

Originally Posted by Efthreeoh

The argument that online sales direct from the manufacturer is that much better of an experience than the dealership is a bit unfounded IMO.

Again as you stated “IMO”. Your opinion is that of a car enthusiast, which is a very small percentage of the buying population. You like many other enthusiasts probably do endless research, probably go into dealers on a regular basis to check out and drive the new models even though you have no plans in buying. When you do buy, you enjoy the “game” of negotiation. You, like me, probably get asked by friends, family and colleagues to assist in their car buying process - why because they are concerned about the process.

Customer research indicates otherwise - that’s why the manufacturers are working on it.

Customers want a simple buying process for pretty much everything - hence the explosion of online shopping and endless bricks & mortar going out of business or changing their business model. People want convenience, people are lazy and people will pay for convenience. Pretty sure the richest guy in the world would agree

Automotive sales are more complicated to get the product to the consumer than the majority of products, but customers are asking for it, so the manufacturers are working it…

[RKT SHP]

This guy gets it.......very well written post that I agree with fully

Originally Posted by Bongoxxx

Again as you stated “IMO”. Your opinion is that of a car enthusiast, which is a very small percentage of the buying population. You like many other enthusiasts probably do endless research, probably go into dealers on a regular basis to check out and drive the new models even though you have no plans in buying. When you do buy, you enjoy the “game” of negotiation. You, like me, probably get asked by friends, family and colleagues to assist in their car buying process - why because they are concerned about the process.

Customer research indicates otherwise - that’s why the manufacturers are working on it.

Customers want a simple buying process for pretty much everything - hence the explosion of online shopping and endless bricks & mortar going out of business or changing their business model. People want convenience, people are lazy and people will pay for convenience. Pretty sure the richest guy in the world would agree

Automotive sales are more complicated to get the product to the consumer than the majority of products, but customers are asking for it, so the manufacturers are working it…

[Efthreeoh]

Originally Posted by RKT SHP

This guy gets it.......very well written post that I agree with fully

Customer research shows "customers would like a hassle-free buying experience" all-the-while the car manufacturer gets more money for it's product because it can set a non-negotiable on-line price. What a surprise!

Is the "on-line" buying experience based on dealerships offering "on-line" discount pricing in a competitive on-line marketplace, or is it a true "buying direct from the manufacturer" market, where there is no price adjustment. Considering Tesla is the only manufacturer that currently is a true direct-sales experience, I think the "consumer market research" is skewed toward the former, i.e. dealerships offering price-competitive on-line buying opportunities.

[RKT SHP]

I think that more manufacturers are going to get on board with direct sales.......this conversation reminds me of one I had years ago when fuel injection first started becoming "main stream", and I used to have discussions with folks who struggled with the concept and couldn't (or wouldn't) accept that change is constant. What worked yesterday and today, might not be the best solution tomorrow. Now here we are on the cusp of many manufacturers going mostly electric, and moving completely away from ICE. But that's a discussion for another thread.

Originally Posted by Efthreeoh

Customer research shows "customers would like a hassle-free buying experience" all-the-while the car manufacturer gets more money for it's product because it can set a non-negotiable on-line price. What a surprise!

Is the "on-line" buying experience based on dealerships offering "on-line" discount pricing in a competitive on-line marketplace, or is it a true "buying direct from the manufacturer" market, where there is no price adjustment. Considering Tesla is the only manufacturer that currently is a true direct-sales experience, I think the "consumer market research" is skewed toward the former, i.e. dealerships offering price-competitive on-line buying opportunities.

[Efthreeoh]

Originally Posted by RKT SHP

I think that more manufacturers are going to get on board with direct sales.......this conversation reminds me of one I had years ago when fuel injection first started becoming "main stream", and I used to have discussions with folks who struggled with the concept and couldn't (or wouldn't) accept that change is constant. What worked yesterday and today, might not be the best solution tomorrow. Now here we are on the cusp of many manufacturers going mostly electric, and moving completely away from ICE. But that's a discussion for another thread.

LOL. Yeah, let's not go down that rabbit hole.

It usually happens when people provide sound and reasonable points why things sometimes are not going to completely change, the inference of Ludditism comes into the discussion.

[RKT SHP]

Efthreeoh,
Indeed...... definitely don't want to go down that Rabbit hole. Furthermore I wasn't inferring that you were a Luddite, and I am sorry if my prior post suggested as such. your previous post and the fact that you drive a BMW, would suggest that that title does not fit you lolololol.

Originally Posted by Efthreeoh

LOL. Yeah, let's not go down that rabbit hole.

It usually happens when people provide sound and reasonable points why things sometimes are not going to completely change, the inference of Ludditism comes into the discussion.

[upstatedoc]

Originally Posted by RKT SHP

Efthreeoh,
Indeed...... definitely don't want to go down that Rabbit hole. Furthermore I wasn't inferring that you were a Luddite, and I am sorry if my prior post suggested as such. your previous post and the fact that you drive a BMW, would suggest that that title does not fit you lolololol.

[Bongoxxx]

Originally Posted by Efthreeoh

Customer research shows "customers would like a hassle-free buying experience" all-the-while the car manufacturer gets more money for it's product because it can set a non-negotiable on-line price. What a surprise!

Is the "on-line" buying experience based on dealerships offering "on-line" discount pricing in a competitive on-line marketplace, or is it a true "buying direct from the manufacturer" market, where there is no price adjustment. Considering Tesla is the only manufacturer that currently is a true direct-sales experience, I think the "consumer market research" is skewed toward the former, i.e. dealerships offering price-competitive on-line buying opportunities.

From what I’ve seen the two are not planning on going exclusively online - just giving customers the option to buy online and potentially avoid the dealer “experience”.

Will that mean a cheaper or more expensive result for the customer?
Hard to say, today it totally depends on your negotiating skills and understanding all the paperwork thrown in front of you with the dealer additions. Many customers do not get any discount when they buy their car today from a dealer, and /or are given a discount only to have that discount eaten up with rust protection, paint protection, fabric protection, wheel locks for $400 etc. etc.

Will manufacturers offer at invoice (like dealers get) probably not - will they sell at MSRP where you start your negotiating at the dealer - who knows…

In the end it will give customers the option to buy online/direct and make the choice to buy that way from the comfort of their home at a fixed price or go into a dealer and try to do better.

[Efthreeoh]

Originally Posted by Bongoxxx

From what I’ve seen the two are not planning on going exclusively online - just giving customers the option to buy online and potentially avoid the dealer “experience”.

Will that mean a cheaper or more expensive result for the customer?
Hard to say, today it totally depends on your negotiating skills and understanding all the paperwork thrown in front of you with the dealer additions. Many customers do not get any discount when they buy their car today from a dealer, and /or are given a discount only to have that discount eaten up with rust protection, paint protection, fabric protection, wheel locks for $400 etc. etc.

Will manufacturers offer at invoice (like dealers get) probably not - will they sell at MSRP where you start your negotiating at the dealer - who knows…

In the end it will give customers the option to buy online/direct and make the choice to buy that way from the comfort of their home at a fixed price or go into a dealer and try to do better.

If one buys directly from the manufacturer there is no such thing as "invoice"; invoice is the theoretical "price" the car is sold to the dealer by the manufacturer. Publicly buying direct from the manufacturer on-line will mean that there is no price derivation between "invoice" and "MSRP" because there is no price competition as there is only a single on-line source from the manufacturer for the product.

If a manufacturer wants to offer the option to buy on line while there is still a franchise dealership sales structure then that is not a change to the legacy economic structure for the sale of automobiles we are discussing. If anything it will just be smoke and mirrors that will involve the dealership structure somehow, or third-party processors like Carvanna and the like. However, I'd bet there are non-compete clauses in the franchise contract that do not allow the Manufacturer to undersell its dealers or use third-party processors to sell cars directly to the public. As I've previously stated, the franchise dealership structure carries a lot of the cost for the sale and support of the manufacturer's products, I highly doubt dealers would tolerate losing sales directly to the manufacturer. The legacy manufacturers at this point do not have the management infrastructure in place support the sales and service end of the business. Standing up that part of the business will be cost intensive and kind of pointless since it already has and pays (dealership holdbacks, incentives, etc.) for that end via the franchise dealership model.

Again, if you want to have a good dealership experience, just pay full MSRP and say yes to all the upsell options.

But, it's always about price, if it wasn't we wouldn't be discussing it...

[Efthreeoh]

Originally Posted by RKT SHP

Efthreeoh,
Indeed...... definitely don't want to go down that Rabbit hole. Furthermore I wasn't inferring that you were a Luddite, and I am sorry if my prior post suggested as such. your previous post and the fact that you drive a BMW, would suggest that that title does not fit you lolololol.

Well... my newest BMW is a 2008, with no infotainment system (it had the option), oh, and a manual transmission (all four of my Bimmers are all like that). LOL

Old Skool and Luddicism are not bedmates...

[TheWatchGuy]

Originally Posted by Bongoxxx

Again as you stated “IMO”. Your opinion is that of a car enthusiast, which is a very small percentage of the buying population. You like many other enthusiasts probably do endless research, probably go into dealers on a regular basis to check out and drive the new models even though you have no plans in buying. When you do buy, you enjoy the “game” of negotiation. You, like me, probably get asked by friends, family and colleagues to assist in their car buying process - why because they are concerned about the process.

Customer research indicates otherwise - that’s why the manufacturers are working on it.

Customers want a simple buying process for pretty much everything - hence the explosion of online shopping and endless bricks & mortar going out of business or changing their business model. People want convenience, people are lazy and people will pay for convenience. Pretty sure the richest guy in the world would agree

Automotive sales are more complicated to get the product to the consumer than the majority of products, but customers are asking for it, so the manufacturers are working it…

my wife is far from an enthusiasts but she wants to test drive any new car before she buys due to the reasons he listed. Sightlines, fit, quality of features, cup holder size/location, etc. and in my circle of friends/family, they are all like that. They dont care how fast the car is or how well it handles, they want to make sure they like the interior of the car and that while driving there arent little inconveniences.

as for convenience, yes, it would be more convenient if you went online, clicked "Buy" and it showed up at your door in a couple days, but with the timelines of direct delivery from the manufacturer, its never been a quick process. Going to the dealer, buying at MSRP or whatever the dealer has listed, is a quick and easy process. Last new car I bought, i was in and out of the dealership within an hour, because there was no haggling the price. Much easier than when I tried ordering a Rivian and then was told to wait 1-2 years for delivery