Dealers Will Go the Way of the Blacksmith Shop

[sborsch]

The man in front of the photo below is my great grandfather, Ole Wolla. This pic was taken in his blacksmith shop in Benson, MN, a business he later recreated in the town he and his sons migrated to in the early 1900s: Tioga, ND.

I recall my grandpa telling me about his dad and how “his shop slowly went out of business as more people stopped using horses and bought cars and trucks.” It was not a business my grandpa or his brothers could inherit as it was downtrending even as my grandpa was a young man and Ole shut it down in the 1920s and “dad should have closed it down much earlier” my grandpa added.

That Is exactly how I felt reading an article in Slate about the most recent meeting of the National Automobile Dealer’s Association held in Dallas, TX. Texas is a place supposedly teeming with conservatives and “free marketeers,“ with the glaring exception being car dealers. They want to control and keep out EVs, even though Elon Musk moved his Tesla HQ to the state.

Here is the Slate article you might find as enlightening as I did: https://slate.com/news-and-politics/2023/05/rich-republicans-party-car-dealers-2024-desantis.html

Regardless of what the NADA tries to do, most dealers will be gone within a decade. It’s not “if” they’ll go away … but rather “when.”

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[Logal727]

It's baffling why they would wanna keep out a product that has an average price of $60k?

 

[Maquis]

It's baffling why they would wanna keep out a product that has an average price of $60k?

Fear of, and resistance to change is basic human nature.

 

[heisnuts]

I don't think that will happen in the next 10 years. We might see a more direct sale of new cars to the customer using the dealer as the pick up location, but for things like service, pre-owned vehicles, and hands on training on how to use the vehicle manufactures like Ford, GM, Toyota, etc. seem to have no desire to have hundreds (or thousands) of locations across the USA for those services.

 

[Hammered]

The article is trash as seen from the fact it's trying to spin something as a political party issue. Fact is there's no difference between them. There's quite a few industries and jobs going the way of the blacksmith, who followed the dinosaurs. What's needed is deregulation and an independent body (not govt run, but govt 'verified') promoting 3rd parties the ability to open service centers whereby they can obtain parts for and provide warranty services for products that aren't easily shipped. States need to remove penalizing taxation nonsense that provides dealers the ability to credit taxes on vehicles during a buy / trade transaction.

Politicians are corrupt though, and there won't be proper legislation, or rolling back bad laws that truly promote capitalism -- not to be confused for how things work most of the time which is crony capitalism. Vehicles shouldn't be stuck at 'gated' businesses like dealers waiting on parts or manpower for weeks and even months. A few simple legislation changes could be used to rein in the nonsense. Take for example the excuse of 'waiting on parts' -- how is something waiting on parts when there's plenty of them being put into vehicles rolling off of the assembly line each day. That's not a part shortage, that's intentional inconvenience. New vehicle sales / parts / warranty services shouldn't be gated behind big financial agreements and legislation keeping those things gated to a select few. This plays into unions as well -- they're another gatekeeper.

Do away with it all and let customers decide when and where they want to purchase and repair their vehicles without companies playing favorites. Businesses that do things right will be rewarded with customers, those that are poor will fold. Forcing people into dealers that suck with no options for significant distances is bad. It's not a partisan issue despite the main stream media trying to fool you into believing it is.

 

[SpaceEVDriver]

Blacksmiths create things. Dealers just sell things they didn't make and make money from that.

Blacksmiths didn't have the organizing, financial, or political power to survive a changing situation.

The dealers have been writing the laws that protect them from anything resembling a true free market for so long, I don't see the sequence of events that will actually get them out of the way.

The thing that made me laugh in the article is that the dealers are basically a giant legally-protected monopolistic union and they're all individually anti-union. If they didn't have their giant lobbying group to protect them, most would have gone out of business long, long ago.

 

[Kamuelaflyer]

Regardless of what the NADA tries to do, most dealers will be gone within a decade. It’s not “if” they’ll go away … but rather “when.”

The sooner, the better.

 

[Earplug]

It's baffling why they would wanna keep out a product that has an average price of $60k?

It is because the Manufacturers control the pricing to the Dealer and they are not giving the Dealers a big enough piece of the pie.

 

[bp99]

There is an advantage to using franchised dealers. For a large company like Ford or GM, having to open service centers with a reach to every potential consumer is a daunting and expensive task. There needs to be a location that receives, preps (including fixing transport damage) and services vehicles. If you want to sell to rural areas (which is not a Tesla priority), you need locations in small towns. Dealers make a lot of sense for building out that infrastructure at little cost. The costs are covered by the franchises with the promise of potential future profit.

I have no problem with direct to consumer such as Tesla, Rivian, etc. It just does not scale well. It works great for smaller manufacturers which also concentrate their sales in denser population centers. It will be interesting to see if Tesla tries to scale beyond metropolitan areas and how they're able to.

New cars won't be any cheaper without dealers. The manufacturer will just adjust prices to market value (as seen with Tesla). Prices might actually end up being a bit higher on average without having high volume dealers willing to take low margins. Not having to deal with bad dealers would be great for consumers, but we already have the option of walking out the door and going to a dealer that does not play games (if they have inventory). My '22 MME purchase was an example of a positive dealer experience, and if I were to purchase another Ford, I would not hesitate going back to them.

What I am against is state laws that protect the dealership model. Let the manufacturers and consumers pick what they prefer. The market will take care of the rest of it.

 

[JMC4Testing]

One advantage of dealers is you have the opportunity to carry your business to the next one if one proves to be... less than honest. With corporate monopolies, like Tesla, the "We take trade-ins only as a service to our customers Scam" induced me to walk away from the Model Y Performance I put a $500 non refundable deposit on, and waited 8 months for it to come in, and order my beloved MME GT-P. Tesla's best offer was $6800 below Kelly Wholesale value and $8200 less than the written offer the BMW dealer next door (to the Tesla facility) gave me - even stating he would pay that figure to any dealer that took it in on a trade. Sure I could just sell my BMW to the BMW dealer, but that meant $4200 more in sales tax. I tried to take it up the chain of command at Tesla with zero effect. I told Tesla to keep their damn Tesla, and happily, here I am.

 

[Kamuelaflyer]

It just does not scale well. It works great for smaller manufacturers which also concentrate their sales in denser population centers. It will be interesting to see if Tesla tries to scale beyond metropolitan areas and how they're able to.

Sales wise, Tesla is scaling just fine. They sold 536,000+ cars in North America alone in 2022. Area wise, they’re doing fine as well. Out here the deliver to Honolulu only and have zero trouble finding customers on the neighbor island. Those customers are responsible for shipping the car beyond Oahu. Service wise, they have mobile service on all islands. Major service is done on Oahu. And they’re about as ubiquitous as a Toyota Corolla atm.

 

[Hammered]

Sales wise, Tesla is scaling just fine. They sold 536,000+ cars in North America alone in 2022. Area wise, they’re doing fine as well. Out here the deliver to Honolulu only and have zero trouble finding customers on the neighbor island. Those customers are responsible for shipping the car beyond Oahu. Service wise, they have mobile service on all islands. Major service is done on Oahu. And they’re about as ubiquitous as a Toyota Corolla atm.

The problem with tesla right now (as seen from the industry POV) is that they're playing a profit / sales maximization strategy. They can change prices on a whim, even multiple times per month. Excess inventory, price drop. Shortage, price increase. Look what it did to ford with the MME. It showed just how much of a mess legacy OEMs are under the new rules of the game. It wasn't by accident ford's got some tesla guys onboard now. The question is can bulldoze aside the legacy bloat that's been dragging them under. Only time will tell.

We've still got some hard financial times to deal with and tesla has plenty of meat on the bone to keep the factories flowing continually just hammering away at the final nail in the coffin for legacy auto.

 

[Hammered]

One advantage of dealers is you have the opportunity to carry your business to the next one if one proves to be... less than honest.

Your population density has blinded you to the fact that the next dealer might be an hour drive and if they suck it could be a 90 minute drive. With 3 hours alone burned in transit, if it's a sit and wait affair it could be 6 hours lost to the void if a loaner is weaseled out of when you have to pick it back up. Meanwhile there's half a dozen other shops close by that should be able to be utilized for the same service with equally qualified technicians.

I know someone with an F150 that's had it in the shop longer than it's been in their possession. Ford should cover the payments while their incompetence has it sitting in a lot.

 

[JMC4Testing]

That's true, I've got 6 Ford Dealers within 30 minutes.
They all stay busy. I can't see them going out of business any time soon.

 

[JSeis]

Funny, my grandfather, a coal
miner very young, became a Union master machinist and Union master electrician in the teens. His days before retirement were spent overseeing crews assembling/installing windings and generators in Columbia Basin hydro plants.

Change or be changed.

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