Quote:
Originally Posted by wtwo3
You won't get charged extra for addons.... the manufacturer will just raise their price arbitrarily throughout the year (see: Tesla). Your dealer ADM now turns into "market sdjustments" the manufacturer makes... the difference here is you won't have a network of dealers where you're able to find one that won't force you to pay extra or add on extra things... because now you're at the mercy of what the manufacturer wants to charge you.
There is so much short sightedness in this discussion. People assume taking out dealers as the "middlemen" means the services the dealers provide the manufacturer will now automatically be free for the manufacturer to implement.
In reality the void of not having a dealer network means manufacturers now have to pony up the expense to establish service centers, logistics takes a hit, and the supply cushion dealerships offer the manufacturer to help streamline production planning will be gone (manufacturers can establish a continuous and consistent production schedule and the dealers have to deal with the inventory implications). When supply is low and demand is high this isn't a problem, but when supply is ample and demand is irregular, manufacturers will be forced to absorb the additional costs associated with production scheduling now that a dealer network doesn't exist.
Who do you all think those additional costs will get passed on to? I can tell you one thing... manufacturers won't find it in their hearts to eat those costs.
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I agree car dealers would still be needed to service delivery and other costs like inventory holding, etc. Service centers is funded out of costs to cover services not MSRP sales.
But a material part of MSRP currently covers sales costs that include sales commissions, sales managers, sales and after-sales support (like financing), very expensive real estate for showrooms, fixed asset costs for sales department, etc. that would no longer be needed (done online), and thus MSRP can drop and still maintain same margin. All of these costs would be centralized by the manufacturer but would still be much less than sales costs of maintaining hundreds/thousands of decentralized sales departments across the globe via dealerships.
Therefore, from a cost-based pricing perspective, MSRP price should materially decrease since the Dealership Sales department can be largely eliminated if sales can be done via manufacturer's website. Of course that's only the cost-based pricing perspective as you can still price over cost-based MSRP based on market factors like supply and demand.