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2010 2011 BMW 5 Series Forum F10 BIMMERPOST Universal Forums General BMW News and Cars Discussion BMW Estimates 25 Percent Of Sales Will Be Made Online By 2025
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      05-11-2022, 12:38 PM   #23
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Originally Posted by Tag View Post
It doesn't make any sense for BMW to offer a fixed price if dealer MSRP is less. And yes, I do think if you cut out the middle man with their money-grubbing hands out of the purchase process you won't pay as much. Does that mean I think you'll be paying invoice? No, but I also don't believe for a second you'll be paying MSRP either. It'll probably fall somewhere in the middle.

Sometimes I think the loudest naysayers either work at stealerships or have a vested interest with them.
No vested interest, but you need to understand how the business works: manufacturers need dealers to buy and floorplan cars because they act as a critical inventory buffer and source of regular cashflow. This allows the factory to operate at maximum efficiency and not have to start/stop based on individual consumer demand. Car gets loaded onto a truck and the dealership gets invoiced. Factory gets its cash.

Eliminate that, and there's a big shift in finance and production that has to occur. Not saying it can't be done, just that it's a lot more complex than folks think.

Next up, consider who pays for the delivery center real estate and staff. The dealership goes away and the financial burden has to fall on someone - that would be the manufacturer. Not saying it can't be done, but it's just not that simple.

Did the price of Apple products drop when Apple opened its own direct retail and online store? Nope.

You're paying for convenience. That comes at a higher cost.
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      05-11-2022, 01:35 PM   #24
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Perhaps what will change is that dealer's will no longer have sales people and they'll shift into providing service and get a fee for providing customer deliveries. I doubt it will happen. Franchise laws really limit what automakers can do.
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      05-11-2022, 01:50 PM   #25
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there's a lot of things that could be more efficient to smarter individuals...don't forget most people buying cars are underwater and live their whole lives underwater.

this fourm creates a microcosm of wealth, when even on this fourm half the folks are underwater.

I feel like I've been ending all my posts like this but this is america, where you can buy anything you want, even if you can't afford it
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      05-11-2022, 01:58 PM   #26
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Originally Posted by F32Fleet View Post
Perhaps what will change is that dealer's will no longer have sales people and they'll shift into providing service and get a fee for providing customer deliveries. I doubt it will happen. Franchise laws really limit what automakers can do.
Maybe. But then that wouldn't really decrease the "MSRP" either since there would still be a fee involved....people don't mind paying 1100 for destination fee or 2000 for gas guzzler tax and there is no added value for those. How dare the middle man with a truck add cost to my car when the manufacturer could just bring it to the dealer from the port for free or absorb the cost into the MSRP, lol.

What anti-dealer people are really anti are the plaid jacket smokers with no manners giving poor excuses to charge them for worthless products for $25 spiffs. This is not a dealer franchise model problem. This is an individual business owners business model problem. If people would stop buying cars from idiots and be honest about why they bought from Dealer B that takes care of people then Dealer A either goes out of business or makes changes.
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      05-11-2022, 03:29 PM   #27
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Personally I do think DEALERSHIPS should be more accommodating for people whom feel comfortable making such a large transaction remotely. I've had dealers demand I show up to make a purchase I was more than willing to perform remotely.

However, the concept that the manufacturer will undercut their retail partners through direct sales is just a foolish dream. The dealers provide a valuable asset to both the manufacturers and consumers alike. They're not stupid enough to destroy the network of dealers they've built over decades.
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      05-11-2022, 04:07 PM   #28
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Adobe is infamous for an all-time data fuckup, strange they’d be trusted as a partner.

For the fellow nerds this is hilarious:
https://nakedsecurity.sophos.com/201...c-blunder/amp/
That was almost 9 years ago. I worked for Adobe for 10 years as an engineer and can tell you that things were very different in 2013.
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      05-11-2022, 04:18 PM   #29
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The dealership experience is definitely diminished with the haggle and rearranging of numbers and BS. With no one stocking inventory in this shortage creation, we cant even test drive models at our time choosing. I prefer a dealership or "experience" where I could test drive more than twice a year at a UDE.. BMW excels with that sales experience at their events, but I hope for dealers to provide inventory to discuss
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      05-11-2022, 06:25 PM   #30
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I don't doubt it. I live about 6 miles from a pretty "popular" BMW dealer and I've specifically skipped over them for my last 2 BMWs and probably for my next as well.

My last car we bought entirely through phone call and overnighted contracts and it was the easiest vehicle transaction ever.

No sitting inside a dealership for 2-3 hours or "let me talk to my manager" nonsense. Just a couple emails and done.
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      05-12-2022, 08:43 PM   #31
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Quote:
Originally Posted by sikotic View Post
I don't doubt it. I live about 6 miles from a pretty "popular" BMW dealer and I've specifically skipped over them for my last 2 BMWs and probably for my next as well.

My last car we bought entirely through phone call and overnighted contracts and it was the easiest vehicle transaction ever.

No sitting inside a dealership for 2-3 hours or "let me talk to my manager" nonsense. Just a couple emails and done.
Same here. Negotiated via email very easily and without giving or taking offense, then flew over with the wife, spent the weekend in Chicago and then drove the car home. The title showed up 3 weeks later, the plates another week later. Cheap, memorable and painless.

Meanwhile at the local “well reviewed dealer”, all I got was basically the test drive experience. I tried to buy from them on the principle they had spent time with me, but they didn’t have what I wanted in inventory, couldn’t swap me the car in from another dealer, wanted ADM to order a new car (with no delivery ETA) and had all sorts of nasty add-on fees.

Give me the painless online system at MSRP, heck I’ll even fly to Munich to pick up the car directly from the factory, no middleman needed. I’ve done it 6 times in the past…
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      05-12-2022, 09:40 PM   #32
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Dealerships as we know them, will start thinning down by 2025. Manufacturers are not too happy with the speculative nature of dealer pricing, giving the brands overall an terrible reputation. Latest example is the new Corvettes. COVID simply exacerbated the situation, with dealers making obscene profits with fewer inventory.

However, there are many laws in place that protects the current business model with manufacturers forced to go through Dealers.

Enter electric cars and Tesla. They are allowed to sell direct to consumer and get to keep all the profits. They also control the user experience, and delivery. Most people are extremely happy with this sales process. Suddenly everyone wants the same thing. Where does Tesla fall flat? After sales.

So, how to move forward? For all electric models, manufacturers are creating new legal entities. Financially, they are setting up the Electric brands as different organizations. This will allow them to be just like Tesla, and circumvent current laws.

Manufacturers want it, consumers want it.

Yes, dealerships are not going to completely disappear, instead, they will be incentivized to be Service and Delivery centers. They just have to figure out this last piece of the puzzle.

This is also what BMW wants.

This is a great article:
https://edgy.app/car-dealerships-why...iminating-them

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      05-13-2022, 05:48 AM   #33
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GearRex -

You should copy+paste this to every car forum in town. THIS is one of, if not THE key reason manufacturers are creating new brands/entities. It will allow them to circumvent the franchise law situation.

Now this is easier said than done and is going to take a long time: the value of brand names is significant, and building a brand takes a significant amount of time and money.

At the lower end / mass end of the market I see this being a bigger deal since profit margins are lower in general, and the value of selling direct makes a lot of sense. For premium vehicles I could see the current franchise model sticking around because of the value of the brand itself.

To your point of turning dealerships into franchise service centers - I can completely see this happening. As automakers reduce incentives to dealers and also reduce margins on cars, the dealers are going to find new car sales far less appealing. Since the majority of profit comes from service anyhow, this seems like a logical fit: dealerships stop having to floor plan cars, they don't need as much land, they don't need as big a building, staff, etc.

Compelling model.

Quote:
Originally Posted by GearRex View Post
Dealerships as we know them, will start thinning down by 2025. Manufacturers are not too happy with the speculative nature of dealer pricing, giving the brands overall an terrible reputation. Latest example is the new Corvettes. COVID simply exacerbated the situation, with dealers making obscene profits with fewer inventory.

However, there are many laws in place that protects the current business model with manufacturers forced to go through Dealers.

Enter electric cars and Tesla. They are allowed to sell direct to consumer and get to keep all the profits. They also control the user experience, and delivery. Most people are extremely happy with this sales process. Suddenly everyone wants the same thing. Where does Tesla fall flat? After sales.

So, how to move forward? For all electric models, manufacturers are creating new legal entities. Financially, they are setting up the Electric brands as different organizations. This will allow them to be just like Tesla, and circumvent current laws.

Manufacturers want it, consumers want it.

Yes, dealerships are not going to completely disappear, instead, they will be incentivized to be Service and Delivery centers. They just have to figure out this last piece of the puzzle.

This is also what BMW wants.

This is a great article:
https://edgy.app/car-dealerships-why...iminating-them
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      05-13-2022, 05:54 AM   #34
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So in other words an agency model without discounts?
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      05-13-2022, 07:41 AM   #35
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I've bought a great many vehicles in my lifetime and I just don't get why people call them "stealerships" and get their underwear in a bunch over what happens in the business office. You guys know you have ALL the power and can just say "no" right? You don't have to buy anything that is offered in there and everything they offer to sell you there is negotiable anyway. I've purchased a Zurich extended warranty in the past for 50% less than what it was offered for simply by saying "no, not at that price."

I get that some people don't enjoy crafting a deal on a purchase and CarMax and others have made a successful business model on that fact. But I have never considered it poor business practice for a dealer to try to maximize their profit in every transaction because they have no power over me to pay anything I don't want to pay. And yes, they make the most money off of sheeple that just walk in and say "OK" to everything. Don't be sheeple.

And finally, if the vehicles are selling as fast as they can get them at the prices they're asking and with the practices they are using to upsell, then it's not them that has the problem. If people stop buying in that world, then it'll correct. Free markets are what they are...
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      05-13-2022, 07:54 AM   #36
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I’m in agreement on this. I’ve never had an issue with a car purchase. My last one was negotiated via text and the paperwork took 30 minutes in person to complete. Painless as could be.

I get the desire to treat the transaction like any retail purchase, but people need to remember one thing: convenience comes at a price.

Quote:
Originally Posted by PittsDriver View Post
I've bought a great many vehicles in my lifetime and I just don't get why people call them "stealerships" and get their underwear in a bunch over what happens in the business office. You guys know you have ALL the power and can just say "no" right? You don't have to buy anything that is offered in there and everything they offer to sell you there is negotiable anyway. I've purchased a Zurich extended warranty in the past for 50% less than what it was offered for simply by saying "no, not at that price."

I get that some people don't enjoy crafting a deal on a purchase and CarMax and others have made a successful business model on that fact. But I have never considered it poor business practice for a dealer to try to maximize their profit in every transaction because they have no power over me to pay anything I don't want to pay. And yes, they make the most money off of sheeple that just walk in and say "OK" to everything. Don't be sheeple.

And finally, if the vehicles are selling as fast as they can get them at the prices they're asking and with the practices they are using to upsell, then it's not them that has the problem. If people stop buying in that world, then it'll correct. Free markets are what they are...
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      05-13-2022, 11:45 AM   #37
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I don't entirely understand this article... so will it be online sales thru a dealership?

Or just online sales with pickup at the dealer?

Neither option is really true online sales.
I don't entirely understand this article... so will it be online sales thru a dealership?

Or just online sales with pickup at the dealer?

Neither option is really true online sales.
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      05-25-2022, 08:11 PM   #38
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Quote:
Originally Posted by Higgs Boson View Post
Quote:
Originally Posted by Tag View Post
Why pay MSRP which includes profit for the dealership when you can pay a fixed price from BMW and cut out the middleman?

Go online, build a car exactly how I want it, complete all paperwork and purchase it without having anyone slow the process down or try to upsell me things I don't want; that's a win IMO. It's not like dealerships are going away, you can still pay MSRP if you want.
lol

you realize what MSRP stands for right? the factory is going to slurp that extra profit right up.

not to mention you cut out the "middleman" and the manufacturer loses all benefits of having franchises.

the MSRP will go up and your car will be more expensive.

cutting out the middleman is a delusion.
Quote:
Originally Posted by Higgs Boson View Post
Quote:
Originally Posted by Tag View Post
Why pay MSRP which includes profit for the dealership when you can pay a fixed price from BMW and cut out the middleman?

Go online, build a car exactly how I want it, complete all paperwork and purchase it without having anyone slow the process down or try to upsell me things I don't want; that's a win IMO. It's not like dealerships are going away, you can still pay MSRP if you want.
lol

you realize what MSRP stands for right? the factory is going to slurp that extra profit right up.

not to mention you cut out the "middleman" and the manufacturer loses all benefits of having franchises.

the MSRP will go up and your car will be more expensive.

cutting out the middleman is a delusion.

Well said. Look at Tesla and they're prices now, look at a model 3 lease now. Did everyone forget the deals we used to get on new cars before Covid? Think that's possible when you buy direct from the manufacture when things get back to normal soon?
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      05-25-2022, 08:42 PM   #39
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That's exactly the point - buying online means you can't haggle down and you can't get haggled up.

Online sales mean you pay exactly what you see. That doesn't mean it's a good deal; buying online means you probably forfeit any discounts but won't get charged extra for add-ons.
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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      05-26-2022, 06:12 AM   #40
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Quote:
Originally Posted by wtwo3 View Post
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.
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.
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      05-26-2022, 07:03 AM   #41
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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.
I highly doubt manufacturers will simply pass on savings from removing sales staff to the consumer. Manufacturers, whether it be automakers or any other industry, are looking to cut costs not so that they can reward the customers, but so that they can increase their own margins or hedge against rising costs associated with materials, logistics, geopolitical issues, or whatever else is going on in the world (or to just line their pockets).

As for removing dealerships entirely as many suggest, we don't have enough information to say that savings from elimination of dealer showrooms and sales related costs would be greater than the increase in logistics/production costs. I've done hundreds of network studies related to physical asset rationalization to know that it's not as simple as people make it out to be. Often times conventional thinking might suggest that it's obvious if you remove costs associated with labor and physical facilities you'd save money - failing to realize that you're sub-optimizing distribution/logistics and manufacturing which results in an insane amount of added cost. And like I mentioned before, in times when demand is irregular, that issue is further exacerbated by the inability to have a dealer network to absorb inventory and be able to streamline production planning.

Dealers aren't here to service customers. Dealers exist to service manufacturers. And while many customers feel like they're getting screwed by a dealer and hate the haggling process, any savvy shopper can easily leverage the dealer network to their advantage.

When I was car shopping, I didn't step foot inside a single dealership until it was time to collect my car. The only other time I'd even consider going to a dealer would be if I wanted to test drive, and even then anytime a sales person wanted to talk numbers I made it clear I was only checking out the car and wanted to think about my decision on my own time. I didn't do any "negotiation" in the form of haggling. I drafted a simple email detailing exactly what I wanted and what sort of pricing I was expecting, and blasted that email to 20 different dealers in the Midwest. It was a simple yes/no question if they accepted. If any dealer asked me to come in to talk, I declined and stated if they wanted my business, they'd address my question in the email. Ultimately 4 of the 20 dealers were willing to play ball, and I simply went with the dealer which offered the best combination of pricing and service. It was such a pain free process, and I'd take that 10 times out of 10 over paying a non-negotiable, static price where the manufacturer can arbitrarily raise prices at their will.

I'm all for a hybrid model... maintain a dealer network for those who are savvy shoppers and have knowledge to be able to leverage the dealer network... and for those who don't want to talk to a person and are ok paying MSRP, knock yourselves out and order a car as if you're ordering a pair of slippers on Amazon.
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      05-26-2022, 09:00 AM   #42
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Quote:
Originally Posted by wtwo3 View Post
I highly doubt manufacturers will simply pass on savings from removing sales staff to the consumer. Manufacturers, whether it be automakers or any other industry, are looking to cut costs not so that they can reward the customers, but so that they can increase their own margins or hedge against rising costs associated with materials, logistics, geopolitical issues, or whatever else is going on in the world (or to just line their pockets).

As for removing dealerships entirely as many suggest, we don't have enough information to say that savings from elimination of dealer showrooms and sales related costs would be greater than the increase in logistics/production costs. I've done hundreds of network studies related to physical asset rationalization to know that it's not as simple as people make it out to be. Often times conventional thinking might suggest that it's obvious if you remove costs associated with labor and physical facilities you'd save money - failing to realize that you're sub-optimizing distribution/logistics and manufacturing which results in an insane amount of added cost. And like I mentioned before, in times when demand is irregular, that issue is further exacerbated by the inability to have a dealer network to absorb inventory and be able to streamline production planning.

Dealers aren't here to service customers. Dealers exist to service manufacturers. And while many customers feel like they're getting screwed by a dealer and hate the haggling process, any savvy shopper can easily leverage the dealer network to their advantage.

When I was car shopping, I didn't step foot inside a single dealership until it was time to collect my car. The only other time I'd even consider going to a dealer would be if I wanted to test drive, and even then anytime a sales person wanted to talk numbers I made it clear I was only checking out the car and wanted to think about my decision on my own time. I didn't do any "negotiation" in the form of haggling. I drafted a simple email detailing exactly what I wanted and what sort of pricing I was expecting, and blasted that email to 20 different dealers in the Midwest. It was a simple yes/no question if they accepted. If any dealer asked me to come in to talk, I declined and stated if they wanted my business, they'd address my question in the email. Ultimately 4 of the 20 dealers were willing to play ball, and I simply went with the dealer which offered the best combination of pricing and service. It was such a pain free process, and I'd take that 10 times out of 10 over paying a non-negotiable, static price where the manufacturer can arbitrarily raise prices at their will.

I'm all for a hybrid model... maintain a dealer network for those who are savvy shoppers and have knowledge to be able to leverage the dealer network... and for those who don't want to talk to a person and are ok paying MSRP, knock yourselves out and order a car as if you're ordering a pair of slippers on Amazon.
I did the same thing 3 months ago and got the same kinds of results. Those that won't adapt to my shopping style can depend on the slowly dwindling supply of conventional (unsatisfied) buyers. Not a good business model for them, but there are certain merket laws that await them, similar to the "Darwin" rule.
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wtwo317864.00
      05-26-2022, 04:47 PM   #43
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I've successfully negotiated in the past, but things are changing.

EV's are coming and many dealers are dragging their feet. They know that EVs are going to kill their service departments long term and service departments are the money maker for them.

Manufacturers know that early poor experience with their EV brand can have severe long term consequences for them. Reputations are lost quickly, but take decades to really rebuild.

So Dealers and Manufacturers are really opposed with the transition to EVs. It makes sense that they would want to take back control of the experience from the dealer. Ultimately they don't want to have to run a dealer network for a lot of the reasons stated above, but it is a chance to renegotiate the dealer model right now. If they want the new cars at all they are going to have to agree to a much stricter model that will probably include a lot more transparency in pricing and a customer order focused system rather than buying whatever is on the lot.

I'm not exactly a fan of a fixed price model, but increasingly the current model is a problem. The customer has so much information these days that there isn't a lot of money to be made in the sale of a car. Sure you can maybe score a little better deal than the next guys, but there are all sorts of buying services, etc.

The real money is on add ons, fees, and financing now. That $3k pinstripe package is a little harder to cross shop. That $900 doc fee. The extra couple tenths on your finance rate plus a kickback. That's were the new car money is these days, not the actual car price. The trouble with all that is complete lack of transparency.

Nothing turns me off more quickly than feeling like the dealer lied. You agreed to a price and all the sudden its thousands more when you show up with all the BS on it. I had one pull the required dealer installed BS on me after agreeing in writing to a price. I had another advertise a rate as a sale price, but was actually a lease capitalized cost and included a combination of incentives that was literally impossible to redeem. Another that tried to add in something like a $2k fee for advertising and marketing a used car. I feel like its getting harder and harder to nail anyone down on a price. I walked on all these people and told them why, but there is always another sucker behind me.

It doesn't have to be fixed pricing, but it feels like its time to deal with transparency in auto pricing. The airlines used to debundle everything and all sorts of required taxes and fees weren't included in the search engines. They got stomped. Same needs to happen here. An advertised price should be required to include all fees and packages except TTL that can vary by buyer location. There should be a fine that is easy to collect if you can't walk in and buy the car at that price without haggling.
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chad86tsi1596.00
      05-26-2022, 08:24 PM   #44
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Can't wait, long overdue!

Dealerships don't know anything about their products but making big profits on it. Please stop this nonsense and cut the middleman.

Just imagine going to the apple store and paying over MSRP.
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