[Jet A]

Originally Posted by Alpine300zhp

I think US franchise laws make direct sales a non-starter in the US. Any hope for changes to those laws are low because the dealer network has and will lobby hard to prevent any changes allowing a direct sales model.

You are correct. I forgot how Tesla got around the law but they used a loophole. The American Auto companies fought hard to keep the dealer sales network in tact.

[F32Fleet]

Originally Posted by afadeev

True, but the dealer advocates on your behalf.
The dealer's service center and owner's incentives are aligned - dealer gets paid when warranty is approved, and it is motivated to make the most convincing case for the OEM to approve the repairs.

Without the dealer in the loop, the owner is attempting to make the case for the OEM to approve the repairs at OEM's expense. With, or without knowledge of what's wrong with the car. The OEM has the direct dis-incentive to approve warranty repairs, and knowledge advantage to deny them, unless absolutely necessary or ordered by the court.

The incentive misalignment in DS service model is glaring and unavoidable.

a

Not necessarily since the automaker would still have a service department to maintain.

[Phillies8008]

Originally Posted by afadeev

It doesn't work like that.
Most dealers make little to no money on new car sales, and just use new vehicle sales as a hook to bring the customers in for service (in and out of warranty) and used sales. If you take away new car sales, the dealer model falls apart. Some will applaud that outcome, but it under-appreciates the problem of allowing OEM to own service and warranty approval.

Wait, so you're telling me that dealers make little or no money on new car sales, but that not selling new cars will make the dealer model "fall apart". Huh? Sounds like direct sales would be doing them a favor. That way they don't have to waste their time and effort on something that makes them little or no money.

I'm not sure how it follows that losing new car sales also makes them lose service customers – those cars need to be serviced by someone, and in this scenario there's no reason that dealers couldn't evolve into manufacturer-approved service centers.

None of this would change their ability to sell used cars – a direct sales model would have zero-effect on that. Since, as you say, selling new cars makes them no money, this seems like a win for dealerships.

[Phillies8008]

Originally Posted by JTK44

This I would prefer to what we have in the states: When I went to order my 2026 540i, there are very few 540i's available and the ones on the dealers lots did not have the options I wanted. The lease quotes for 39 months, 7.5K miles per year varied from above $1100 a month to less than $900 a month. (No money down and all taxes and fees in the monthly lease payment). Because I was willing to do the work and drive an extra 30 minutes I was able to save nearly $8,000 on a 39 month lease!

For most people not willing or able to work the Internet, the direct sales system with a fixed price will inure to their benefit.

Your experience actually argues for a direct sales model, not against it. What you found was that one dealer wanted to screw you out of $8,000, while another was willing to not screw you*. In a direct sales model, you wouldn't have had to worry about getting screwed by that first dealer, or by any dealer, since you would've have known from the start that you were paying the best price BMW was willing to offer.

It's just funny to me that someone finds a dealer that's trying to put them over a barrel, but thinks they've gotten a "deal" when they find one that isn't. Car buyers have been brainwashed into thinking that not being cheated is a deal. It's like we all have Stockholm Syndrome, lol.

*Or at least not screw you as much. The... "fun" part of the dealership model is that you'll never know!

[JTK44]

Originally Posted by Phillies8008

Wait, so you're telling me that dealers make little or no money on new car sales, but that not selling new cars will make the dealer model "fall apart". Huh? Sounds like direct sales would be doing them a favor. That way they don't have to waste their time and effort on something that makes them little or no money.

I'm not sure how it follows that losing new car sales also makes them lose service customers – those cars need to be serviced by someone, and in this scenario there's no reason that dealers couldn't evolve into manufacturer-approved service centers.

None of this would change their ability to sell used cars – a direct sales model would have zero-effect on that. Since, as you say, selling new cars makes them no money, this seems like a win for dealerships.

First because of state franchise laws, direct sales in the US is not going to happen.

Second, because of the Internet and other sources of information, the usual profit on new car sales has plummeted. Dealers make their money on service, financing and used car sales.

Third, dealers have invested millions in infrastructure. Look at dealerships for BMW, Mercedes, Audi, Land Rover all high: they are like Four Seasons Hotels. Service departments which 15 years ago were heated are now heated and air conditioned. Before direct sales ever becomes a reality, the dealers would need to recoup their investments.

[JTK44]

Originally Posted by Phillies8008

Your experience actually argues for a direct sales model, not against it. What you found was that one dealer wanted to screw you out of $8,000, while another was willing to not screw you*. In a direct sales model, you wouldn't have had to worry about getting screwed by that first dealer, or by any dealer, since you would've have known from the start that you were paying the best price BMW was willing to offer.

It's just funny to me that someone finds a dealer that's trying to put them over a barrel, but thinks they've gotten a "deal" when they find one that isn't. Car buyers have been brainwashed into thinking that not being cheated is a deal. It's like we all have Stockholm Syndrome, lol.

*Or at least not screw you as much. The... "fun" part of the dealership model is that you'll never know!

I do not think you read my post: If you had you will note that I said:

This I would prefer to what we have in the states:

and:

For most people not willing or able to work the Internet, the direct sales system with a fixed price will inure to their benefit.

The nearly $8,000 difference is the problem with the franchise system: Most people do not have the time or inclination to do what I did: most people would leave a substantial portion of that $8,000 on the table.

[Phillies8008]

Originally Posted by JTK44

First because of state franchise laws, direct sales in the US is not going to happen.

As I've already acknowledged. The entire argument is academic, but, you know, Internet. This doesn't really have anything to do with the discussion at hand.

Second, because of the Internet and other sources of information, the usual profit on new car sales has plummeted. Dealers make their money on service, financing and used car sales.

So again, a manufacturer direct sales model would benefit dealers, not hurt them, since they wouldn't be burdened with having to support those new car sales. So what's the disagreement?

Third, dealers have invested millions in infrastructure. Look at dealerships for BMW, Mercedes, Audi, Land Rover all high: they are like Four Seasons Hotels. Service departments which 15 years ago were heated are now heated and air conditioned. Before direct sales ever becomes a reality, the dealers would need to recoup their investments.

Cool – dealers don't have to keep spending money on that either, so another benefit! In fact, they can sell that prime real estate they're on and move to much cheaper locations. Sounds like another win.

So how does direct sales hurt dealerships again?

[Phillies8008]

Originally Posted by JTK44

I do not think you read my post: If you had you will note that I said:

This I would prefer to what we have in the states:

and:

For most people not willing or able to work the Internet, the direct sales system with a fixed price will inure to their benefit.

The nearly $8,000 difference is the problem with the franchise system: Most people do not have the time or inclination to do what I did: most people would leave a substantial portion of that $8,000 on the table.

You're right: I did mis-read your post. My apologies!

[JTK44]

Originally Posted by Phillies8008

You're right: I did mis-read your post. My apologies!

Apologies accepted!

[JTK44]

[QUOTE=Phillies8008;32358917]As I've already acknowledged. The entire argument is academic, but, you know, Internet. This doesn't really have anything to do with the discussion at hand.



So again, a manufacturer direct sales model would benefit dealers, not hurt them, since they wouldn't be burdened with having to support those new car sales. So what's the disagreement?



Cool – dealers don't have to keep spending money on that either, so another benefit! In fact, they can sell that prime real estate they're on and move to much cheaper locations. Sounds like another win.

So how does direct sales hurt dealerships again?[/QUOT

Dealer's still make money selling new cars - just not as much as in the past. They also make money in finance. They also make money on trade ins and used cars. Not saying that they cannot with the direct sales, but once dealers give up control of the reason people come in - to buy new cars - they can lose control of the above sources of income, something they do not want to do. Basically like with both Tesla and Ford with the MachE, profits on those cars goes to the manufacturer not the dealer.

I was originally looking at the MachE. The dealer's were clueless and continue that way. Dealer's had the potential to make much more per car selling than the fixed fee for the MachE. Dealers put their efforts were the money was, in selling new cars not the MachE.

[m3number86]

I'll take Tesla style direct sale any day.

Shit was the easiest purchase ever lol

[Boltar]

If I may add the german perspective to this:

In Germany, in the past there were hundreds of small dealerships. They were more or less obeying to what Munich advised.

Since ~2000 many small dealships have been taken over by large companies that now have dozens if not hundreds of dealerships under their control. Basically, theres only about 12 dealership companies left.

And now they do have a lot of power. And they stand between BMW and their customers. There has been a power struggle between Munich and these dealership companies for several years now and this is just the escalation of that power struggle: Munich is disempowering the dealerships. In the new model, the dealershops dont own the cars, they dont negotiate the prices, nothing. They are just "handlers". And at a fixed rate of 2% of the cars price. Thats not a lot.

VW has done this before and has now swiched back to the classic model, as they have disrupted these large dealership companies. Wouldnt be surprised if BMW does the same in about 4-5 years.

[renedx]

In NL they had one dealership owned by BMW directly and it was the best out there, best support, best prices, best service. Its sad they sold it to a franchise, its never been the same again.

I hope this approach brings back that kind of service again.

[Higgs Boson]

Originally Posted by renedx

In NL they had one dealership owned by BMW directly and it was the best out there, best support, best prices, best service. Its sad they sold it to a franchise, its never been the same again.

I hope this approach brings back that kind of service again.

can you elaborate on what particular things they did differently than a franchised location?

[JABCAT]

I honestly don't care about direct sales or buying from a dealership. I haven't purchased a vehicle by going into a dealership and negotiating in probably more than 20 years.

I find the vehicle I want, contact several dealerships and tell them what I'm willing to pay. If I have a trade, I send pics & videos, plus what I'm willing to accept. The one that comes back with the best price/value for my trade gets the sale.

I purchased my Z06 via DocuSign while I was in Hawaii then picked it up the day I got back. My previous 330e was purchased from a dealer in TN. Flew in, handed them the cashiers check and drove back to TX. My wife ordered a Grand Cherokee from a dealer in IA. I purchased my M2 via DocuSign while I was on vacation in UT, and many others just like that.

I learned to avoid haggling whe I was 11 years old. I spent all day with my grandfather driving around from dealer to dealer to dealer looking for a new truck. He finally settled on a new Toyota Tacoma at Fletcher Jones Toyota in Las Vegas, NV.

We sat down and he started negotiating. I remember the salesman said best we can do is $10,250. My grandfather said he'd pay not a penny more than $10,200 or he wanted floor mats thrown in at the $10,250 price. Sales Manager came in & gave the "we're losing money on this deal, $10,250 is the lowest we can go". To which my grandfather said to me "let's go" & we walked out.

Got home and my grandmother asked where the new truck was because we had been gone 12 hours. I told her Papa walked out over $50. She told my grandfather to get his ass back in the car they were going to buy the truck. When we got back to the dealership the $10,250 truck was miraculously sold & the only other comparable one they had was now $14,500. My grandfather started the negotiating again & my grandmother said "Jack shut your mouth", whipped out her checkbook and wrote a check for $14,500 for his new truck

Do some research ahead of time, find the invoice price, employee price, dealer holdback, etc., then make a fair offer of what you're willing to pay. You're just wasting your time going back & forth with them sitting in the dealership. Regardless of what "deal" you think you got, they still made $ off you.

[Rux]

It used to be fun to “wheel and deal” for cars. Now..:.it’s just a pain in the ass.

I personally buy a new car every 1-2 years and have been doing this for more than 30 years.

The sales team used to be a static thing. They used to know your name, know your needs. If a car came in that was just ideal , you would get a call. Now…you are lucky if the sales person even knows about the cars they sell.

The last 4 cars I bought were BMWs. 22 year old sales kids with barely a ball hair telling me how “sick” the deal is. Going to “check” with the sales manager on everything. The car salesman model is dead. it’s never coming back. I applaud BMW and others for direct sales and can’t wait to see my idiot dealerships sales manager on the bread line. Eat shit Val. How is this really any different than using a lease broker?

[JTK44]

Originally Posted by Rux

It used to be fun to “wheel and deal” for cars. Now..:.it’s just a pain in the ass.

I personally buy a new car every 1-2 years and have been doing this for more than 30 years.

The sales team used to be a static thing. They used to know your name, know your needs. If a car came in that was just ideal , you would get a call. Now…you are lucky if the sales person even knows about the cars they sell.

The last 4 cars I bought were BMWs. 22 year old sales kids with barely a ball hair telling me how “sick” the deal is. Going to “check” with the sales manager on everything. The car salesman model is dead. it’s never coming back. I applaud BMW and others for direct sales and can’t wait to see my idiot dealerships sales manager on the bread line. Eat shit Val. How is this really any different than using a lease broker?

Cannot imagine buying a new car every 1-2 years. Cars do not change that much in so short a time. Plus, I will not buy, ever first year of production.

I would think you would be much better off with 2 year leases. With a lease 1/2 of your work, the trade in and/or sale is taken off the table.

Just my $.02.

[Rux]

Originally Posted by JTK44

Cannot imagine buying a new car every 1-2 years. Cars do not change that much in so short a time. Plus, I will not buy, ever first year of production.

I would think you would be much better off with 2 year leases. With a lease 1/2 of your work, the trade in and/or sale is taken off the table.

Just my $.02.

100 percent. Half are for business which i lease. the others are personal. some leases. some buys. I just said buy to not kluge up the conversation