EV Transition-Can Dealers handle it?

[Flying68]

17 hours ago, Deanh said:

QUOTE " I wouldn't have a problem with ADM's if the allocation system was eliminated, that way the dealers that effectively compete on price will be able to sell the most "...……...I wish I could believe that, but if you think a smallish Mom and Pop store such as ours,  that is NOT charging over MSRP for vehicles, will EVER get additional allocation over several heavy hitters in our Zone ( one is 17k over on Broncos, the other had a couple at 30k ) you would be dreaming...and therein lies another issue....Ford likes to convey a character trait of frowning on said practices, while rewarding the very dealers that move larger numbers in manners they profess to frown upon...

Which is one of the reasons why allocation should be eliminated.  If you as a small store can keep your overhead low and sell for less than the big city mega dealer, you should be able to get as many vehicles as you can sell.  I have never really liked the big dealers, too much turnover in staff and they don't care about the customer.  The actual system I would like to see is one where every dealer sells at MSRP.  Ford in turn gives a fixed base commission per car and a market volume commission (over perform your market area, get more money), plus incentives for positive customer experiences.  This would also mean plan pricing wouldn't be an issue as Ford would give the same commission regardless.

 

There is a major disconnect in the interests of the dealers and the OEM's that isn't good long term for either party.  They are going to have to figure out how to work together on a cohesive strategy or be decimated by new entrants with a better model.

[rperez817]

12 hours ago, Trader 10 said:

I think you’re wrong about makers keeping supplies low. See link below about Toyota to produce a record number of vehicles in January. You don’t think that Chevy wouldn’t love to dethrone the F150 and that Ford will stop at nothing to prevent it? Sure automakers would love to keep supplies low but competitors will just jump their sales by raising production should one or more keep production constrained. Once the chip shortage disappears production will quickly return to pre Covid levels. 
 

https://www.autoblog.com/2021/12/15/toyota-production-800000-vehicles-january/

 

Thanks for this Autoblog article Trader 10. If Toyota is representative of global automakers generally, sounds like there will be a spike in vehicle production once the chip shortage abates to make up for lost units over the past year or so. But once things stabilize after that spike, silvrsvt makes a good point that automakers are likely to focus on profitability over revenue. That means lower production rates, more closely aligned with actual customer demand than what was the case prior to the pandemic.

[Harley Lover]

21 hours ago, Deanh said:

squewed opinion IMO ...look at overall profit, what SHOULD be the margin in a $47k Bronco?...answer...its INADEQUATE IMO given a Dealerships overhead and responsibility to its clientele....your thoughts, whilst noted should NOT be based on percentages...that said theres some dealers being absurd with ADMS. SO...curious...what are your thoughts on those individuals flipping for 60 - 100k over after they've bought the car....? Keep in mind the investment that has gone into a Dealership....

 

Totally lost in your defense of dealers is the fact that they have state laws written to protect them and provide them with a monopoly to sell new cars within their respective states. Compare that to the average individual buyer, and that person has the deck stacked against them the minute they step into the showroom. That those same dealers fight tooth and nail to prevent any change to the state franchise laws (ala Tesla) that might introduce competition that might mitigate their behavior is not lost on anyone - they know they have a good system and protection from the state, and fight to maintain it.

 

The internet has provided much more info to individual buyers, including the ability to buy from a dealer elsewhere to mitigate costs, but very few outside of a dealer have any sympathy for their price gouging. It's certainly their right to do it, and as noted above, their enablers in state government protect the practice and the lack of competition that might mitigate the practice, but don't expect anyone to be cheerleading you while it's being done.

Edited December 16, 2021 by Harley Lover

[Deanh]

2 hours ago, Harley Lover said:

 

Totally lost in your defense of dealers is the fact that they have state laws written to protect them and provide them with a monopoly to sell new cars within their respective states. Compare that to the average individual buyer, and that person has the deck stacked against them the minute they step into the showroom. That those same dealers fight tooth and nail to prevent any change to the state franchise laws (ala Tesla) that might introduce competition that might mitigate their behavior is not lost on anyone - they know they have a good system and protection from the state, and fight to maintain it.

 

The internet has provided much more info to individual buyers, including the ability to buy from a dealer elsewhere to mitigate costs, but very few outside of a dealer have any sympathy for their price gouging. It's certainly their right to do it, and as noted above, their enablers in state government protect the practice and the lack of competition that might mitigate the practice, but don't expect anyone to be cheerleading you while it's being done.

RUBBISH...you just made a statement then contradicted yourself by mentioning the ability to do research online...stacked against them?...pffffft...invoice pricing, interest rates for loans, trade estimates...its all right there...you want to buy Tesla style...that option has always been there....don't haggle , pay MSRP, far be it that a Dealership that has invested MILLIONs make a profit, obviously Tesla doesn't..cough cough...as for Addendums, which you obviously take umbrage with...re read what I stated...I don't condone them...but I fully understand them...you obviously don't...but remember that the next time something you are selling fetches more than you think due to supply and demand...seems its ALWAYS fine when the shoe is on the consumers foot where it benefits THEM...but it differs when it works to the Dealers advantage, which even you would have to confess...is extremely rare....and FYI, love or loathe, you would be absolutely screwed without that Dealer base...AND SIDEBAR, Sure not hearing any complaints about the money ( they may as well have addendums on them ) for their trade ins......

Edited December 16, 2021 by Deanh

[Harley Lover]

1 hour ago, Deanh said:

RUBBISH...you just made a statement then contradicted yourself by mentioning the ability to do research online...stacked against them?...pffffft...invoice pricing, interest rates for loans, trade estimates...its all right there...you want to buy Tesla style...that option has always been there....don't haggle , pay MSRP, far be it that a Dealership that has invested MILLIONs make a profit, obviously Tesla doesn't..cough cough...as for Addendums, which you obviously take umbrage with...re read what I stated...I don't condone them...but I fully understand them...you obviously don't...but remember that the next time something you are selling fetches more than you think due to supply and demand...seems its ALWAYS fine when the shoe is on the consumers foot where it benefits THEM...but it differs when it works to the Dealers advantage, which even you would have to confess...is extremely rare....and FYI, love or loathe, you would be absolutely screwed without that Dealer base...AND SIDEBAR, Sure not hearing any complaints about the money ( they may as well have addendums on them ) for their trade ins......

 

Hysterical much? Again, nothing in what you wrote addresses this: "Totally lost in your defense of dealers is the fact that they have state laws written to protect them and provide them with a monopoly to sell new cars within their respective states. Compare that to the average individual buyer, and that person has the deck stacked against them the minute they step into the showroom. That those same dealers fight tooth and nail to prevent any change to the state franchise laws (ala Tesla) that might introduce competition that might mitigate their behavior is not lost on anyone - they know they have a good system and protection from the state, and fight to maintain it." 

 

I agree with you, an informed consumer has all the tools available on the internet, but the average off the street consumer probably doesn't do that level of homework and has few protections in comparison to the dealers with their state lawmaker benefactors.

 

 

[ice-capades]

11 minutes ago, Harley Lover said:

I agree with you, an informed consumer has all the tools available on the internet, but the average off the street consumer probably doesn't do that level of homework and has few protections in comparison to the dealers with their state lawmaker benefactors.

 

Better than 90% of customers do their research online and that's been the case for years now. The very, very few "off the street" customers are a different matter.  

[silvrsvt]

1 hour ago, Harley Lover said:

I agree with you, an informed consumer has all the tools available on the internet, but the average off the street consumer probably doesn't do that level of homework and has few protections in comparison to the dealers with their state lawmaker benefactors.

 

57 minutes ago, ice-capades said:

 

Better than 90% of customers do their research online and that's been the case for years now. The very, very few "off the street" customers are a different matter.  

 

Knowing about a product vs the finacing or even operations of a deal (with the BS I went through), is where this argument falls flat.

 

And when your salesperson who you know on a personal level doesn't know about a signed sales agreement to protect the sale...well there are alot of things that don't quite add up in the consumers favor. 

[Deanh]

57 minutes ago, Harley Lover said:

 

Hysterical much? Again, nothing in what you wrote addresses this: "Totally lost in your defense of dealers is the fact that they have state laws written to protect them and provide them with a monopoly to sell new cars within their respective states. Compare that to the average individual buyer, and that person has the deck stacked against them the minute they step into the showroom. That those same dealers fight tooth and nail to prevent any change to the state franchise laws (ala Tesla) that might introduce competition that might mitigate their behavior is not lost on anyone - they know they have a good system and protection from the state, and fight to maintain it." 

 

I agree with you, an informed consumer has all the tools available on the internet, but the average off the street consumer probably doesn't do that level of homework and has few protections in comparison to the dealers with their state lawmaker benefactors.

 

 

no...hysterical?...that's ripe, no its first hand experience and knowledge. 36 years of it, with an average of close to 200- 300 transactions a year, that a good enough resume for you?.......seen every change in the book, and absolutely NOTHING, not one change was advantageous to the Dealership body....it was and HAS always been to benefit the consumer, and Im not bleating...that's FACT. And I for one , in the last 10 years, haven't dealt with a single individual that hasn't done their due diligence regarding researching the purchase of the second biggest investment in their lifetime ( well unless they are an audiophile or addicted to some sort of priceless art collection...or...or..., ) And news for you...inter dealer competition nullifies any Monopoly...unless a big conglomerate tries to buy every dealer in a State...Autonation tried here in So Cal and failed miserably...you want to talk a Monopoly, you may want to look at the very sales model you are quoting as a Role model...Tesla...fact is, if the Car Business embraced their business model it would be wholeheartedly lambasted and people would STILL complain for not having any choices regarding their transactions....

[Deanh]

14 minutes ago, silvrsvt said:

 

 

Knowing about a product vs the finacing or even operations of a deal (with the BS I went through), is where this argument falls flat.

 

And when your salesperson who you know on a personal level doesn't know about a signed sales agreement to protect the sale...well there are alot of things that don't quite add up in the consumers favor. 

I remember your story regarding your Bronco...it sucked....similar scenarios are happening around us as well...fact is though, if you take supply ( demand ) issues out of the equation...the market is definitely tilted on the Consumer side..I for one have never seen the market like it has been the last 18 months...

Edited December 16, 2021 by Deanh

[Deanh]

and no offence Harley, but the old argument of how Dealerships making money on vehicles is somehow different than someone selling an item of theirs for what the market can bring, has become rather old and fatigued...its like taking offence to someone selling something on e-bay for the highest bid they can get, or their house for the most money they can get...oh how disgraceful they wouldn't take a less money, crooks...but Consumers MOANING when the shoes on the other foot and they arent in control or have no leverage is ripe....ESPECIALLY when Tesla is utilized as an example of how the Car Business should be run ( fixed pricing no discounts etc etc  )

[Chrisgb]

22 hours ago, akirby said:

Don’t forget that a large percentage of vehicles are leased and those have to be replaced within a few months of lease end unless the buyer wants to keep them.

I would think that lease end purchases would be exempt from the ADM phenom, as the buyout option price is negotiated at the start of the lease under the dealer's signature. That would be the only time the dealer would have the opportunity to add markup, and many, but not all, do add $500+.

[Deanh]

57 minutes ago, Chrisgb said:

I would think that lease end purchases would be exempt from the ADM phenom, as the buyout option price is negotiated at the start of the lease under the dealer's signature. That would be the only time the dealer would have the opportunity to add markup, and many, but not all, do add $500+.

you cant add more than the $500 to a Lease end buyout....and the buyout is itemized on the Lease contract....its not negotiated....

[akirby]

2 hours ago, Chrisgb said:

I would think that lease end purchases would be exempt from the ADM phenom, as the buyout option price is negotiated at the start of the lease under the dealer's signature. That would be the only time the dealer would have the opportunity to add markup, and many, but not all, do add $500+.

Correct but my point is if you are ending a lease and you don’t want to do a buyout then you HAVE to buy new so you’re stuck with current market pricing.  As opposed to someone who purchased and has the option to wait.

[bhidalgo63]

2 hours ago, akirby said:

Correct but my point is if you are ending a lease and you don’t want to do a buyout then you HAVE to buy new so you’re stuck with current market pricing.  As opposed to someone who purchased and has the option to wait.

My current 2020 Explorer is a Lease but my F-250 is retail. We went with the lease on the Explorer only because we needed something NOW when our Escape got too small after our granddaughter was born in late 2019. I did a 15K annual mileage contract because in prior leased vehicles my wife killed the mileage on them  But NOW, actually, I wish I had done 12k Instead.  Why? Because since we got it in March of 2020 we have only put about 12K on it. Mind you COVID put the brakes on a lot of driving, but still, I am overpaying for something I am going to have to trade in or turn around and buy. I seriously doubt I'll buy it due to the issues we have had with it since day one. I love the model but too many electronics-related issues with it. I'm really looking forward to the lease ending on it so I can find something else. The wife LOVES the Aviator but it's really just the Explorer all dressed up. We owned an MKC when they first hit the market and loved it. But it was smaller inside than the Escape and we just could not afford the MKX at the time.  I like the Ford/Lincoln lineup but wish they had kept more than just the Mustang as a sedan.  We'll stay with Ford just not sure what our next step will be for a family vehicle at this point.

[Captainp4]

On 12/15/2021 at 1:05 PM, silvrsvt said:

Another thing about ADMs on MSRP-its not like your talking a 5-10% markup...your talking an additional 15-20% to the vehicles cost when 10K is added to a $47K Bronco or $5 to a 30K Maverick. That isn't small potato no matter what way you slice it.

So if the profit in a Bronco is say $1000 (which I'm thinking its half that) its fine to make a 1000% profit increase on it? In other industries that would be considered price gauging 

 

On 12/15/2021 at 1:14 PM, Deanh said:

squewed opinion IMO ...look at overall profit, what SHOULD be the margin in a $47k Bronco?...answer...its INADEQUATE IMO given a Dealerships overhead and responsibility to its clientele....your thoughts, whilst noted should NOT be based on percentages...that said theres some dealers being absurd with ADMS. SO...curious...what are your thoughts on those individuals flipping for 60 - 100k over after they've bought the car....? Keep in mind the investment that has gone into a Dealership....

I don't know what the margins are on a bronco, but just a perspective from a slightly different industry. If I wasn't making 30% on aftermarket parts I was selling (performance parts for older vehicles) it wasn't worth my time and after website and credit card fees it was possible to lose money on ~10% margin sales. If dealers are only making 1k on 47k dollar sales I don't know how they keep the lights on.

[Deanh]

18 minutes ago, Captainp4 said:

 

I don't know what the margins are on a bronco, but just a perspective from a slightly different industry. If I wasn't making 30% on aftermarket parts I was selling (performance parts for older vehicles) it wasn't worth my time and after website and credit card fees it was possible to lose money on ~10% margin sales. If dealers are only making 1k on 47k dollar sales I don't know how they keep the lights on.

I think a majority have an inflated opinion of what Dealers actually make per unit.....would me saying ( after 30 plus years ) if I was to invest in a Business, I would most vehemently NOT invest in a Dealership, shed a light?....

[rperez817]

3 hours ago, Captainp4 said:

If dealers are only making 1k on 47k dollar sales I don't know how they keep the lights on.

 

New car dealerships have relied on used car sales, fixed ops, and finance/insurance to keep the lights on. 

[RGIll]

27 minutes ago, rperez817 said:

 

New car dealerships have relied on used car sales, fixed ops, and finance/insurance to keep the lights on. 

Agree. Most dealerships also make their bread and butter from service and parts more than sales so that might hurt them if EVs need less attention. But when they do it is costly. The downside for dealers which I can see in the future is just the use of kiosks if you go in to order and that is if you even have to order at the dealer (ie Tesla only does online order) t sales individuals are going to disappear and instead you will have more customer service as in people that familiarize owners with all the features of their new cars when they arrive and potentially one or two folks that run test drives. But I think sales folks will one day be gone

Edited December 18, 2021 by RGIll

[rperez817]

30 minutes ago, RGIll said:

Most dealerships also make their bread and butter from service and parts more than sales so that might hurt them if EVs need less attention. But when they do it is costly. The downside for dealers which I can see in the future is just the use of kiosks if you go in to order and that is if you even have to order at the dealer (ie Tesla only does online order) t sales individuals are going to disappear and instead you will have more customer service as in people that familiarize owners with all the features of their new cars when they arrive and potentially one or two folks that run test drives. But I think sales folks will one day be gone

 

Thank you RGIll, that's an excellent summary of some of the biggest challenges franchised new car dealerships face amid the ongoing automotive industry revolution.

[balthisar]

18 hours ago, rperez817 said:

New car dealerships have relied on used car sales, fixed ops, and finance/insurance to keep the lights on. 

This is the perfect argument for breaking the dealers' sales monopolies and allowing direct to consumer sales.

 

I don't need any particular dealer, because there are many of them. And I have no loyalty to them, because they're fungible for the most part. I don't really care about their investments, either. The best thing in the world is being able to buy with A Plan so that I don't have to deal with the bullshit aspects of dealerships. 

 

[FordBuyer]

20 hours ago, rperez817 said:

 

New car dealerships have relied on used car sales, fixed ops, and finance/insurance to keep the lights on. 

 

Yeah, I've always been under the impression that dealers made most of their money selling used cars, financing, extended warranties, and doing thousands of recalls. Recalls alone keep the garages super busy. Now I know salesmen make money selling new cars, but dealerships make money lots of other ways. It's a pretty all encompassing business with lots of revenue sources. 

[Deanh]

On ‎12‎/‎18‎/‎2021 at 10:11 AM, balthisar said:

This is the perfect argument for breaking the dealers' sales monopolies and allowing direct to consumer sales.

 

I don't need any particular dealer, because there are many of them. And I have no loyalty to them, because they're fungible for the most part. I don't really care about their investments, either. The best thing in the world is being able to buy with A Plan so that I don't have to deal with the bullshit aspects of dealerships. 

 

and you are exactly the type of individual that would deserve the consequences of your wishes.....

[rperez817]

On 12/18/2021 at 1:11 PM, balthisar said:

This is the perfect argument for breaking the dealers' sales monopolies and allowing direct to consumer sales.

 

I don't need any particular dealer, because there are many of them. And I have no loyalty to them, because they're fungible for the most part. I don't really care about their investments, either. The best thing in the world is being able to buy with A Plan so that I don't have to deal with the bullshit aspects of dealerships. 

 

6 years ago, John Voelcker at Green Car Reports said this about dealers' sales monopolies, direct to consumer sales, and BEV. How Bad Was Nissan Dealer When Buyer Wanted A Leaf Electric Car? THAT Bad (greencarreports.com)

 

"The ongoing battles between Tesla Motors and state auto-dealer lobbyists have focused new public attention on the fact that it's illegal for an automaker to sell a car directly to a buyer.

Instead, those lobbyists have convinced elected representatives to alter franchise laws, state by state, to mandate that the sole legal way to buy a car is through an independent third party. That is, a dealership.

Which might not be quite such a bad thing if so many dealers weren't so demonstrably inept at selling electric cars to the people who want to buy them."

 

Sadly, things have not improved much since then with franchised new car dealerships as a whole, though some dealerships have finally taken BEV more seriously.

[balthisar]

21 hours ago, Deanh said:

and you are exactly the type of individual that would deserve the consequences of your wishes.....

 

What would be the consquences? The dealer would be free of the pain in that ass and low margins that they cry about, and I wouldn't have need a useless middleman to transact the purchase. The dealer would still be around for things like service and warranty support, you know, the things that they say bring them real profit. Win-win.

 

[sullynd]

If Ford spun off a brand, or brands, would they be able to renegotiate with dealers?  For example was RAM a whole new dealer agreement?  Imagine if they were able to say “Oh, you want to still sell F-Series? Then you need to…”