By on September 18, 2017

Dealer Showroom

Car dealerships are an American institution. Often controlled by a patriarch with an unusual amount of sway in the local community (and their sometimes cosseted children), dealer franchises dot the country’s landscape like moles on a back. Isolated near exit ramps, they serve as gleaming beacons of civilization as you traverse through long expanses of wilderness on a road trip.

North America wouldn’t be the same without them but, according to one automotive regent, irreparable change is coming to the dealer networks we’ve become begrudgingly accustomed to. Bill McDaniels, president of McDaniels Automotive Group, runs a half-dozen stores selling selling Acura, Audi, Porsche, Subaru, and Volkswagen-branded vehicles in South Carolina. He’s one of those automotive viceroys mentioned earlier, right down to having his son as the chief operating officer for his business, and he’s convinced the era of family-owned dealerships is almost over.

Is this one man’s paranoid delusion or an astute observation of industrywide trends? 

Speaking with Automotive News, McDaniels expressed his concerns while ironically describing his expanding automotive empire. Having been in the car sales business since 1969, Bill has branched out into real estate and uses income from his home-building projects to purchase existing centers and remodel his own.

“I want to build nice stuff. You don’t have to beat me in the head to spend money,” McDaniels explained. “I want it to look like a nice product when it’s finished. Most car dealers, they don’t care. [The dealership] is just the box. [Their attitude is] ‘I got the manufacturer off of me. So I’m done. I’ll go fly my jet or whatever. And I’ll see you when the building is finished.'”

“But I think the way I grew up, the way I started in the car business, there are very few of us left,” he continued. “And there are going to be fewer as time goes by.”

There’s certainly cause for concern. Since the 1990s, large retailers have moved in on local dealers — stealing large chucks of their business. CarMax is the prime example but it is by no means the only one.

“I see the future of the car industry being controlled by maybe a dozen companies like the Penskes, the Asbury group, the big groups. I see them actually owning everything in the car industry,” said McDaniels. “I also see that down the road, once the dust settles, the car business will become an Amazon.com. That’s where you order the cars exactly the way you want them. They send it to a service facility and you go there and pick [up] your car. There will not be a salesperson.”

“But Mr. Customer, I hate to tell you, there’s no negotiation either on that,” he added. “Because they are going to control the pricing once they monopolize the market.”

At this point, the interview takes a turn from one man’s musing to a prospective cautionary tale. It would be easy to accuse him of being an old blowhard, but Tesla is already adopting a business model very much like the one McDaniels describes. Tesla isn’t alone either. Lynk & Co wants to conduct sales in a similar manner and is concerned as to whether or not it can get away it in North America.

“And I’ve got some news for the manufacturer: These groups that control that market, they’re going to tell you what kind of car to build and how to build it,” he went on. “So it’s just like the Walmarts, like the Lowe’s, like Home Depot. They have destroyed the small business person in the market. Because Home Depot or Lowe’s, they never pay for anything on their shelves until they sell it. It’s all on consignment. It’s a pretty neat deal.”

It’s Revelations in the automotive bible. While perhaps overly dramatic, you can kind of see things slanting that way if enough goes according to McDaniels’ worst-case scenario. Realistically, small-town dealerships will continue losing ground to the big boys. That has been the trend of late and, even though there’s no sign of an overnight nationwide takeover, that could be the end game if things don’t eventually change.

As for our South Carolinian businessman, he says he plans on being raptured if these truly are the final days of the local car dealership. He’s going to ascend to a green heaven where everything is made of money but true joy is absent.

“I hope a bigger group visits me. And they see all-new buildings,” McDaniels said. “They don’t have to worry about building new facilities. They think they can run it better and more efficient, and I want them to. I just want them to pay me first. So yeah, eventually, in the very near future, I would welcome some of those big boys to come in and write me my big check. And I’ll ride off into the sunset. But it will probably be the saddest day of my life because I really love the car business and it’s fun.”

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102 Comments on “One Man’s Dismal Vision of a Future Without the Family-owned Dealership...”


  • avatar
    SCE to AUX

    I don’t see how this is so bad. It’s only ‘dismal’ to the dealers who mistakenly believe they add value to the buying process.

    • 0 avatar
      TonyJZX

      I’m going to need Ja rule to make sense of this. And by Ja rule I mean ruggles.

    • 0 avatar
      sgtjmack

      Actually, they do. It is hard to buy a car for a lot of people. I’ve sold cars for about 15 years, and have seen a lot. There are countless people that come in thinking they want or need a specific type of car, but leave in something that is actually going to work better for their lifestyle.

      You see, buying a car is not like but g a pair of shoes. If the shoes don’t fit, you can simply return them or exchange them. But But I g a car is different, you are stuck with that car, i bless you want to take a huge hit with depreciation if you don’t like the car after you take delivery and drive away.

      Not to mention that there are a lot of features on the cars that many people don’t know about, or how to use them. If you don’t have a salesman, who would tell the people or show them how to use them? Who would show the customer the different ways to buy a car, or help them co.pare the different types or even trim levels of the car?

      Who would locate the car that the person wants, track it down and make sure the car is delivered, make sure the options are correct, make sure the car goes through the pre-delivery process and has a full tank of gas, as well as go through the delivery process, confirm the insurance and registration? Also, who would receive the trade in and make sure that process is completed properly, like making sure the bank receives the money for the pay off, and the plates are removed?

      These are only a few of the things tha t i can think of in a short amount of time, but there are a lot more things that a salesman does besides take you on a test drive.

      I sold 20-25 cars a month, month after month since the third full month after I first dtarted, and that is because I take care of my customers and they return, as well as refer their friends and family to me on a continuous basis. Salesmen provide a great service no matter what they sell. People like buying. From other people that they like, especially when it is a large ticket item.

  • avatar
    gpolak

    “I also see that down the road, once the dust settles, the car business will become an Amazon.com. That’s where you order the cars exactly the way you want them. They send it to a service facility and you go there and pick [up] your car. There will not be a salesperson.”

    Can’t wait! Order exactly the colors and options I want on a car I know more about than the dealer? Sign me up! The dealership offers zero value to most people these days.

    “But Mr. Customer, I hate to tell you, there’s no negotiation either on that,” he added. “Because they are going to control the pricing once they monopolize the market.”

    Yeah, hate those huge Amazon markups and the way the shaft me with hidden fees and unnecessary “services”.

    • 0 avatar
      brn

      The Amazon comparison wasn’t a good one. Amazon still has to compete with other local and online retailers. Even with that, I often get better deals at Best Buy or Home Depot. If Amazon didn’t have to compete with other retailers, their prices would be a lot higher.

      • 0 avatar
        RHD

        Sometimes Amazon has a good deal, and often they do not. Ebay sellers often beat them; online isn’t always the best deal. Recently I had to reserve a hotel room, and the none of the websites could offer a better price than calling the hotel directly and booking with them.
        I have found that walmart.com “sells” items that actually come from independent ebay sellers, and they just charge a buck or two more and pretend to be the vendor.

        • 0 avatar
          scguy864

          I can’t say I had a good experience at Carmax. Fortunately or unfortunately I sold Cars both New and Used of course at Family owned High Volume stores that are still going after almost 90 years in one case. The Cars at Carmax at lease here in the SC area were Dirty and as far as I can tell overpriced. Their main focus is to have you come in pay the price, and go through CarMax financing with no options. The Financing was a joke, here is the Rate pay it. Wait a minute what about Shopping the Deal, Ally, Wells with good credit. Sorry, this is it. They want you to what’s called in the business to LAYDOWN, in other words, this is the price this is the rate take it or leave it I say BULLSHIT. I found what I wanted, had to travel 3 hours to get it, saved almost 4000 now that prices are going up again due the unfortunate need for cars due to the Weather etc. As far as Financing I saved 3% and will save more once I can refinance. Sorry, but I will take the personal touch with a good store with people who treat you fairly and with respect.

          • 0 avatar
            tooloud10

            Where are you finding car dealers filled with people who treat you fairly and with respect? I recently needed two new vehicles and due to having a really nice trade-in and taxes, I needed to buy them both from the same dealer on the same day. CarMax was the only dealer that had what I wanted–one car transferred from Minneapolis, the other from Chicago, both for free–and the process of trading one car in and buying two was simpler than just buying a vehicle outright at most places.

            I think it was the first time I ever bought a car where I didn’t catch anyone in the building lying to me at any point, and the prices on my cars were right on the market value. Sometimes the CM pricing can be higher but you don’t have to play the stupid game for hours/days/weeks to get. I probably paid about 2% over market value for my cars at CarMax, but it was well worth it and I would do the same thing again.

            Nobody tried selling me on the ‘glass etching’ type nonsense, either.

          • 0 avatar
            scguy864

            Tooloud, it wasn’t difficult. If Carmax is selling a year make and model for 22,000 and Hometown dealer B even if it is 150 miles away has the same year make and model for 4000 less asking price, we are talking used here, why would I not go there. The trade was worked out, received a little more at the store, F&I was good. No issues. I’m not saying a place like CarMax is bad per say, I just do not like the take it or leave it way of doing business.

      • 0 avatar
        kvndoom

        Best Buy was always the worst on prices until they wizened up while Amazon and Newegg were eating their lunch. BB used to always be the “demo store” where customers would go and see a product hands on before ordering it online.

        If they hadn’t changed their business model they would have gone the way of Circuit City and CompUSA.

    • 0 avatar
      sgtjmack

      Nothing is “hidden, as it is illegal, thanks to the consumer protection act. Everything is in writing on the contract.

  • avatar
    bking12762

    Small independents are going to be dinosaurs. I believe it is similar with restaurants. The independents are simply losing out to chains. Just consider the cost to open a new car store. It takes millions now. At the risk of sounding very old…I remember when we could buy a small new car store for 200k-300k FFE and including the property. Small guys could try their hand at the sales game and maybe make it big. This is not the case today.

    • 0 avatar
      Mandalorian

      Honestly, I’m just about done with small independent stores in general for anything. I like idea of supporting a local business in theory, but in reality they want more money for equal or worse service than the big boys.

      It’s darwinsim, be competitive or go extinct.

  • avatar
    Jean-Pierre Sarti

    haha, never ceases to amaze me how much dealers feel they add in the car buying process.

    hey Mr. Delusional Dealer, do you think amazon is the only online retailer?

    I’ve never in my life felt like a dealer added any value to me when trying to buy a car. Maybe it’s just me.

    • 0 avatar
      bking12762

      How would Amazon handle the trade-in?

    • 0 avatar
      brn

      Can’t go for a test drive at Amazon either.

      • 0 avatar
        redrum

        Assuming this hypothetical car dealer only handled new cars straight from the factory, any trade-ins would just be sent off to a partner that specializes in used car re-sale, and the profits split between them and the new car dealer. Similar to how many businesses handle cell phone trade ins.

        There would still need to be a brick and mortar presence with a smattering of vehicles for test drives and in-person inspections, there just wouldn’t be a “drive it off the lot” inventory.

        • 0 avatar
          Philosophil

          I don’t know how things are in the States, but in Canada (or Ontario at any rate) the value of the trade-in subtracts from the taxable price on the vehicle. Hence if you are buying a $20,000 vehicle and you get $10,000 for the trade-in, you only pay taxes on the remaining $10,000. Losing that trade-in value on the taxable portion of the purchase would not be so good for the consumer making the trade-in.

          • 0 avatar
            sitting@home

            Here in California you pay tax on the price of the car you buy irrespective of trade in. In the final negotiation they might knock $1k off both prices to save you $90 or so, but taking the whole trade-in off (and saying your trade was effectively worthless) would probably amount to tax evasion.

            People who think that negotiating a sales price is great are deluded. All they are doing is knocking the salesman down to his bottom line, which only he knew what it was beforehand. Removing the salesman means you start at the bottom line.

            And I’m sure the world could survive with a different model than trading your car in on the next one. Craigslist, Auto-Trader and all sorts of other methods would quickly fill the void.

            10 years ago we bought all our books and music in physical stores, but now look …. I’m sure we could adapt to a world without physical car dealers.

          • 0 avatar
            Scoutdude

            WA is like Canada, in that you only pay the sales tax on the difference and with most areas of the state nearing 10% that can add up to real money.

            However nothing indicates that you wouldn’t be able to trade. They would value your car the same way the existing dealers do, take the trade and pass it off to their used car affiliate.

            But it will never work that way. Yes you and I and a bunch of other people on the internet would love to order the exact vehicle they want but the majority want to go in pick out their car and drive home the same day. The other fact is that if this was the system the number of choices available would drop like a rock because they would be counting on a stream of the exact same products. So you can have your car in two trim levels and 3 colors, oh and that base trim is only in one of those colors and it isn’t shared with the upper trim.

            So you want a Camry? You can have the stripper in white, or the fully loaded model in Silver Beige or Beige Silver.

          • 0 avatar
            sgtjmack

            That is the same here, except for California, where they tax you on the entire sales price of the vehicle. Trade difference does not apply there.

  • avatar
    newenthusiast

    So, wait, picking the exact options I want, what color I want, and seeing the actual price I’m paying (before I decide to pay) is somehow bad for a consumer?

    I’d love to have this gentleman’s 1) deluded sense of self-worth and 2)supply of whatever he is smoking.

    What he describes is what the process SHOULD be. Then I either decide I can afford to buy it or I walk away, or I reduce/change option package to get the price I want. It actually would bring MORE choice to me.

    Plus, its not like any of what he says would apply to the used car sales market at all. That will still exist and probably STILL be where the majority of overall annual sales and registrations of cars come from in the US.

    • 0 avatar
      Scoutdude

      If it went the way of Amazon then no you wouldn’t be able to pick the exact options you want. You would have the choice of just a couple of things that Amazon has “in-stock” at that time. They aren’t going to order you a car, they will want to order thousands of a particular combination at a time. So 5,000 of this one 10,000 of that one and 7,500 of the other.

      • 0 avatar
        threeer

        This. I see the “Amazon” model more like what is described by Scout. It wouldn’t necessarily mean an endless array of options. The automotive manufacturer just couldn’t handle the dizzying number of options. I’d see it more like a drop-down menu of available options along with some inventory already available. Still, it would be kind of nice to push a few menu buttons and get what you want (of course, if you’re willing to wait, you’re sort of able to do that today). Maybe more places will pop up that have (probably mid-level trim) vehicles across the line-up of many manufacturers available for test drives only with no purchasing option, just so you could get an idea of what you’d be interested in. Not sure I’d ever want to 100% purchase a car online without ever having actually driven one.

        • 0 avatar
          tooloud10

          Isn’t that how it works already? Lots of available options along with some inventory available in stock?

          In an Amazon-style model, you could pick from a few different configurations that were available for delivery very quickly, or you could customize it with many options, just like how it works now.

          Heck, if anything the selection would be better because Amazon would be able to advertise vehicles from several sites all over the country and delivering to anyone versus how most people are only choosing from cars within a 50-mile radius of their home.

      • 0 avatar
        newenthusiast

        I don’t recall ever mentioning Amazon or any third party sales/dealer.

        I mean using the ‘build your own’ function that every manufacturer already has, and then actually getting that car built.

        I use Amazon as part of the mix for mass market purchases where customization is not required (casual clothing, electronics, tools) if I cannot find what I want locally AND if their price after shipping is better AND if its not urgent. (There some things, like furniture or jewelry for instance, that I wouldn’t buy online).

        I also shop local.

        But neither of those sales models are how cars are currently sold….a process that I hate. If others want to use it, fine. I’m not advocating banning dealers or anything. But right now I have no choice. That’s all I’m asking for. The choice to NEVER set foot on an auto dealer sales floor and still get what I want OR see what’s on a local lot if I need something faster…this would then be pretty much in line with every other type of retail purchase most people do.

    • 0 avatar
      healthy skeptic

      @scottdude

      Tesla doesn’t do that. You can customize the car pretty highly (except the Model 3 at present).

      If they want to stamp out huge blocks of identical cars, I’d think it would make more sense under the current system. They’re building those cars on speculation anyway.

    • 0 avatar
      sgtjmack

      Wait, you can actually do that now. The ONLY thing is, you must also take the mandated safety gear as well as E.P.A. standards that jack the price up on an ordinary vehicle that would normally cost around $10k.

      Another thing to think about is the fact that when you buy a car customized to your order, you will pay more due to the fact that your vehicle takes longer to manufacture. Since cars come with specific packages these days, it is less expensive to manufacture them as such. Wiring harnesses and other mechanical issues tend to add time and labor when changing them from mass production.

  • avatar
    sirwired

    They wouldn’t be in this position if they had not, collectively, $hit all over their customers since forever. I’ve bought three new cars in my life, and with none of them do I feel the dealer did one damn thing for me that couldn’t be easily replicated with the Tesla model of a test-driving showroom followed by an online order. Cut the crap already with the four-square, “let me talk to my manager”, and the F&I gauntlet of pointless add-ons.

    Personally, I don’t want to hear one damn word from some dealer complaining that CarMax has siphoned off a bunch of their trade-in/used business. CarMax offers not-terrible money for trades, and on the sales side, sells pretty decent cars with a sales process that doesn’t leave you wanting to take a shower after you get home with your new ride. And they even make decent money doing it.

    • 0 avatar
      jalop1991

      eh. I wandered onto a Carmax lot a couple of weeks ago; the first car I tried to drive made a horrible screeching sound from the front end as the salesdroid tried to drive it up front.

      The second car I tried to drive was a C-Max hybrid. It had a dead startup battery. And the salesdroid had his booster pack, but no idea where the terminals were for hooking it up.

      I just left. I can get this from Craigslist.

      • 0 avatar
        tooloud10

        And pointing out either problem to CarMax results in them acknowledging it and fixing it before selling it to you for the advertised price. A BMW I bought from CarMax only had one key…”No problem, we’ll have the local BMW dealer mail you another one.” And they did.

        The dead battery thing happens to every dealer on a daily basis. Just a fact of life with hundreds of cars on the lot…and with the way batteries are packaged these days (three of my cars have them in the trunk), I wouldn’t expect a sales guy to know where the terminals were on all of them.

        I don’t even think of the people at CarMax as salesmen–they’re just the person that shows me where the car is and types the info into the computer. I don’t even need them to tell me anything about the cars.

        • 0 avatar
          jalop1991

          “And pointing out either problem to CarMax results in them acknowledging it and fixing it before selling it to you for the advertised price.”

          Absolutely true. Of that I had no doubt.

          But they time car #2 was also not available for a drive, I lost my patience. I don’t exist to serve Carmax by waiting for them to get their stuff together.

          As I said, I left. I can get this on Craigslist.

          You’re apologizing WAY too much for the total lack of attention to any kind of detail on this Carmax lot.

          If that’s how they choose to do business, that’s their business. I chose not to make it MY business.

          Let them survive or not. With experiences like that, I can’t imagine how they would.

      • 0 avatar
        sgtjmack

        Apparently the salesman was not trained on how to drive a c-max, since it is the exact same drive train as the Toyota prius. They all use electric motors, NOT gasoline engines when they first start moving.

  • avatar
    Philosophil

    I wonder where would you go to take a vehicle for a test drive?

    Where would you go if you had a lemon?

    I assume there would still need to be brand-dedicated service shops (for warranty work and such).

    • 0 avatar
      I_like_stuff

      Two words: Amazon Cars

      I’m serious. Amazon could figure out a way to sell cars, allow exchanges/returns, test drives, etc for pennies on the dollars in costs compared to the con artists we know as auto dealerships.

  • avatar
    Shockrave Flash Has Crashed

    Well the trend has been toward fewer dealers and larger dealer groups for quite a while now. Banks and retail have consolidated at the same time. Cheaper advertising, accounting and insurance are achieved by consolidation. It helps to keep wages down too. This all possible because of automation. Get educated people and keep learning, or you’re going to be left out.

  • avatar
    PrincipalDan

    “But Mr. Customer, I hate to tell you, there’s no negotiation either on that,” he added. “Because they are going to control the pricing once they monopolize the market.”

    Like there won’t be competition regardless of the sales outlets utilized.

  • avatar
    Philosophil

    How would you do a trade-in?

  • avatar
    HahnZahn

    I think everyone’s in agreement that engaging with a car dealership is a loathsome task. I’m curious about what the process is like with Tesla, as they’ve done away with the dealership model. I imagine direct sales work well because they have, what, two different models? You want a Tesla and you pick from two flavors and a handful of options. How would it work with a company like Chevy with a bloated product line?

    I could see it going well for the likes of Subaru. There’s little wiggle room with their prices as it is, which I found to be a lot less stressful when I bought mine. And they have about six models to choose from. I could also see it being a viable distribution model as the capabilities of cars converge – one electric is probably much like another, so it becomes a question of styling and storage volume, etc.

    I don’t doubt the guy has a point about unintended consequences, though. And for a lot of people, I imagine they’ll just never be comfortable buying something as expensive as a car online.

    • 0 avatar
      SCE to AUX

      I’d still want to test-drive the actual product.

      As for online purchases, however, I bought my home mortgage online in *2001* (when the internet was still in black-and-white), and showed up at my closing on faith that it would work. Sure enough, some guy appeared with paperwork for me to sign, and it all went smoothly.

      If that hadn’t worked out, I would have been homeless, with a $125k loan stuck in the ether.

      • 0 avatar
        HahnZahn

        Brave of you. In the aftermath of the housing market implosion, I see stories once in a while about people getting foreclosed on despite paying their mortgages due to shell company shenanigans. Must have been quite a pucker factor clicking on Send back in 2001.

    • 0 avatar
      sirwired

      A simple showroom with a handful of each model on hand for look-see and test drives would be sufficient. I imagine anywhere from 2-4 would be sufficient, depending on dealer size and how popular it was.

      As far as the options go? You can do a lot with paint samples, material swatches, displays, etc. that don’t require an entire car.

      And it has the great advantage that you could order the car you wanted, instead of the inoffensive mix of what the manufacturer and dealer thought they could turn over quickly. If you have some uncommon options mix, the chances you can find it other than some shade of white, grey, or black these days is pretty slim.

      • 0 avatar
        I_like_stuff

        People buy new houses all the time without “test driving”. They go to a design center and pick out flooring, cabinets, paint colors, etc. You don’t need to see a Navigation system in person to know if you want it or not in a car either. The deisgn centers for cars could have leather samples, stereo options you can listen to, etc. And one step further would be AI simulation to see what driving would be like with option a vs b.

        • 0 avatar
          brn

          If it weren’t for the ability to test drive, I would have purchased a different car.

          • 0 avatar
            Philosophil

            Being able to test drive is crucial, at least for me. Some vehicles simply ‘fit’ my body and driving posture better than others and you can’t determine that simply by looking at published dimensions. I don’t know how many vehicles I’ve tried that I was surprised to discover had uncomfortable seats or no headroom or had horrible lines of sight for my more upright posture. Other times my expectations might be completely reversed. A good example for me is Subaru. I thought for sure I would prefer the Forester over the Outback but when I actually test drove them I was really surprised at how much more I enjoyed the Outback.

          • 0 avatar
            brn

            In addition…

            I read the reviews and test drove cars. One kinda stood out, so I focused on it. A dealer then strongly encouraged me to just try a *gasp* Taurus.

            Why would I drive such a terrible reviewed vehicle? It’s HATED by the automotive press. Well, the automotive press is wrong.

            If I can’t test drive and must rely in reviews, I won’t get the right car for me. I dread that day.

      • 0 avatar
        HahnZahn

        I think the options are where it’d be fantastic. When I was buying my TDI replacement, I absolutely wanted driver assistance, heated seats and Apple Car Play. That’s a hard combination to find outside of luxury brands or the max trim level on most cars, and usually come coupled with a lot of others like upgraded audio, sunroof, etc. Subaru actually provided the combo I wanted, but they were the only one, really. I’d have had to forgo one of those options if I’d have gone with a different brand. Or pay way too much.

      • 0 avatar
        ACCvsBig10

        Vr technology. Everytime a car is built when doing their final checks they make VR video and upload it to their showroom databases. Customer goes to showroom sits in the show models wears the glasses to see different options, colors, etc..

  • avatar
    gearhead77

    Having just finished the car buying process, I can’t wait until there’s no dealer to deal with. One dealer was nearly 2000 under the other, but that didn’t include freight or their preposterous dealer document fees, so the real difference was only $1300. Not insignificant, but not enough to justify a four hour drive for a car I wanted, but not in the color they had.

    The local dealer still offered a decent deal, according to all the popular price sites, but who wouldn’t want to save another $1000 at least? But they low-balled my trade and only came up when I told them a new used car megastore near me, CarSense ( like CarMax, but not as large by any stretch) offered me $800 more. I ended up selling to CarSense, who have turned my car around and are offering for 4K more than they paid me. I could have made more selling it myself, but I don’t want that hassle.

    “Service after the sale”. Bite me.

  • avatar
    ajla

    “the car business will become an Amazon.com. That’s where you order the cars exactly the way you want them.”

    “There will not be a salesperson”

    WTF, I love the future now.

    • 0 avatar
      Rnaboz

      Don’t hate the salesperson, hate the F&I guy!

      • 0 avatar
        CKNSLS Sierra SLT

        Truer words never have been spoken. As I stated in another thread-The F&I guy tried to add $300.00 key insurance and $200.00 Nitrogen charge hoping I wouldn’t see it on the contract.

        Hyundai dealership.

      • 0 avatar
        brn

        Yes, F&I is generally the most despicable part of purchasing a car, even when you’re not financing!

        • 0 avatar
          TonyJZX

          There’s an old saying, you need a wolf to kill a wolf.

          I have no love for Mr. Bezos but if its a choice between the brave new world of Amazon Autos and Tesla Direct Sales over the old world dealers with their F&I and the four square and the opticoat engraved VIN nonsense, I take Bezos being the emperor of the world any day of the week…

          The old guard deserves to die in a fire.

  • avatar
    I_like_stuff

    A man whose livelihood depends on keeping car dealerships says car dealerships are important to America? Well if he says so, I guess it must be true. He can’t possibly be biased.

    Next up…..real estate agents will tell you buying a home is the best investment you can make!

  • avatar
    ToddAtlasF1

    A guy who built a group of eight dealerships here by being an early-adopter of the systems-house model sold out to Umansky last week.

  • avatar
    I_like_stuff

    Truth be told I hope dealers don’t go away. I like the negotiating game and I’m pretty damn good at it. I’ve leased some luxury cars for insanely low monthly payments. And if we were to go to the Carmax models those deals would be gone.

    One of the good parts of car dealers is for every moron that pays 25% above fair value, someone like me can scoop up a deal for 25% below fair value. In the Carmax model, we both pay fair value. And what fun is that?

    Car dealers prey on people who don’t understand math and/or are too lazy to do their homework. If you’re good at math and are willing to put in some effort, buying cars, isn’t a big deal and you won’t be taken for a ride.

    • 0 avatar
      TonyJZX

      I’m with you there but I recognise that I’m not representative of the wider audience.

      The subject matter has what I would call ‘intergenerational rose tinted glasses’… that system made his family wildly wealthy so why wouldnt it be the best system for him and he would only see the benefits for this audience… he immediately thinks of the thousands of happy customers he has served and pushes aside the bad sides.

      I see it, I feel it. Many of us derive income from things that have a downside, he just doesnt or cant see it.

      IMO the direct sale method like Tesla could have downsides but they cant be worse than the system we already have.

      I welcome it. Also because IMO the daalership experience for most people is like a once every 3yrs thing so as bad as it is, its not something that afffects me. I know how compound interest works and I know how to say NO… and when to walk.

    • 0 avatar
      tooloud10

      That’s not really how sales works. The dealers aren’t selling cars for 25% below market just because they got another guy to pay 25% over market value.

      And in a world where the negotiating is gone, the sellers still have to compete with each other and would have to be more aggressive on their advertised pricing because now they only have one chance to make the sale, rather than the stupid game of denying an offer, then calling you back the next day and wanting to negotiate.

  • avatar
    Cactuar

    This reminds me of active investment managers “warning” clients that passive investing is bad for them. As Upton Sinclair said “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”

  • avatar
    whitworth

    Good riddance.

    I’m sure some antiquated state laws are the only thing keeping them in place.

    • 0 avatar
      RHD

      Is this guy expecting us to feel sorry him because there are changes happening in the industry? Seriously?
      Maybe we should go back to the days of the wood-floored General Store, where you would request each individual item from the storekeeper, who would weight them out for you or take them off the shelf from behind the counter. The shoemaker would come to your cabin once a year, and you would have to provide him with room and board until he was finished making your family’s shoes. Change is clearly bad, especially for those who lack the imagination to adapt or find another profession to dedicate themselves to.

  • avatar
    el scotto

    Consolidation will continue with dealerships. Each and every state has dealer franchise laws. Whether or not your State Automobile Dealers Association is an employment opportunity for idiot son in laws/idiot children is open to debate. The tipping point will occur when some of the largest dealership groups look around and candidly ask: “why are we paying dues to these State Automobile Dealer Associations, inviting lard-ass politicians to hospitality tents at auto races, or inviting state-level politicians to VIP product demo days and then buying them drinks and dinners? ” They’ll ask, “Do these state franchise laws, and their inherent costs, provide less value than what we’re paying for?”. I imagine the multi-state, region car dealers will say “YES”. Amazon, Schmazon; wait until the dealership GMs figure out how to pay for hookers and blow with bitcoin.

  • avatar
    cdnsfan27

    He is right, there is a growing consolidation in the car business and it will only be good for the shareholders of these mega corporations. It won’t be good for the employees and lessened competition is certainly not good for the consumer. I sell Jaguars for a privately owned company after working in two corporate stores that sold competing brands and I can see a definite difference. I see customers from major centers all the time who tell me all the stores in their area are owned by the same company and they won’t deal. They will drive 300 miles to shop with us because of price and service.

  • avatar
    Pricha33

    Why do I picture some balding middle aged guy cruising in his red 5.0 convertible as he runs the entire community with an iron fist.

  • avatar
    vterian

    I love how people think that the dealership should go away. I’m in the dealer world, I think that people will feel very different when you can’t complaint about something. Anything. No returns on cars, there is a title just like on the house you don’t like, or underwater on, no over allowing on trades, you’re not dealing with people, no getting approved if you are a hard luck story. I can say after 13 years I have made many customers happy who have bought more than one care from me. I would love to see the system built that can do this…wait there is one called the dealership.

    On another note, I went into a Tesla store the other day to see what goes on there. I could very well afford to buy one of their cars and I was not approached, not even a common hello. I had to go and ask questions about their product.

    Value to the business is people skills. Good attitude, some fun, and getting the car you like, potentially meeting a car salesman/woman who cares. Good luck future Amazonia car buyers

    • 0 avatar
      tooloud10

      What makes you think you can’t complain to Amazon? I’ve actually had extremely good customer service from them, to the point that it boggles my mind that an online merchant can somehow offer better service than a brick-and-mortar store.

      Literally every time I’ve had a problem with an Amazon product, their answer has always been “We’re sending you a new one right now.” In a rare case they’ll ask me to return the broken/defective/wrong product that they had sent, but usually tell me to just throw it away.

      OTOH, I’m sure I and lots of others could share stories about poor customer service at local car dealerships. Having a building to go to to complain doesn’t do anything to prove that your complaint will be heard.

  • avatar
    zerofoo

    I’ve already seen how this plays out – it’s happened before in a newer, yet faster moving industry – cellular communications.

    I used to work for a small mom and pop shop that sold cell phones and contracts. At the time, the telcos were too busy building their networks to deal with customers. That was our job.

    We made money on the phone hardware and we were paid a monthly residual on every cell contract we activated.

    After years of signing up customers, those monthly residuals were a pretty sizable sum – for essentially no real work.

    Eventually the cell companies figured out they could sell direct to their consumer, cut out the middle man, and keep all the profits – including residuals for themselves.

    Sure, there are some independent cell phone shops – but they are mostly gone replaced by company stores.

    That is exactly what will happen in the auto industry. First consolidation of small dealerships into larger regional ones, then the manufacturers will eventually swallow those as company stores.

    Once the mom and pops are gone – most of the legislation protecting them will be unnecessary and eliminated.

    • 0 avatar
      jalop1991

      – – –
      I used to work for a small mom and pop shop that sold cell phones and contracts. At the time, the telcos were too busy building their networks to deal with customers. That was our job.

      We made money on the phone hardware and we were paid a monthly residual on every cell contract we activated.

      After years of signing up customers, those monthly residuals were a pretty sizable sum – for essentially no real work.

      Eventually the cell companies figured out they could sell direct to their consumer, cut out the middle man, and keep all the profits – including residuals for themselves.
      – – –

      And what has happened to prices in the cell phone world?

      That’s right. They’ve gone WAY, WAY down since those days of your mom and pop shop.

      Two smartphones for a grand total of $60/month for unlimited everything service. No extras–all fees and taxes included in that $60.

      For two lines.

      I would say the world is better off today than in your mom and pop cell phone shop world.

  • avatar
    hamish42

    I just purchased a Honda Fit for my daughter. The experience was enough to make you want to take the bus for the rest of your life. We were disrespected, treated with rude condescension and outright lied to. I will never do this again. Do I negotiate for a refrigerator? Then why the hell should I negotiate for a car. They know exactly what they can sell it for – tell me and I’ll pay if it’s reasonable. Cut the bulls*-t.

  • avatar
    ClutchCarGo

    “dealer franchises dot the country’s landscape like moles on a back”

    And just about as likely to turn malignant

  • avatar
    Scoutdude

    Without a doubt the companies like Penske and Autonation will continue to pick up or open new dealerships. However I wouldn’t write off the smaller operators just yet. In my area in the recent past we saw the Ford dealer purchase the Chevy dealer down the street and a case where a Chevy dealer picked up the near by Ford store and most recently a Kia store.

    We will not see the Amazon model come to the new car sales market. The margins in the new car sales are just too slim. The average new car dealership sells new cars to get the profits from the shop and the used car side. So the still need physical locations that are convenient for customers to get service and parts department sales and profits. They also need a place to unload those used cars for those profits, not wholesale them off at cost or just above.

  • avatar
    healthy skeptic

    The marketplace can determine how all this plays out, but those semi-corrupt state protectionist laws for dealers need to get tossed from the books.

  • avatar
    bikegoesbaa

    “Since the 1990s, large retailers have moved in on local dealers — stealing large chucks of their business”

    Stealing = Earning?

  • avatar
    Joss

    Well with the coming EV flip which remains to be seen how it plays out.. dealerships will lose an important source of revenue due to reduction in parts & servicing.

    EV’s still require tires at the same rate as ICE, so I should think the independent tire retailer & installer are much better positioned to survive.

  • avatar
    Speed3

    Looking forward to cutting out the middleman and buying my next vehicle directly from the manufacturer in the specs I want.

    Also looking forward to when electric vehicles with much less maintenance deliver another blow to dbag dealers. No overpriced fluid changes for EVs.

  • avatar
    FreedMike

    Here’s the thing: is the family-owned dealership model going to die, or is it just going to morph into a different, more customer-centric model that emphasizes a more streamlined buying experience, with things like up-front pricing?

    I’m going with the latter.

    Sounds like this guy is lamenting the days when he could just restage his favorite scenes from “Used Cars.” Well, sorry, that’s not happening anymore. And thank God for it.

  • avatar
    olddavid

    There is one player in this mega-trend that can speak of both small town personality and large market economy – Lithia Group.I did business with them on a handshake (over the phone, no less) in the early ’70’s and it seems this generation of family has seen the writing and co-opted it to their benefit. A store like our family Chrysler-Rambler combo – given to my Father on a napkin agreement with only two employees other than seven family members, now that is history. Too bad. The equity a fair hard working honest person can build can be life changing for generations to come. The harbinger of doom is those self-entitled “children” who believe they have learned the business just by being someone’s child. There is a happy medium somewhere in this, but damned if I know where it is.

  • avatar
    hreardon

    Do not equate “convenience” with “better deals”. Convenience is expensive and someone will have to pay for it, whether it is the dealership or you in overall higher transaction prices.

    There is a trade off when competition drops: instead of some people getting a better deal and others a worse deal, everyone gets a less optimal deal (for the consumer).

    Sure, it’s a more convenient transaction, and I recognize that I’m an outlier because I’ve never had a bad car buying experience in 25 years of buying cars.

    Amazon provides a very convenient buying experience. My wife initially loved the idea that they would send us a new bottle of Tide detergent on subscription….until she cross checked the price of the subscription versus what she would pay at the local Target about a month ago: 17% more from Amazon for the convenience of them shipping it to us on subscription.

    I used to be able to negotiate annually on my cable TV subscription when we had ATT, Direct, Time Warner and WOW in our area. Now we’re down to either ATT/Direct (merged) or Spectrum (frmly Time Warner). In the last two years of trying to negotiate AT&T told me to pound sand.

    I’m one who generally values his time more than extracting every last pound of flesh in a deal, and I love the *concept* of factory order custom build specs on an automobile. Direct sales will ultimately push transaction prices up, I have no illusions about that.

  • avatar
    hreardon

    Adding to the above: a great first step would be to revise the state dealer franchise laws to allow manufacturers to sell direct to consumers. Then you’d have a true test of consumer demand for the direct sales model and dealers would actually have to demonstrate their value.

    Or would they?

    I suspect that if you were to walk into your local Chevy, Honda or Audi factory direct order center that it would go something like this:

    “Hi, I’d like to test an A4 and then place an order for one, can I do that?”
    “Sure, consumer. Here’s the order form, spec out what you’d like and the car will be here within 4 weeks/4 months”
    “Wait, what?”
    “Oh, you’re ordering a car, so it takes time.”
    “Okay, I can do that. Let’s talk price, then.”
    “Great, consumer. The MSRP is $47,575.”
    “Ummm, that’s a lot.”
    “Well, we don’t discount. The window price is what everyone pays.”
    “But, the Audi dealership down the street was giving me 8% off of MSRP.”
    “Great, go buy it from the Audi dealership down the street. Thanks for stopping by.”
    “Wait, what if I take one of the models you have here on your lot?”
    “Sure thing. It’s still MSRP, you just get it today versus in 4 weeks/months.”

    If people think consumers will pay MSRP for the convenience of check-box ordering and not dealing with dealerships, then let’s give them that option. I suspect, however, that the reality will be that while some people would be all over that model, the masses will still go back to the haggle-prone dealership to save a few bucks. Generally, those who have money to burn and who value time over everything else, or car people who want high levels of customization would jump on the direct sales model.

    Regardless, the franchise laws stink and consumers should be given the option.

  • avatar
    cheezman88

    How is this a bad thing at all? LOL. Man, I love how some dealerships sell themselves as some absolutely crucial part of the car-buying process. All they do is add cost and hassle so they can take home a piece of the pie and pat themselves on the back for the extra money they were able to take out of the customer’s pocket. I can’t wait until we have an Amazon like car buying process. NO ONE likes buying a car because of dealerships, 300%.

    • 0 avatar
      bikegoesbaa

      I agree.

      If dealers are so valued and necessary then they have nothing to lose by dropping state franchise laws. Surely customers will continue to patronize them of their own free will. You know, because they add so much value.

  • avatar

    Good riddance. I can’t wait for direct to consumer sales spec’d exactly the way the consumer wants them.


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