Dealership Dread

[ponyo]

In my opinion, negotiation is for unique offerings and services. When I'm working with our partners and we're orchestrating a deliverable with lawyers in the room, you can bet all the group's finance guys are running numbers to determine the best mutually beneficial profit potential for us, for our partners, and maintaining our appeal in the market. Those negotiations that I'm part of make total sense.

For a car? Of which they're making more than a quarter million of them that year alone? No. That's not special in the slightest. There is absolutely no purpose to it except to get people who aren't "game" enough to deal with the system to subsidize those that are. For cars of which there's literally millions produced every year it's just silly.

When I bought my Subaru in 2015, I went to 8 different dealers across 3 states from their e-sales that had matching cars (because again, there's nothing special about buying an econobox). I had each of them give me their lowest number and noted that I'd only be working over E-mail, and I'd be buying whichever vehicle had the lowest price, because they're all the same. Subaru Impreza, Hatchback, Eyesight, Leather, Climate Control. Check all the boxes and get back to me with the price. I then would tell them where they stood in pricing compared to each other and went through all of that over about 3 days until only 1 remained. And I went and bought the car. Was that easy? Yes (because there's nothing special about buying a car). But it was completely an unnecessary waste of my time.

When I bought my Tesla, I customized it, and bought it just like buying something off Amazon. I paid the single price that Tesla has calculated with the best balance of profit margin and competitiveness in the auto market, and I did it in 15 minutes at my computer.

Even the delivery portion was massively better. With the Impreza I had the car I wanted only after sitting there for an hour with them going on and on about how I needed to buy extra services for it. The Tesla I was there for half an hour spending the vast majority of the time signing forms. Then I'm walked to my car, given a brief overview, and told I'm free to go at my leisure.

I can't wait for Tesla's business model to freakin' crush the auto industry.

It's going to happen. When the legacy automakers go down, they're going to take down the dealers with them. I drive by this road near my house with lot of car dealerships, and I see construction going on with dealerships increasing the size of their building and lots. And I think to myself, what are these guys thinking? Don't they see the writing on the wall? If I owned legacy car dealership, I would be looking to sell the entire business ASAP while it still had value and I could still find a buyer. Once it becomes apparent to the market these legacy automakers along with their dealers are in serious trouble and toast, they're only going to get liquidation prices for their businesses. They're about to get Amazoned by Tesla. You would think they learned from the demise of Sears and all the other failed retailers after what Amazon did.

 

[BonzaiDuck]

I'm wondering whether the amount saved out of MSRP is so significant in comparison to the larger deterioration in value that includes "just driving the car off the sales lot". This informs my judgment about buying "pre-owned" versus new.

But if I were fixed on the plan of buying a brand-new car from a dealer, I suppose I'd settle on the make and model, create some spread-sheet "builds" to add the options, and then canvas for a good deal.

The phenomenon of "lease" versus "buy" has been around for several decades. I'd rather buy a car outright. I had a friend, though, who -- in the 1980s -- leased a Mercedes Turbo-Diesel sedan. He juggled an "investment counseling" enterprise with a friend while teaching part-time, fly-by-night consulting assignments with corporations, and a government day-job. So the lease was made through the investment-counseling LLP. When the lease expired, he arranged to purchase the Mercedes through the LLP, and then sell it to himself. At least, that's how he explained it. If that seems "slick" or even shady -- he was a lawyer also, and finished out his civil service as an Assistant US Attorney.

But I'd rather just own the car outright. And for the next and probably last vehicle in my life, I'd like to pay for most of it outright -- cash on the barrel-head.

I would think that a strategy offering a large sum of cash immediately to a dealership would give the buyer a bargaining edge. If I recall, financing arrangements these days require 10% down payment, while I'd hope to pay about 70% outright if I couldn't manage 100%.

And -- maybe I'm right, maybe I'm wrong. But the mention in earlier posts about a Tesla follows my own thought that purchase of a $30,000-plus internal combustion vehicle is probably short-sighted and even a losing proposition. Best to save the change in the piggy-bank and wait for a proven electric that fills the bill and floats your boat.