FTC to Host Public Workshop Examining the U.S. Auto Distribution System Workshop Will Explore Competition, State Regulations, and Emerging Trends in the Industry, Project No. P131202
I'm fairly young so I've only bought two cars in my life (one used, one new). Both times, dealers were the cause of the majority of my frustrations. Next time I buy a vehicle, I'd like to avoid the hassles which dealerships cause. I went ahead and suffered through a propaganda video by the National Automobile Dealers Associations which made the following points: NADA claims that they compete to provide the best services at the lowest prices, but in my city of 300,000 people all three Toyota dealerships are owned by the same company, so there's obviously no competition. Plus, in more rural areas there's often only a single car dealership for hundreds of miles. NADA claims the dealers have a positive impact on local economies, with dealer sales resulting in 10-15% of sales tax revenues, but sales tax will be paid in either model just like whether customers buy things from large online retailers or in local stores. The dealer doesn't result in additional sales tax. In addition, does it really benefit if there is a middleman taking a cut? Sure, the middleman gets a job and spends money locally, but doesn't that money come from customers who would have more money to spend locally? NADA claims that dealers handle financing, registration, tax, trade-in, repairs, and regulatory paperwork but there's no reason the manufacturer can't handle these or outsource them to a local company if they choose. NADA also claims that dealerships are incentivized to perform service and will remain in business even if automakers go bust, but non-affiliated local service stations are probably more reliable (i.e. how many Saab dealerships do you still see?). NADA claims that local dealerships have a large car selection, but I've found that local dealerships often don't have the car with the options you want because they ordered what they thought they could make the most profit 6 months ago and if that doesn't currently reflect market demand, the customer loses out. If the customer doesn't want what's available, their options are: wait and hope, settle for something without options you want or pay more for options you don't want, or drive hundreds of miles until you find a dealership owned by a different company who has what you want. I see no benefit car dealerships provide that manufacturers couldn't provide. Give customers a choice, and those customers who like dealerships will still buy cars from them.