No offense to the dealers that input daily on this board but I believe it's high time (well past due) that the auto industry DROP its "protectionalism" mindset and do away with auto franchise laws that PRECLUDE direct factory purchasing by we consumers. We would no longer have to deal with inexperienced sales people, destination charges, holdbacks, and all the bickering/antics that go on in many a show rooms. The network of auto dealers would still handle the profitable revenue stream recognized from repair/warranty work. If one feels more comfortable going the dealer route then so be it. I for one, do not think the dealers on whole would lose much business anyway because most in this country are too lazy to inform themselves and/or actually drive to the respective plant and commsumate the deal on their own. But for we "others" if I could save another $1,500 buying right from the plant that made these vehicles, I would do so in a New York minute, and this option ought to be available to us. If America wants to truly compete in this new "globalization" era then doing away with these "protectionist" franchise laws is step # 1 that must be enacted.

 

Oj vey! The simple answer is to do that, they'd have to buy out every one of their dealers. In the case of Chevrolet, multiply out $10 million times 6,000, and you'd have the answer.

The more complicated answer is that the factory guys have no intention of dealing with the retail customer. Ford (and GM) have owned factory stores in the past, and it was a huge bust- they don't know squat about retailing, customer service, and, more importantly, the used car business- which is what really makes the car biz go 'round.

Finally, let's say the factories could actually afford to step up and buy out their franchisees. Do you really believe that the vehicles sold would be any cheaper? By owning the dealerships, they'd assume all the overhead that goes along with it, and this is a biz with razor-thin margins as it is. The fact of the matter is that it takes a 8% gross margin to net 2% at a dealer level- and the ownership of the facility doesn't change that math.

Edit 1: there is one car you can pick up at the factory- a Corvette. You still pay destination, even though the museum is across the street from the plant, and they ding you and extra $600 for the privilege. Still worth it, though- but definitely not cheaper.

Edit 2: the profitable warranty business? The shop is profitable, but there's nothing profitable about warranty claims. In many stores, this turns out to be a net loser.

 

I understand with the tremendous success of Dell computer, where this would seem attractive, but a car or truck is not yet a throw-away item like a computer. It needs real in-person after-sale support, not a help line in India. Have you ever called Ford's 800 number? Its like calling Dell, or worse.

GM execs have made many fact-finding trips to Dell, only to conclude that they cannot possibly follow that business model.

Here's another idea. Maybe Walmart can start selling Chinese cars from its auto centers? Didn't Sears once sell Motorcycles?

While some state franchise laws can be restraint of trade, franchise agreements between a manufacturer and its dealers are private contracts and that is ok with me. Good, honest, dealerships do exist, including, I'm confident, the ones represented here at FTE. You can spot the others when you see a bunch of young men in cheap new suits standing out front.

Jim