Why do car dealerships exist?

I think they do both, which is a little weird.

 

I travel a lot. Rental cars.

 

But not unprecedented. Mitsubishi makes cars and TVs. And missles, which is why my grandfather will never buy one of their products, since one of their missles killed his brother in WWII.

 

Ditto to those who advocate using online resources to buy a new car. Other than stopping in to test drive the two models we were interested in and later stopping by to pick up the one we chose, our entire purchising process was done at home via email. No sales pressure, no bullshit with the manager, nothing. Our salesman asked us to give him a price. We did some surfing around the dealers in our area, found one that was running a sale, and gave our guy that price. He emailed back right away and agreed to it. SOLD.

We also used the Kelly Bluebook and Edmunds sites to get an idea of what to ask for in a trade, and were treated very fairly. Maybe we just lucked into a dream salesman, but you can be sure our next car will be bought the same way.

 

Saturn has no-haggle pricing and the pricing is set by GM, not the dealers. So the dealers are selling based on customer service rather than price, which is why their satisfaction and loyalty rates tend to be very high despite selling cars that ranged from mediocre to terrible (up until the past year or two).

 

Ford bought back all of the dealerships in a handful of U.S. markets, circa 2002. Their idea was to give buyers a uniform pricing and service strategy -- the user merely had to travel to the nearest Ford dealership (I think there were about seven in my market) to make their buy.

Problem is, a lot of people had their hearts set on buying a Ford from the start. The only decision to be made was "Which Ford dealer will give me the best price?" Once the Ford stores became homogenized, prospective buyers shopping on price criteria started to include comparable GM, Chrysler and foreign models in their search.

Ford lost on price in a number of instances and quickly lost some customers who'd driven nothing but Fords for 10 or 15 years. They gave up after not quite two years and started selling franchises back to local businessmen. In one local case, a longtime Ford dealer who had his franchise yanked ramped up promotion of his foreign lines and gained a lot of market share. He bought back his Ford franchise when it became available, but rumor has it that it cost him barely half what he sold it for two years earlier.

 

Here's a great series about car dealerships. The author went undercover for three months at two dealerships. It's really long but really informative. It points out that the internet is impacting the dealerships so much they don't get white people there any more - they're too busy buying cars at invoice price online.

It's amazing how they rip you off. I entertained the thought briefly but I couldn't do it.

http://www.edmunds.com/advice/buying/articles/42962/page001.html

 

I've read that twice -- once because it was interesting, and again when I started car shopping. I just wish I knew how to call up a dealer and get an invoice price on a car.

 

Man, that was illuminating. Quite illuminating. Thanks for passing that on. I haven't bought a new car in more than a decade and probably am unlikely to do so for many years to come, but that gave some good advice.

 

What's sad is I know I've fallen for the Up To? trick.

 

Good stuff. I'm not sure how you can call the dealership to get invoice prices, but I think you are somehow entitled to find out.

I've heard about another trick involved with invoice pricing, too. Dealers will purchase a car for the invoice price, say $33,000, but if they sell the car within 3 months of delivery, they get a $3,000 "rebate" from the manufacturer. Therefore, the customer hears the invoice prices is X, but if the dealer moves the car quickly and gets the manufacturer's rebate the true price the dealer paid for the car is X-$3,000 (or whatever amount).

 

Ms. Slappy is going car shopping with CarMax... anything she should specifically know about that place?