[Rumford]

There are some interesting comments in here about how tough the struggle is for car dealerships, but I don't think that necessarily justifies their existence or mitigates the point of this article.

If what the dealerships do is valuable enough to the customer, they would exist even without the ban on direct sales. But I think we can all intuit that if the ban were lifted, buying a car would be a very different (and better) experience.

[venning]

We often moan about the taxi industry, the hotel industry, or the dealer associations but, in doing so, we miss something very important. The players in that industry often existed for years or decades in a state of government-backed protection without realizing it. Taxi drivers didn't necessarily lobby for market restrictions; they took advantage of the oligopoly, sure, but not necessarily consciously.

If you live in a state of believing that the market is actually fair and others have an equal shot at participating in it, then someone else entering the market in defiance of the existing protections appears to be unfair.

It's hard to believe that you didn't enter into a job market and win a wage fairly. That, instead, you were unfairly advantaged by artificial pressures in that market much bigger and more entrenched than you.

Essentially, the incumbents have been lied to for years and, now that new logistical realities are changing the status quo, it is very hard for them to understand why this is happening. They think someone must be cheating.

---

To expand on joosters' analogy of taking a fence down elsewhere in this thread [1], it's not necessarily bad if we take the fence down, we just need to realize that doing so may have serious consequences in the near-term. Having such a strong, deep-rooted artificial pressure in a market so abruptly removed may result in a painful readjustment of the market that hurts a lot of people.

(My other comments weren't meant as a defense of dealers, only intended to elucidate their operations.)

[1] https://news.ycombinator.com/item?id=10463745

[grandalf]

Car dealers are among the biggest "small business owner" donors to political campaigns in the US. The National Auto Dealers Association is a big part of most dealers' lives, and they know who is buttering their bread.

I mention this b/c I don't think it's a gradual accident... The dealers forced Ford to shut down factory stores in Oklahoma not too long ago. This is a turf battle.

[venning]

Absolutely. Regulatory capture is a real thing and a really bad thing. I'm certainly not defending the franchise protections. I would just like to be clear: people get hurt when we uproot the status quo quickly. That isn't to say we shouldn't do it. There aren't easy answers here, particularly for the legislators who have to make those decisions.

[maratd]

> There aren't easy answers here

I don't think the circumstances are as grim. Most of the personnel retained at a dealership do useful work. That same work will be required regardless of who runs the show. They may need to apply for a job at the new factory store, but that's really the extent of the displacement. You're not eliminating an entire industry. You're re-organizing it to reduce friction.

[swatthatfly]

> Most of the personnel retained at a dealership do useful work. That same work will be required regardless of who runs the show.

Some people may benefit from this "service", but not me, nor any of the people I know. The only benefit I could see from my previous buying experiences is the act of handing out the key for a test drive. Everything else was simply designed to extract as much money from my pocket without giving me back anything in return. I had all the information I needed to make a purchase decision, the financing doesn't need to be done at the dealership, the car can be bought from a website, and delivered to the curb. A bunch of grown men sitting around all day and swarming people that enter the floor with the goal of "giving them a good deal" is not a value proposition. It's a complete misallocation of resources.

[maratd]

Salesmen aren't a substantial part of the workforce in a dealership. Mechanics, secretaries, service coordinators are. You still need those.

Finally, while you're OK dropping the equivalent of a year's pay on a website, most people are not. They need to talk to someone. So you're still going to need salespeople ... although they'll be far more pleasant to deal with, since there will just be one price that everyone pays and you won't have to be in constant fear of being ripped off.

[venning]

Agreed. And I didn't mean to sound grim.

Markets tend to be efficient in the long-term and inefficient in the short-term as it is still determining how to place capital and whatnot based on new information. I feel like our industry (software, and technology generally) understands that well, even if implicitly. It's just that those "inefficiencies" are often real people and the "short-term" means being unemployed or unemployable for a while.

It's important to innovate and to do so boldly, but to also not be cavalier with how that innovation affects a world that was spinning long before that innovation was conceived of. Not to say that you or anyone else on this thread is doing so, I just wish to point it out.

[ska]

  "short-term" means being unemployed or unemployable for a while.

If you add the caveat that "for a while" might in practice equal "several generations" for comparable employment, this is true. See for ex. industrial revolution.

The hard truth is that to the degree that these things do work as a simplistic free market model might predict (and that is clearly arguable) they may operate on time scales that will do nothing to alleviate to problems the changes cause.

[newjersey]

It is one thing to provide short-term support for carriage drivers and ship cargo loaders when mechanization renders their jobs useless. It is a different matter when existing big businesses stand in the way of progress.

Would you support laws that would slow down the growth of digital cameras in the late nineties and early noughties so Kodak could continue to sell celluloid? I bet a lot of people were affected by that change. Where is the smooth transition for them?

[SilasX]

So there's an active, non-artificial market for scummy negotiating tactics and pressuring people to take deceptive financing deals?

[__jal]

I'm having trouble coming up with a meaning for "non-artificial market". Do you mean a market free of all forms of non-participant manipulation, coercion, information-assymetries, etc.? I don't think we make those on this planet.

[JoshTriplett]

> Car dealers are among the biggest "small business owner" donors to political campaigns in the US. The National Auto Dealers Association is a big part of most dealers' lives, and they know who is buttering their bread.

Which makes me wonder how much it would change the US political landscape to eliminate the massive protections granted to car dealerships.

[grandalf]

> eliminate the massive protections

It would certainly change things a lot, but it would have to happen through the same democratic process that put the protections there in the first place.

[fineman]

That never works. You'd need those who benefit from the protectionism to stop lobbying. The issue is that it never was democratic, it was graft that made these regulations and it's graft that keeps them going.

The way to get rid of regulatory capture is to make it impossible to enforce and let the leeches die.

Uber may not win, but Taxi companies will die.

[AnimalMuppet]

Some fences need to remain. Take barbers/hairdressers, for instance. It turns out that a barbershop can be a great place for spreading head lice. You want your barber/hairdresser to be trained to prevent that. That's part of what their licensing is about.

So, are there any aspects of being a car dealer that are worthwhile fences? Offhand, I can't think of any, but that doesn't mean there are none.

[venning]

I agree. As an avid "car guy" and a student of regulation, I cannot think of any reason for car dealers, as a whole, to be protected in the long-term. I am, however, perplexed with how we should address the possibility of established manufacturers attempting to cannibalize the sales of their most profitable franchises by building neighboring dealerships with their considerable capital.

I believe the California model actually offers a lot of hope: manufacturers can compete, but they must observe a 10 mile radius from existing franchises.

[AnimalMuppet]

Pick a model - say, Chevrolet. Is there anywhere within the LA basin that isn't already within 10 miles of a Chevy dealership? Does this rule leave the manufacturer any place to be in a place like LA?

[venning]

This is why I am perplexed.

[fineman]

How many hours does that take?

Why does it take so long and yet being a waiter requires no (government) training at all?

[jacobr1]

Right, a waiter could do all sorts of things to contaminate food but doesn't require licensing. Regulations and investigation are sufficient. The same could easily been done for barber shops. Enforcement can also be done via torts. Insurance also requires certain base level of employee training. There are many ways to try and prevent and remediate problems other than requiring a license.

[unics]

Licensing only provides money to a regulatory system. Health inspectors may prevent head lice but word of mouth is still the main way a business gets shut down for shoddy work.

[mathgeek]

"Health inspectors may prevent head lice but word of mouth is still the main way a business gets shut down for shoddy work."

The difference, at least in theory, is that the health inspector prevents the outbreak. Word of mouth is generally more reactionary and after-the-fact.

[drzaiusapelord]

>. Taxi drivers didn't necessarily lobby for market restrictions

Drivers are out in the street protesting anything that allows ride sharing and demanding further restrictions. The idea that employees are innocents is riduculous. This ignores 100+ years of unions, associations, legislation, etc. Its the rank and file demanding these laws, not shadowy men cutting backroom deals. If these deals get made its because the rank and file have a enough political capital to make them happen.

>Essentially, the incumbents have been lied to for years

This seems to be politically biased. These people know exactly what they're doing. When the Chicago Teacher's Union marches and claims low pay (instead they are some of the highest paid teachers in the nation), they know exactly what they are doing. When cab drivers block streets to protest Uber, they know exactly what they are doing.

[venning]

There is a difference between the creation of the status quo and the defense of it.

> ...out in the street protesting...

> ...Chicago Teacher's Union marches...

> ...cab drivers block streets...

Your examples are all of its defense which, while understandable, is largely ignorant of the protections' unintended consequences. My earlier comments addressed the creation of those protections and the effects of their inevitable repeal.

> The idea that employees are innocents is riduculous.

I in no way implied innocence of any party.

> This seems to be politically biased.

Not that it matters, but I am contractually obligated to not display political bias in public. Even without that, as a matter of course and as a non-political resident of Capitol Hill, I avoid politically-biased discussion.

[300bps]

I agree that the ban should be lifted. And I think car dealerships would survive without it.

I recently spent some time on many car companies' websites and navigating the options is extremely difficult. They use all their marketing jargon like sDrive vs. xDrive or 4MATIC or whatever else other nonsense. They don't explain well what any of them mean, and I was left googling the definitions of everything.

Then you get to being actually able to see the car with the various options that you're interested in. The article decries the fact that dealerships have "$100 billion of unsold dealer inventory" but that inventory has a purpose. Some people need a car right away and they aren't picky about it being the exact thing that they want. Some people want to actually see, feel and use the options they are considering.

So I'm against the government-sanctioned ban on direct sales but I think that car dealerships would serve a purpose and survive without it.

[ethbro]

To compare and contrast the two methods of research/purchase: both online and in person feature the same marketing jargon.

Online: You can perform further self-guided research to discern what these terms actually mean and whether you need those features or not. Furthermore, you can see what other people thought about those features.

In Person: You can have the salesperson explain those terms to you. Except... do you really trust someone with a direct financial interest in your purchasing a new car to help you figure out whether you need features and whether this car is the right car for you?

[JoeAltmaier]

In person is there for one reason: so the salesperson can direct the dialog, completely control the conversation. They are heavily trained in the dance of sales, and its all in their interest and not yours.

The primary reason to get the dealership out of the picture is, to get the salesperson out of the picture. You don't buy a toaster that way, or even a house. Why a car?

[gherkin0]

They're honestly not that bad if you keep control of the conversation (to the point of being willing to walk in response to BS) and double-check their claims. You actually have a lot of the power in that relationship, since usually the salesman needs your sale more than you need to buy from him.

I actually like doing a lot of initial research face-to-face with a person. It's higher bandwidth, and the car is there in front of me, so I can get a sense of the intangibles and other facts that are hard to capture online.

[jaynos]

>so the salesperson can direct the dialog, completely control the conversation.

And direct you towards something they have in inventory, not the configuration you came up with on the manufacturers website.

[Rumford]

You're probably right. For example: Even though you can buy a Thinkpad directly from Lenovo, Best Buy still exists.

[forgetsusername]

>Even though you can buy a Thinkpad directly from Lenovo, Best Buy still exists

For how long? It's a product an older generation that, for some reason or another, appreciates receiving the sales pitch. We're all tech savvy people here; go into Best Buy and start looking at computers. 4 out of 5 times you'll receive a sales pitch with, at least, a few elements of utter bullshit.

Meanwhile, the younger generation are becoming more and more comfortable with buy things online, sight unseen. The GP said it needs to see and feel options on a vehicle. I don't. I need to know what they do, and whether they work (information I can gather from reviews). In my experience, going and playing with something for a brief period of time at a dealership or store doesn't provide enough real world information, and I'm just as likely to make the wrong choice about a feature.

[breischl]

>>The GP said it needs to see and feel options on a vehicle. I don't.

Maybe not, though a lot of people do and you probably should. The ergonomics of a car are more important, and much more complex, than for many other items. Some of this is addressed by adjustable seats, but not all of it. Zappos solved this by doing lots of returns, but that's not a great solution for large items with high shipping costs.

That said, I could easily see the value in having a single specimen at the showroom to check for fit, and then having everybody special order one with their own trim level, colors, etc.

[xixi77]

I would certainly not buy a laptop sight unseen -- you can't really evaluate things like how the keyboard/pointer device/etc. feel from a picture, or how the screen looks in sunlight, or if that 0.1" width reduction is worth it, etc.

Much more so with cars -- e.g. how would I tell whether 0.5" less elbow space is still good enough, or how good is road visibility from the driver seat (IMO the single most important characteristic of a vehicle!), or whether the plastic feels cheap, or how clear/useful the HUD is, from looking at pictures?

Thinking about it, I've picked my last car based on rear seat headrests obscuring rear visibility too much for my liking in one of the last two contenders. I wouldn't have been able to notice it without actually driving the vehicle.

Sure, there are reviews & ratings, but those reviewers are not you -- if (for example) you don't care about those headrests quite as much as I do, why should you let my opinion skew yours?

[PretzelFisch]

Probably the better example would be even though you can buy an Iphone directly from Apple.com the Apple Store still exists.

[xixi77]

Aren't Apple stores owned by Apple though? If they are, when you go to an Apple store to look at things and then buy online, the store owner (Apple) is still happy because it's getting paid just the same.

[sliverstorm]

If what the dealerships do is valuable enough to the customer, they would exist even without the ban on direct sales.

Can you really make that assumption? Customers act selfishly, and game theory applies here.

For example, you try a shoe on in the store and then buy it online for less. The store provided something valuable to you, but you still bought the shoe online. Eventually the store will go out of business if many people do this, and we lose a valuable service because we each act in our own self interest.

It's not hard for me to imagine that protections could be good in some cases.

[xacaxulu]

Then other companies will realize that this is valuable and will let you try on multiple shoes and mail back the ones you don't like (Zappos/Amazon). This competition ends up being a net positive for the consumer.

[nether]

"I sure wish I could have bought my Tesla from a dealer" - no one ever.

[tsotha]

To be fair, most Teslas are being bought by enthusiasts. When they start selling the model 3 to people who just want a reliable car, there may in fact be some demand for the services typically offered by a dealership.

[SilasX]

That dynamic actually explains why all big-ticket retailers -- not just car dealers -- need to change business models to something like, "You pay for self-service showroom access to a variety of products, then make your actual purchase from [a level near] the OEM with minimal margin."

The only reason I tolerate(d) any interaction with car salesmen at all is the intangibles you get from a test drive. I would much rather just have some kind of option where I can try out car models at some place that doesn't have financial incentive to make me buy one of them.

[afarrell]

Indeed, if working for a car dealership is as stressful as described, then that means that the institution of the car dealership deserves to fade into the dustbin of the market.