[zachshefska]

The market is SO inefficient. While you’re right in describing the principles of supply and demand, the reality is that buying a car should be 10x simpler and the price should just be the price. No games, no haggling, no BS add-ons that increase dealer profits. Retail auto is due for a wake up call, and I sense it’s happening right now. You wouldn’t need markups to make extra profit if the cost infrastructure associated with selling cars was lower than it currently is.

[bradfa]

Tesla is leading the way today (somewhat painfully in some areas) but they're not the first to try fixing this. GM's Saturn tried to make buying simpler in the 1990s and surely there were other previous examples, too.

Ford seems to be testing the waters about how to simplify the car purchase process: https://fordauthority.com/2022/05/ford-dealers-will-likely-s...

There's plenty of dealerships who have historically had simple purchase processes with standard no haggle pricing but often buyers have to do extensive research in order to find such dealerships.

[_fat_santa]

Ford Corporate is livid with their dealers. Back in 2018 when they put out the Focus RS, dealers basically killed that car with markups. Dealers all marked them up 20-30k which put them around 70-80k OTD. While some bought it at that price, they all just languished on the lot and Ford eventually cancelled due to sluggish sales.

An almost similar thing happened to the F150 Lightning, Ford had to threaten dealers that they would withhold any future deliveries if they caught wind of markups.

[a2tech]

From what I'm hearing from friends that work inside Ford, the dealers have burned all their bridges. Ford is sick of their crap and is working to move to direct customer sales (their electric vehicles I believe have already made steps towards this).

[deelowe]

Doesn't help that their service centers are just awful.

[nradov]

If Ford had really wanted the Focus RS to succeed they would have just built more cars. Dealer markups only happen on models in short supply. There just aren't many customers willing to pay even $40K for a small Ford hatchback, even though it had good performance specs.

[czstar]

Tesla has increased prices a lot. What’s the difference to the consumer if the increase comes from the manufacturer or a dealership? Tesla also is known for delaying vehicle deliveries if you don’t pay extra for FSD. Tesla just appears to be better than a dealership but they engage in the same shenanigans.

[kspacewalk2]

The market is inefficient because dealerships form a cartel, divvy up the geographical areas where they operate and don't allow any competition there. If it was an actual market, carmakers would sell off cars to dealers (e.g. at mega-auctions), who can set up wherever they want (or sell online), and all the games, haggling etc. would disappear.

[__alexs]

But then where would the manufacturers put all the financial engineering shenanigans?

[zachshefska]

And to be clear, consumers shouldn't have to negotiate for hours to try and get a "fair" price during "normal" market conditions.

The current "markup" phenomenon is the same as the prior experience (pre-pandemic) where OEMs intentionally subsidized the purchase of their vehicles well below MSRP, and savvy customers could negotiate thousands off a car deal. It's mind boggling to me that we allow for such an inefficient market to perpetuate! 100 years of franchise dealerships is enough! Time for business and consumers to wake up and enact change.

[rdtwo]

Even during normal times if you wanted a trim that was somewhat desirable you would get hit with this behavior. Plus you get so many hidden fees that don’t have to be listed like the “Toyota Advertising fee” for over 1k. A few of those different fees Added 3-5k in normal times

[ChainOfFools]

Conditions may be different now, with the internet at all, but the fact is this has been tried a number of times by individual dealers, and at least in one very large scale circumstance that I can recall - the now defunct Saturn division of GM. Saturn famously touted fixed, non-negotiable sales prices as a feature of their vehicles, part of the total package of the car similar to its warranty and so on.

Even with all of the might of GM behind it, and with the cars themselves having a distinct position in the market with a few unusual features no other brand had, such as polymer body panels that were lightweight, rust proof and easy to repair (by simply replacing entirely), Saturn only lasted a few years before folding.

I was selling cars myself for a few months during their peak, and recall that they mainly got used as a rhetorical backstop by customers who would bring in an invoice for our vehicle (printed out from edmunds.com, which had just barely become a thing at the time), and argued that they should pay some absurdly small fixed number ($100, $300, possibly $1000 if they were buying an NSX, our "halo" vehicle) over invoice to get a fixed price like saturn.

This was a couple years before dealerships had organically responded to the internet by adding all sorts of hidden costs that do not show up on an invoice to the base price (in addition to the usual ones) so unlike today the invoice was literally our invoice price. But they were not there to buy a Saturn they were there to buy a different brand of car.

[flazzarino]

This doesn't address the question asked.

[zachshefska]

Let me be clear; we should move away from Manufacturers SUGGESTED Retail price and go towards Manufacturers Retail Price. Just make it that the price is the price, and then the dealers can become glorified delivery centers/showrooms and service centers.

They'll make tons of gross profit because their cost infrastructure will go down, and OEMs will be happy because they still won't have to deal with customers and can focus on wholesaling cars to their "dealer" network.

The rub is in the finance and insurance products. OEMs all have captive lending arms, and currently dealers make a ton of money ($1,500+ per vehicle retailed) in finance and insurance profit. Navigating that relationship will be interesting as OEMs take on more control of the sales process.