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Would Direct Sales Be Better Or Worse For Car Buyers?

Illustration for article titled Would Direct Sales Be Better Or Worse For Car Buyers?
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As Jalopnik’s resident car buying expert and professional car shopper, I get emails. Lots of emails. I’ve decided to pick a few questions and try to help out. This week we are discussing the pros and cons of direct car sales and how to stay safe when selling a car privately.

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First, will factory-direct sales fix our broken dealership model?

“In a recent Morning Shift post, there was a heated discussion in the comments as to whether or not factory-direct car sales would be beneficial to car buyers.

Since you are in regular discussions with both consumers and dealers, I would be curious as to your take on this.”

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This is an interesting topic, and I don’t think the answer is as simple as most people make it out to be. For instance, we have the Tesla model that sells cars direct to consumers at a fixed price, though that “fixed pricing” does seem to have some flexibility.

Most people hate the car-buying process, with the back-and-forth and the dealer games, so the concept of “here is the price, no haggling” is theoretically what people want. The problem is that, psychologically, car buyers have come to believe they should never pay sticker price. So if all brands sold directly at a fixed price, that would take some getting used to. Also, with some brands, I’m not sure whether buyers would ever really adjust to paying full price for a Kia Optima or a Ford F150 when historically there were always deals. But just because brands sell direct doesn’t mean that fixed pricing has to be applied.

Consumer psychology aside, it also comes down to how these factory-direct stores are implemented. Let’s assume for a moment that the franchise laws are altered and brands can sell direct. If there is a combination of factory-direct and franchised dealerships that compete against each other, that could mean better deals and better experiences for the customer.

It may also be the case that the factory-direct stores get priority in rebates and discounts, giving them an unfair market advantage — and the ability to muscle out the franchised stores. The concern is that the automaker would then have a monopoly of sorts on sales, making the consumer feel as if they don’t have any way to leverage a better price. So it would really come down to how the system is implemented.

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The dealer system as it currently stands is generally terrible, and it’s no mystery that franchise laws are part of the reason the overall experience is not pleasant. But a direct-sales approach isn’t guaranteed to fix the problem, either. There are plenty of folks who haven’t been satisfied with the Tesla model, while at the same time higher-end brands like Porsche have done a pretty good job of working within the traditional dealer model with minimal pain.

Next up, what is the best way to stay safe buying or selling a car privately?

“I read a terrible story about this couple killed by someone when they tried to sell their car to him. What should people know about selling (or buying) cars privately and maintaining a level of safety?”

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That is terrible, and anyone who has ever tried to sell a car on Craigslist or FB Marketplace can tell you stories about some shady characters. There is a common bit of advice that you want your transaction to take place in the daytime, if possible, and at a public location. This is still a good rule to follow, and I would also add to go with your gut on things: If something feels off or uncomfortable, reconsider the meeting. No transaction is worth risking your safety for.

If the other party insists on meeting at a spot or at a time that doesn’t seem right, that is probably a red flag. Sometimes local banks will offer a room or even assistance with facilitating these transactions.

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Got a car buying conundrum that you need some assistance with? Email me at tom.mcparland@jalopnik.com!

Tom is a contributing writer for Jalopnik and runs AutomatchConsulting.com. He saves people money and takes the hassle out of buying or leasing a car. (Facebook.com/AutomatchConsulting)

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DISCUSSION

I’m always stunned by those who think direct sales would be any better than the status quo.

-Large manufacturers don’t generally want to be in the sales game and vice versa. There’s a reason people buy everything from places like Walmart and Amazon instead of directly from the factory that made it.

-Get ready for a below wholesale trade-in offer every time. If GM, Ford, and Toyota don’t want to sell their own cars, they REALLY don’t want to sell your crapcan used car.

-“Fine” you say, “I’ll sell my car myself”. See question 2.

-The idea that just because you buy direct there wouldn’t be pushy salespeople, overpriced add-ons, predatory finance rates, etc. seems naive to me.

-”Fine, no in-person contact, I want to order online and make everything easier” Great, you’re willing to wait 8 weeks for your car, most people aren’t. Also, I prefer a test drive, maybe you don’t care but most do. Even after all that, you can already factory order a car this way and spend a total of 15 minutes in the dealer like I did with my truck.

It’s not that I love dealerships, I’ve just made my peace with the idea that buying cars isn’t ever going to be as easy as buying groceries or toilet paper. Yeah it might suck for a couple hours, but most are literally only doing it once every few years. In the scheme of things it’s just not worth the hassle.