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Old 11-12-2012, 11:15 PM   #16
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Join Date: Nov 2004
Location: ATL / Boulder / SLC
Posts: 3,374
My Ride: '08 ZCP M3 | '03 R6
I don't quite follow the legal restrictions on the topic- but I do understand why a Manufacturer wouldn't want to take on the endeavor.

A quick google helped me find these nuggets:
First and foremost, how would you handle used vehicles or trade-in's? It's important to offer buyers, the majority of which are used buyers, a place to purchase their next vehicle and a place where they can trade-in whatever they currently have as a down payment toward their next vehicle. The manufacturers aren't set up to handle those types of transactions, and it wouldn't be a profitable venture to do so. Each dealership is structured to do several things on behalf of the manufacturer:

1) Sell and distribute new vehicles
2) Service those vehicles (and more)
2B) Perform factory recall inspections & services
3) Offer parts for those vehicles
there's a fair back and forth between automotive manufacturers and generally locally owned dealers. These dealers have a particular skill-set for locally marketing and selling vehicles through dealerships in person that is applicable to a fair number of automotive brands. In other words, Jimmy Bob's Chyrsler is often next door to Jimmy Bob's Audi and VW dealership. The dealerships are not entirely dependent upon or married to any car company and can and will sell other cars if they can become more profitable by doing so.

Alternatively, they add enough value to car companies in pushing sales and increasing profits that it is necessary for the car companies to utilize some sort of local dealership infrastructure. They can't do it on their own or don't want to undertake the investment and distraction of developing a dealership infrastructure.

The local dealers know that this factory-direct sales model would undercut their own sales and won't tolerate it on the part of the car company. That's why automotive companies don't offer factory-direct pricing or dealing.

Come to think of it, a suprising amount of the consumer economy is still via a retail model. Manufacturing and retailing are vastly divergent specialties that it is difficult for a company to effectively span. The reatiler/manufacturer relationship requires that the manufacturer go through some effort to ensure consistency in the way a product is marketed. Hence why companies require that retailers sell at MSRP even if a low-overhead internet firm could still be profitable at a lower price.
In my understanding, these are only 1/10th of the stresses encountered trying to juggle dealerships.

The % the manufacturers stand to gain from "cutting out the middle man" do not outweigh the additional difficulties they would have to endure. [Most] manufacturers enjoy the buffer between customers, as customers are usually stupid and can cause big problems for little insigificant reasons.


Last edited by E92M; 11-12-2012 at 11:29 PM.
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