mmarshall

Even considering that the new-car buying/leasing buisness is (arguably) much more straightforward and honest today than in the past, polls show that new-car shopping, deal-making/bargaining, dishonest commercials/ads, bait-and-switch techniques, hidden add-on pricing, selling new-cars with damage to them, etc.... routinely rank up at or near the top of customer-complaints. I think a good topic for discussion here in the CAR CHAT forum would be the feasibility of having factory-owned sales-outlets in addition to (or replacing) traditional Buisness/family-owned dealerships or dealership-chains.

Some of these buisness/family-owned dealership-chains in the D.C. area, like Koons, Rosenthal, Fitzgerald, Stohlman, etc...are really getting huge, sometimes selling a dozen or more different brands at a dozen different locations or more for each firm. Worse, some of the radio/TV ads from these places can be so silly (with puppets, loud music, costumes, shouting voices, cartoons, etc...) that, IMO, they insult one's intelligence. In these ads, EVERY dealership always has THE lowest prices, THE best service, THE widest selection, and THE best customer-satisfation. Well, simple logic says that EVERYBODY can't be right. SOMEBODY (probably all of them to an extent) is lying.

Saturn, of course, back in the 1990s, took some large steps towards addressing at least some of these concerns with their unique system of marketing and selling their products. Dealerships were not called dealerships, but retailers (Fiat, BTW, now calls them studios). All brand-new new Saturn vehicles were sold at factory-list...no markups (except for dealer/factory-approved accessories), and no discounts. A 30-day full-money-back guarantee on any new Saturn for any reason, if not completely satisfied, and with no vehicle damage and a clear-title (I actually returned a new yellow/limited-production Saturn coupe in 2001 I had bought, after two weeks, because of problems). No pressure on customers was to be used in th showroom by any Saturn sales-personnel. The salespeople even wore nice, colored T-shirts with the company-logo on them instead of the usual buisness-suits. All cars in the service-bays, for any reason, got a hand-wash (They even let me hand-wash my own Saturn there, as I generally distrust other people with the paint on my car). No other brands could be sold with Saturns....the shops could deal only with that one brand. You didn't see or hear any silly Saturn ads on TV/radio like with other brands. Any Saturn dealership (Oops, retailer) that violated these policies risked losing their Saturn franchise.

Those days, sadly, are gone with Saturn's demise, although some of those policies were adopted, here and there (but not all at once), by other dealerships. Still, would it make sense to see these type of company-owned or company-regulated deslerships make a comeback? Factory owned or operated shops would, of course, not be run by independent buisnesspersons or rich families like many of today's shops are. They would (presumably) have more control over how their products are advertised/marketed/sold, the quality of the technicians hired to service and repair the vehicles, the integrity of the salespeople, and a number of other factors. Salespeople under the current system, in my experience, range from brilliant to moronic, and everything in between.

An interesting topic, IMO, to discuss. What are your thoughts? I know that most of you here on CAR CHAT are intelligent, have a lot of car-related opinions, and generally know the car industry.

Lil4X

Like you, I greatly appreciated Saturn's approach to marketing. Their business model was nothing like the high-pressure circus that describes most current dealerships. Having the retail outlets more answerable to corporate would go a long way IMHO toward making the car business both more responsive and more responsible to its customers.

We all know of absolutely shameless dealerships that not only destroy any shred of quality image the manufacturer has tried to project for his product, and many actually break the law with their sales tactics and lack of customer support. In the last few years, Chevrolet has pulled the franchise from two local mega-dealers that were incredibly destructive to GM's reputation. That of course hasn't been the end of it; just a shuffle of some paperwork and a change of signage brought the same old operation back online in a matter of weeks. It's reached the point that I'd be rather leery of buying a GM product anywhere in the county right now.

The most egregious conduct surrounds the sale. Bait and switch is not just common it's a whole business model for some of these dealerships. They'll advertise, say a new 2011 Suburban for $23,880, but just try finding it on the lot. If you go to the lot, you'll find it has just been sold, but the salesman in the red suspenders would gladly put you in another one for $36K. If you ever got a glimpse of that price leader, you'd find it was a fleet "utility" truck, with vinyl bench seats, rubber floormats, and no heat or air. Power steering and brakes are usually included, but power windows, door locks, even hubcaps are not. One additional giveaway, they are always white - usually with painted bumpers. Where do they get these things, off the export dock on the way to some third-world nation?

These mega-dealerships that handle just about every domestic brand of automobile, plus a few second-tier imports, are hundred million-dollar operations with a lot of clout, both before the local trade associations and in Detroit. I'm proud of Chevrolet for standing up to these guys who give the whole domestic industry a black eye.

mikez

In Steve Job's biography, when he was asked what other example of end to end control of customer experience worked for company (such as Apple), he said: "Car companies... well it used to".

I think factory owned would work, but I think the high end (Lexus, BMW, and Porsche specifically) work really well. Even though these brands are owner operated, they all follow the same styling, presentation, and service experience.

I think where it goes wrong are the mid tier ones, where every Honda or Ford dealer is different and gives off a 'sleezy, run by some guy who used to be a mechanic' feeling.

Have not been to a Saturn or Scion dealership myself.

scgt652

Most states have franchise laws that prohibit car manufacturers from selling cars directly to the public. These laws were enacted to protect car dealers who have spent significant sums of money to obtain their franchises. It would not be fair for car manufacturers to undermine these franchise agreements.

bitkahuna

iTrader: (20)

^ not sure if those laws will apply to new brands that will spring up in the next few years.
Mfr run dealers are inevitable and will be a good thing but reg dlrs aren't going away.

caddyowner

I think automakers are encouraging the growth of large dealer groups. It probably lowers their dealer management costs and provides a more consistent, professional purchasing experience for customers. The automakers' current requirements to upgrade and standardize store designs are very expensive. Many small, family dealers are opting to sell out.

mmarshall

That, though, was one of the points I was addressing in the thread title.......should some (or all) of those laws be rescinded? Should manufacturers be allowed to sell directly to the public?

Having factory-owned/operated dealerships would not necessarily mean no more traditional private-buisness/family-operated ones. They would (likely) just exist alongside in competition. And, IMO, the factory-owned shops would not be very likely to broadcast the on-and-on, endless, intelligence-insulting nonsense you get from traditional dealer TV/radio ads. It's gotten to the point that I hit the mute button now (or blank out the radio-volume) almost every time that music/cartoon/shouting-voice dealer-ad nonsense comes on....which is a LOT.

Hoovey689

iTrader: (16)

Quite frankly I think they should be allowed to sell their cars (if they wanted to). To put it simply, its their product! Dealerships are like middlemen and tend to complicate things (not always), but should a situation arise with a customers vehicle the communication between customer to dealer to manufacturer sometimes lacks.

ggravant

I agree - hey if Apple can do it, why not a Car company.

scgt652

It would be very difficult to repeal state franchise laws because NADA is a very powerful organization, and they have some of the best lobbyists working on their behalf. Most state legislators are very reluctant to enact any laws that are opposed by NADA.

scgt652

The Mercedes dealership in Manhattan is factory owned. They were able to do this because no independent dealer was willing to bear the exorbitant costs of maintaining an MB dealership in Manhattan. Some dealers tried to do it in the past, but they all failed.

scgt652

This. It is much more cost effective for automakers to outsource sales and service to independent dealers rather than creating and maintaining factory-owned stores.

Fizzboy7

Absolutely not! Being able to haggle at the dealership and land your own price is a great (and only) way to save a lot of money. Take that away from the people and the smart guy will pay just as much as the stupid guy. Let those who do their homework reap the benefits. Everyone else can pay high prices, which they already do. Dealerships do just fine with all those people.

Joeb427

iTrader: (1)

and I love haggling.

ggravant

I would think that they could still haggle with prices if they so desired. In fact, they would have even more room to haggle considering the expense that the middle man is skimming off the top now.