jadnashuanh said:
Would you feel the same way if all of the BMW dealers charged exactly the same price for their cars - no competition between them, even to the level of what your trade-in was worth? Competition between manufacturers happens with them providing the dealers with incentives to try for more market share. FOrget the buying experience...if you're going to pay the same price for a product wherever you shop, you might choose a place that looks nicer or is closer, or more convenient, but many people shop by price. That doesn't happen when the sellers all agree to hold the price constant. We have laws about that, they're called monopolies, and we try to avoid them when possible. Certainly, you can choose a different phone, but if you want an iPhone, you're going to essentially pay the same thing wherever you buy it. Would you really like that to be true with a car? Saturn tried that and see where that got them!
You're mixing business models and laws. The alternative universe is not that all BMW dealers charge the same, but that dealers don't exist and BMW has stores like Apple and Tesla. Answering your question in that context, my answer is YES because the service and customer experience would be vastly improved. I have no objection, and a strong preference, for dealing directly with the manufacturer. My experience, whether Mercedes, Lexus, Porsche or BMW is that dealers do not add value, only expense.
Saturn tried to sell a mediocre product and poorly differentiated product through an incompetent dealer network. Tesla's success clearly shows that there is nothing flawed in the manufacturer direct business model. I've never read or heard of a Tesla customer complaining that they had to buy direct from Tesla.
Think about it, dealers run a retail store and make a profit. The same stores if operated by BMW would have a lower operating expense if they were all owned and operated by BMW (aggregating dealerships and reducing expense is the backbone of the Auto Nation and Penske business model). Now there is a profit to be distributed, an even bigger profit than the aggregate profits of all the dealerships because we've reduced the cost of running the store and thus increased the profits. The profits could go to the manufacturer running the store in the form of net margins, or to the consumer in the form of a lower price.
Dell did this to the PC industry and utterly destroyed computer retailers, lowering costs for the consumer in the process. That's what the car dealerships are afraid of. Do you feel that the death of computer retailers damaged or benefited you as a consumer? Do you prefer dealing with the iPhone service guy at Best Buy or the Genius Bar at Apple? Where do you get better service?
More specifically, if there was a BMW store and a BMW dealer both equal distance from your home, where would you expect to get better information about your i3?
Monopolies exist when one manufacturer has a very large share of a the market for a given category of product, like Microsoft for PC operating systems. Monopoly is not a applicable concept in the context of a specific product in a category. This is most definitely no vendor with a monopoly in either cars or telephones. Samsung has the highest market share for mobile phones in 2013 at 25% while Apple has a mere 8%. Do you think Apple has a monopoly and you're being cheated as a consumer? Ending dealerships would not result in creating any monopolies. You are more likely to be manipulated as a consumer by the aggregation of dealer ownership by corporations such as Auto Nation who, for example, owns BMW Mountain View and BMW Fremont which certainly reduces the competition among BMW dealers in the SF South Bay. Give them 10 more years and they will further reduce competition.
BMW has a monopoly on the i3. They can raise prices anytime they want. Having dealerships does not change that fact.
Neither of us want to be manipulated by monopolies, but this is not a likely situation in the auto or mobile phone markets. There are plenty of manufacturers and lots of competition, the existence of dealers does nothing to enhance or diminish the level of competition for our vehicle spending dollars.
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