In most states, manufacturers are prohibited from selling directly to consumers.
There are a variety of reasons for it, some were consumer-friendly (like preventing the manufactures from monopolizing repair/service), but it basically created a system of middlemen that raised costs.
I worked at a Honda dealership in college and I learned a lot.
For example, when you finance through a dealership, the dealer doesn’t actually put up any money. They find a 3rd party financer then tack on a few percentage points.
Salespersons also earn higher commissions on dealer-provided upsales, such as window-etching, rust-preventative, custom badging, extended warranties, etc, so they try to push those things.
Dealers are also locked into individual manufacturers, usually. That is, a “family” of dealerships, are actually multiple businesses, each with a contract with a different manufacturer.
The person that owned the Honda dealership I worked at, owned others. On one side, they had a Pontiac-Buick-GMC dealer, then Chevy, Chevy truck, and Cadillac on the other side. Even they it was all General Motors, they were run separately. Down the street, they had a dealership that sold both new Toyotas and Subarus.
Um, only having been tourist to the US, how does it work?
Edit: the car dealership. What’s different to e.g. Europe (the referenced American only practice)
That’s the neat part, it doesn’t!
Which one?
The first comment talks about stealership, the next about weird us practice and I have no idea what they are referring to 😁.
In Europe we habe car dealers, franchise, independent or do buy privately but they can all act independently.
Is there a cartel or something in the US for car dealerships?
In most states, manufacturers are prohibited from selling directly to consumers.
There are a variety of reasons for it, some were consumer-friendly (like preventing the manufactures from monopolizing repair/service), but it basically created a system of middlemen that raised costs.
I worked at a Honda dealership in college and I learned a lot.
For example, when you finance through a dealership, the dealer doesn’t actually put up any money. They find a 3rd party financer then tack on a few percentage points.
Salespersons also earn higher commissions on dealer-provided upsales, such as window-etching, rust-preventative, custom badging, extended warranties, etc, so they try to push those things.
Dealers are also locked into individual manufacturers, usually. That is, a “family” of dealerships, are actually multiple businesses, each with a contract with a different manufacturer.
The person that owned the Honda dealership I worked at, owned others. On one side, they had a Pontiac-Buick-GMC dealer, then Chevy, Chevy truck, and Cadillac on the other side. Even they it was all General Motors, they were run separately. Down the street, they had a dealership that sold both new Toyotas and Subarus.
Thank you.
Sounds like a lot of lock in or lock out.