The service department is a huge part of the business model for dealerships also.

If/when that happens why will we need cars at all? We'll just live life from our sofas. Of course, selling a virtual car is right up Tesla's alley.

up 20% today, is this how megacaps normally behave?

Bitcoin is up like 8%. Elon has reserves of Bitcoin and basically just added over 100b to their cash reserves if he was using 100x leverage

Cars as software.

Who bought the 40% dip? congrats

It is happening whether you like it or not.

I became a partner in an auto finance company in 2012 and near 100% of our finances were forwarded from Dealership Finance offices.

By 2019 when we sold the company ~30% of of contracts in the used car space were completed online with buyers who only saw their new car for the very first time, when it was delivered to their driveway by the dealership they bought it from.

Young people especially hate the dealership experience. They want no part of being 'sold' by an aggressive salesperson and then getting put in that Finance Box with a professional who inches them up with upsells.

As a result though, many of these current online buyers are paying 2-3% more in interest payments on their loans then they would typically if in the Dealership as the Finance professional there is incentivized to get them the best rate so they can juice up the car and extra features to get that extra money.

There are two potential models competing.

A Manufacturer may take all Sales in through the internet and then funnel the sale to a Franchise Dealer via Zipcode for fulfillment.

Or the Dealer Franchise model may die, and Manufacturers will just have strategically located "Drive Centers' with all models on site for test drive and tire kicking.



And this. Franchises and Manufacturers will want to keep service as it is a big profit center. So that is why I think you see Franchise, Fulfillment and Servicing as the go forward model for most established players.

Won't it be difficult for legacy auto to unwind the dealership model ? If it's even legal to do so, I would guess it's going to be state by state and they'll have to buy out each dealer to go that route.

People will do the same with clothes in the future to the point where going to a store to buy some will be an oddity. People seem to care a lot less what they look like these days. Business attire is declining and more people are wearing pajamas out in public.

Puts on laundry detergent companies.

Very challenging. The Dealership Franchises have a ton of sunk money and power.

But they simply cannot compete with the extra costs of these legacy palaces and hundreds or thousands of cars sitting on a lot, all adding cost.

And with the younger buyers increasingly not caring about the car as a status symbol, they simply DNGAF to pay hundreds or thousands more for a car to go see it parked in a lot first when they can go online, read a review, watch a video and have it delivered to their driveway.

And again the young people have a true hate for dealing with Salesmen and Finance professionals. They will pay a premium to avoid them.

How did you determine they had never been in that model car before? Was it a question on your application? I have no doubt that people don't want to go to a dealer to purchase a car. But I'm sure most sane people don't get a car without ever having been in one of the same type before - whether that is test driving at a dealer, renting one for a week, or having been in it with a friend that has the model you want.

Well nothing in my post says or even suggests they have never been in that model car before. What i DID say was that they never "saw their new car" they had purchased before it showed up in the driveway.

And yes, as a finance company we would have extra disclosure and potentially inspection requirements when a person bought a car, sight unseen. It is risk to us, if they get ripped off and we end up having to take that car back and resell it.

With a Franchise Dealership you have some level of accountability to the Finance company if things are misrepresented. With the Corner Lots or individuals doing 'direct to consumer' you have almost no accountability once the sale is completed so Finance companies take that responsibility on prior to funds flowing with conditional approvals, requiring an inspection.

Really? Your post was responding to this (you even quoted it).

And your reply was this.

I do think a lot of people buy a car without driving it first. I see it a lot with Chinese people who are just buying the brand and status, not really the driving experience.

Fair enough. I was replying more to the general 'buying a car without sitting in it' or 'test driving it', etc ideas making it a hurdle than that specific part of the post you seemed more focused on.

Anyway to that end I know of one person who bought a Tesla that way. Had never even ridden in one as a passenger. Just got the idea they wanted one, researched it online and made the purchase.

So even to that point I would say 'yes' that is happening now and is definitely going to happen more and more.

It's difficult for me to imagine anybody spending $40k+ on a model car they have neither ever drove or ever experienced as a passenger.

i wonder why that could be?


chinese use case also completely different, road trips are unheard of in china, they think that's insane to drive anywhere you can fly or take a train to go to so most cars in Beijing likely never left the city limits - in fact, every building I've lived in has underground garages full of cars like mazeratis just coated in dust because the owner bought it then decided it was just easier to get a cab than to drive in the city

if you're looking for a growth market it's used cars in china, basically doesn't exist now because like grizy said, it feels dirty to drive a used car - i think by the end of this decade and as more middle class buy cars then economic reality will catch up - not now but in next few years i'll be buying leaps of chinese used car platforms

This is an easy test to find the "old."

Yeah, maybe. I know people < 30 who shopped for cars (used and new), so who knows.

Every car I've ever bought has been from private sellers. First from newspaper classifieds and then from craigslist. Same with every car I've sold.

Anything else is -EV. But I get it if you don't want to deal with people you just have to pay more.

Yeah I've generally chosen to pay more for convenience.
I've always sold my cars to CarMax because everything is done within an hour. No having to take pictures, post, meet up with people.

And I've always bought from the dealership having done most everything online. Only went in person to sign papers and pick up the car.

Tesla just as easy to access test drive as any dealership and will let you take home overnight if you are serious, just like other high end brands. Anyone buying without trying is doing so because of their preference, it’s not due to anything in Tesla business model.

I have bought 2 trucks without driving them. I care about price and it not breaking down. Both GM

This. I tried the alternative just recently and the selling tactics are super aggressive. One of the dealers straight up lied and told me the quoted price is the amount to be financed with all taxes already included. That amount incidentally was roughly the same as comparables on cars.com. Then I saw the financing document and sales tax was definitely not included. They even tacked on another 2k or so of a bunch of bullshit service charges. They tried to hide all that by saying "but we got monthly payment down to xxx."

It was just absolutely infuriating. What some dealerships do should be illegal. In fact, I suspect some of it is illegal and why they refused to put stuff down on paper.

Come to think of it, they still haven't refunded me the $500 "refundable deposit." I should have never agreed to that bullshit.

Online shopping through cars.com is just so much easier. Because everything is in writing (email), there is wiggle room on what the terms are. I just go in, drive around the block, sign, and leave with the car. The experience is just way easier for someone who doesn't want to deal with bullshit or risk getting scammed.