Ford Fires Salvo At Dealers. Is it Time For GM Also To Do The Same?
#1
Instructor
Thread Starter
Ford Fires Salvo At Dealers. Is it Time For GM Also To Do The Same?
Very interesting article. Ford just threw down the gauntlet to sell D2C. They are forcing their dealers to put up a ton of money to sell EVs, or the dealers get NONE! Also, these vehicles will have FIXED pricing,no gouging by dealers. Now GM has no choice by to follow this model If they want to keep pace with Ford. Time for GM to pressure dealers to not only allow D2C for EVs, but to also move high margin cars like the C8 to D2C. This is what Wall Street and consumers want, so at least Ford is responding. Time to get off your lazy butts GM and open up this new sales channel!
https://cleantechnica.com/2022/09/16/ford-drops-a-bomb-on-dealers-youre-either-in-or-youre-out/
https://cleantechnica.com/2022/09/16/ford-drops-a-bomb-on-dealers-youre-either-in-or-youre-out/
#2
Moderator
No thanks. I don't want fixed price car sales. GM tried that with Saturn and it flopped. Ford still has dealers involved. It is not D2C:
The dealer franchise laws prevent Ford from selling those vehicles directly to consumers
#3
I absolutely hate this idea and hope that GM never does it.
#4
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I'll believe GM actually DOING anything different when I see it.
#5
Race Director
Ford is aging both sides. They're spinning off EVs into another business unit that will set its own rules, and giving dealers a choice if they want in or not. I suspect most of the smaller dealers will not partake, why would they? Razor thin margins for them for a big spend, and if you're in a rural area, virtually no market.
Ford is playing it smart though. Their CEO flat out said that EV wasnt the answer, and that a mixed portfolio is the way of the future. They're giving themselves the amity to offload all the EV debt onto a business, and then shutter it if the market isn't there. At the same time, they're investing in ICE in markets that fools are leaving.
D2C models don't really work for cars. Yes tesla has done it by bribing their way out of laws, but they're a VC coke party, not a business. Toyota and GM both tried thr d2codel and both fizzled out. I think there just isn't enough incentive tive to dealers to keep.i ventory, and people are only.ok woth waiting several months for so long. Eventually these supply chain gridlock will burst, and people will demand on hand inventory of vehicles. A lot of automakers dread this, but the first company that starts putting metal on the lots and does incentives is gonna capture a TON of market share. It doesn't matter if your car is 45% better than your competitor, if they can sell you it today and you drove away but you want someone to wait months, your same day competitor will win almost every time.
Ford is playing it smart though. Their CEO flat out said that EV wasnt the answer, and that a mixed portfolio is the way of the future. They're giving themselves the amity to offload all the EV debt onto a business, and then shutter it if the market isn't there. At the same time, they're investing in ICE in markets that fools are leaving.
D2C models don't really work for cars. Yes tesla has done it by bribing their way out of laws, but they're a VC coke party, not a business. Toyota and GM both tried thr d2codel and both fizzled out. I think there just isn't enough incentive tive to dealers to keep.i ventory, and people are only.ok woth waiting several months for so long. Eventually these supply chain gridlock will burst, and people will demand on hand inventory of vehicles. A lot of automakers dread this, but the first company that starts putting metal on the lots and does incentives is gonna capture a TON of market share. It doesn't matter if your car is 45% better than your competitor, if they can sell you it today and you drove away but you want someone to wait months, your same day competitor will win almost every time.
#6
Melting Slicks
Ford is playing it smart though. Their CEO flat out said that EV wasnt the answer, and that a mixed portfolio is the way of the future. They're giving themselves the amity to offload all the EV debt onto a business, and then shutter it if the market isn't there. At the same time, they're investing in ICE in markets that fools are leaving.
#7
Instructor
Thread Starter
#8
Race Director
Automakers are moving to EVs because it gives them a more desirable revenue model where they sell subscriptions to features and have customers pay monthly for the service. It's not about global warming, its about paying for a vehicle like you would a cell phone, re-occurring revenue and selling software.
#9
Instructor
Thread Starter
Automakers already have been trying this to great failure. Tesla has it's cult followers willing to do it, but the general consumer has rejected this idea and concept outright. The reason automakers are pushing EV so hard is the big money VC guys and their Washington lapdogs are effectively forcing them to. Whether they end up seeing major losses as they try to force something on consumers many dont want and pivot remains to be seen, but i expect to see some major consolidation in the auto industry. I expect one of the big 3 (GM - let's be real their only good product is Tahoe/Suburban) to merge with another large automaker before the end of the decade. I could see GM being an attractive target for a purchase or "merger of equals" by a Hyundai/Kia or VW for their trucks and that's about it.
#10
Race Director
I'm not a Tesla fan, but their market cap dwarfs Ford and GM combined. Don't think for a second that Wall Street is not pushing 'legacy' automakers to move to a model much closer to Tesla to allow D2C for vehicles since the manufacturer gets ALL the revenue and profit in that model; the dealer is cut out. It won't happen overnight due to state franchise laws, but Ford's move to sell D2C for EV's (and other vehicles soon) is just the tip of the iceberg. Also, GM has huge investments from Chinese companies, so they could get pushed on that side to offer other sales channels than privately owned dealers.
#11
Melting Slicks
I don't think GM or Ford should ice out dealers, but I sure would like to have the option to buy direct. It would be a very capitalist thing to do to let the consumers choose what they prefer with their own cash.
I have only ever dealt with one dealer that wasn't slimy and it was a Toyota dealership in Gilbert AZ. They told me the price of the car plus tax and sold it at that point. I was in and out in about 30 minutes. On the other side of the spectrum is literally every other dealer I have had the misfortune to deal with. When I bought my 15 Stingray it was a 4 hour ordeal to buy one off the showroom floor where they tried to sell me more than I wanted. I knew I wanted an extended warranty and the car as it was nothing else, four hours of being pestered with service contract extensions, dealer added accessories, theft deterrence, window etching, etc. The only reason I allowed this was due to getting the car at supplier pricing.
I do not believe that getting a modern sports car will ever be what it was as there is no incentive to offer seals on cars manufacturers can't seem to make enough of. In this case, I would prefer to do my own research, pick out my options online, add to cart and buy. Its not like many dealers will let you test drive a sports car nowadays, at least I haven't found a dealer to let me test a Stingray out. Porsche is better about test drives but good luck on taking a GT3 for a spin before you drop an order for one.
So, having the option available to buy direct would be a huge boon and would likely put a huge damper on the whole ADM game. GM could be transparent with D2C sales as far as allocations with first come first serve style sales and let the dealers sate the diehards who place deposits decades in advance for a spot in a line that they aren't guaranteed legally.
I'd rather have a chance at getting a car at MSRP via D2C than to have to play all the stupid games to get a car I want. This is why Tesla is killing it financially, the car may not be the most exciting product ever, but the purchasing process is slick as snot and appeals to those of us who are tech saavy.
Dealers are a relic of a bygone Era. A stone age method of selling new cars in a time when you can literally buy everything else with a few clicks on a computer. Used car lots will always need to exist but Carvana and online dealers like them are proving that physical dealerships are unnecessary as well.
So that just leaves Service departments, which are a necessary evil. GM needs to move the service of Corvette to Cadillac establishments si the quality of service matches the cost paid for the car. When I drop off my vette for service that requires a loaner car, I would prefer to have a Cadillac over a Cruze, and now that the base Stingray is easily optioned into the 6 figure range that seems more and more necessary.
I have only ever dealt with one dealer that wasn't slimy and it was a Toyota dealership in Gilbert AZ. They told me the price of the car plus tax and sold it at that point. I was in and out in about 30 minutes. On the other side of the spectrum is literally every other dealer I have had the misfortune to deal with. When I bought my 15 Stingray it was a 4 hour ordeal to buy one off the showroom floor where they tried to sell me more than I wanted. I knew I wanted an extended warranty and the car as it was nothing else, four hours of being pestered with service contract extensions, dealer added accessories, theft deterrence, window etching, etc. The only reason I allowed this was due to getting the car at supplier pricing.
I do not believe that getting a modern sports car will ever be what it was as there is no incentive to offer seals on cars manufacturers can't seem to make enough of. In this case, I would prefer to do my own research, pick out my options online, add to cart and buy. Its not like many dealers will let you test drive a sports car nowadays, at least I haven't found a dealer to let me test a Stingray out. Porsche is better about test drives but good luck on taking a GT3 for a spin before you drop an order for one.
So, having the option available to buy direct would be a huge boon and would likely put a huge damper on the whole ADM game. GM could be transparent with D2C sales as far as allocations with first come first serve style sales and let the dealers sate the diehards who place deposits decades in advance for a spot in a line that they aren't guaranteed legally.
I'd rather have a chance at getting a car at MSRP via D2C than to have to play all the stupid games to get a car I want. This is why Tesla is killing it financially, the car may not be the most exciting product ever, but the purchasing process is slick as snot and appeals to those of us who are tech saavy.
Dealers are a relic of a bygone Era. A stone age method of selling new cars in a time when you can literally buy everything else with a few clicks on a computer. Used car lots will always need to exist but Carvana and online dealers like them are proving that physical dealerships are unnecessary as well.
So that just leaves Service departments, which are a necessary evil. GM needs to move the service of Corvette to Cadillac establishments si the quality of service matches the cost paid for the car. When I drop off my vette for service that requires a loaner car, I would prefer to have a Cadillac over a Cruze, and now that the base Stingray is easily optioned into the 6 figure range that seems more and more necessary.
#12
Race Director
I guarantee I'm more tech savvy than 99% of people on here and I hate the idea of a D2C model. In D2C, I'm stuck overpaying. In the dealer model, I can negotiate for the vehicle I want with multiple dealers and get the best deal. It takes a little more work, but it's worth thousands in the end. That's worth it to me.
#13
Instructor
Thread Starter
I guarantee I'm more tech savvy than 99% of people on here and I hate the idea of a D2C model. In D2C, I'm stuck overpaying. In the dealer model, I can negotiate for the vehicle I want with multiple dealers and get the best deal. It takes a little more work, but it's worth thousands in the end. That's worth it to me.
#14
Race Director
What makes you think that automakers won't discount in a D2C model? They will discount cars that are not selling, just like dealers do today. I see no downside to a D2C model since the dealer adds ZERO value for me; they just add additional cost and hassle to what should be a straightforward process. Face it, the overwhelming majority of today's customers already know which vehicle they want to purchase, so it should just be a matter of ordering what you want from the manufacturer and having it delivered to your local dealer for pickup. There are very, very few customers who walk into a dealership not knowing what they want and need 'hand holding' from the dealer on the purchase. Today's customer just wants the product they've researched at a decent price in a decent time interval. The dealer only gets in the way, and adds unnecessary ADM, to that process. Watch the video below. D2C is coming and GM will embrace it at some point since they will be forced into it by Wall Street.
https://www.youtube.com/watch?v=51Lq2P_y2Xg
https://www.youtube.com/watch?v=51Lq2P_y2Xg
Your assessment of the average customer couldn't be further off. While car enthusiasts know what they want, the average consumer doesn't have any idea. They go test drive a car based off reputation and styling typically first, and buy when a dealer makes the sale.
The D2C model is doomed by lack of.inventory. You can see its effects now, it's really tough to sell someone a car they can't test drive.... unless they're in the cult of tesla, but those people are weirdos.
#15
Melting Slicks
Agreed. Consumers here do absolutely no research. They walk on the lot toward a car that looks pretty and shop toward a payment - not the total cost of the car. So the salesman finances them for 84-96 months to make it work and they drive off the lot financially upside down. But hey, at least they have something cute to post on Instagram...
#16
Instructor
Thread Starter
Agreed. Consumers here do absolutely no research. They walk on the lot toward a car that looks pretty and shop toward a payment - not the total cost of the car. So the salesman finances them for 84-96 months to make it work and they drive off the lot financially upside down. But hey, at least they have something cute to post on Instagram...
#17
Race Director
That 'less informed' customer will always exist because so many people are just lazy. So for them, a dealer will always be their preferred way of purchase. But, the trend is going the other way regarding the number of customers who have knowledge of the cost of the vehicle and the features. It is that increasing customer base that needs a new D2C sales model because a dealer provides zero value to them. In the recent interviews with the Ford CEO, he acknowledged that his move to a D2C model will 'weed out' a lot of smaller dealers since they can't afford the investments required by Ford. But, a hybrid model of D2C for knowledgeable customers and a small number of large dealers for the less informed customers, is what Ford is moving towards. GM is going to have to look at this seriously also at some point.
That said, GM has too many dealers. They should shutter the gmc and Buick brands and dealers, and roll them into Chevrolet.
#18
Melting Slicks
GM will look at it, realize it's a terrible idea, and not do anything with it. The idea that there are more informed consumers now, and their numbers are increasing are just completely off base. Consumers increasingly know less and less and less about cars, features, etc. They know "i want a truck" or "this one is pretty".
That said, GM has too many dealers. They should shutter the gmc and Buick brands and dealers, and roll them into Chevrolet.
That said, GM has too many dealers. They should shutter the gmc and Buick brands and dealers, and roll them into Chevrolet.
Dealers love convoluted option offerings because it validates their predatory nature and existence. D2C would also net GM higher profits because they no longer need to set MSRP with the intent to cover dealer profits and can instead pocket that money themselves or provide a higher quality item at similar to dealer factored pricing.
I'm not saying we eliminate dealers...just give customers the option to bypass them if they want to. I think that the long term effect of that would be the end of new car dealers.
#19
Race Director
Your argument makes more sense for D2C. Most car buyers just want a car with modern amenities. Tesla offers like 5 different options that arent colors and sells as many cars as they can make (actually they sell more than they can make). GM could trim down the I divide all options on its more mundane cars to reduce the variability of options and increase output of those cars and then sell them D2C as simple "packages" that make sense to the uninformed.
Dealers love convoluted option offerings because it validates their predatory nature and existence. D2C would also net GM higher profits because they no longer need to set MSRP with the intent to cover dealer profits and can instead pocket that money themselves or provide a higher quality item at similar to dealer factored pricing.
I'm not saying we eliminate dealers...just give customers the option to bypass them if they want to. I think that the long term effect of that would be the end of new car dealers.
Dealers love convoluted option offerings because it validates their predatory nature and existence. D2C would also net GM higher profits because they no longer need to set MSRP with the intent to cover dealer profits and can instead pocket that money themselves or provide a higher quality item at similar to dealer factored pricing.
I'm not saying we eliminate dealers...just give customers the option to bypass them if they want to. I think that the long term effect of that would be the end of new car dealers.
Alternatively, you could drove down to a local dealer, haggle for a little bit ofntime to make them earn your business, get a car for under msrp, have them find the car you want at a nearby dealer and bring it to you, and have it in days. So pay less, get it faster, and be ablw.to try before you pay?
Yeah, the sight unseen route that costs more and takes longer seems like the option that customers would definitely prefer, lol.
#20
Instructor
Thread Starter
So your idea is to give consumers the option to buy direct, at msrp, not have I ventory to test drive, wait a few months, then get their car? The manufavturers would have to come up with some sort of delivery service, perhaps a centralized place where all customers could.pick up their cars, finalize paperwork for financing and purchase agreements, maybe even get warranty and service? But what would we call such a place?
Alternatively, you could drove down to a local dealer, haggle for a little bit ofntime to make them earn your business, get a car for under msrp, have them find the car you want at a nearby dealer and bring it to you, and have it in days. So pay less, get it faster, and be ablw.to try before you pay?
Yeah, the sight unseen route that costs more and takes longer seems like the option that customers would definitely prefer, lol.
Alternatively, you could drove down to a local dealer, haggle for a little bit ofntime to make them earn your business, get a car for under msrp, have them find the car you want at a nearby dealer and bring it to you, and have it in days. So pay less, get it faster, and be ablw.to try before you pay?
Yeah, the sight unseen route that costs more and takes longer seems like the option that customers would definitely prefer, lol.
Just look at the recent firestorm in Florida where a number of dealers are charging unnecessary fees to customers who want to purchase their vehicle at lease end. The dealers are adding thousands of dollars in fees that were never part of the original contract, and they are being sued because of it. Many dealers are just scumbags and this is further proof that customers need to have a D2C sales option to avoid slimy dealers.