ElI5 why do we have car dealerships?
In: 160
A lot of good answers on the historical reasons, especially by rabid. But unfortunately those dealer victims effectively unionized into NADA and has not been using their new power for good.
I will give you a few important functions dealers serve in the modern times.
– Manufacture inventory buffer. For the most part, factories run at max capacity, when demand is lower during winter months, dealers can help off load excessive inventory from OEMs which helps with cash flow and lower expense.
– immediate price corrections. No body better than your local Joes Ford that can determine on the daily, how much to move the price of each carline to maximize his returns and still have room on the lot to absorb inventory push. This is why haggling is a thing for auto and almost nothing else.
– parts and service. Not as big of an issue for electric cars, but you can see the service problem even Tesla is encountering as they scale.
I think the dealer system is broken in a lot of ways and needs a major overhaul, mostly their anti consumer practices but at the same time, manufacturers need dealers to scale and compete. No easy answers and fixes.
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