ElI5 why do we have car dealerships?
In: 160
To sell a product, a manufacturer can either use an e-commerce web site or a physical store. The latter is preferred for goods that customers strongly prefer to check out in person. Specifically for cars, most customers won’t buy a vehicle without looking at it in person and taking it for a test drive.
If you want to sell to most of your customers yourself (direct sales) you have to open hundreds of stores. That means building, staffing, training, and managing those hundreds of stores. That is a lot of work.
If you offer your products to authorized retailers, then you mostly worry about product distribution, and let those retailers handle their staffing, training, and management themselves.
There are some advantages to direct sales. You have more control over the customer sales experience. (More consistent pricing and service, etc.) This is the approach that Tesla took. (Tesla is also able to do this in part because EVs have relatively fewer service needs compared to vehicles with internal combustion engines. Far fewer moving parts that wear out and need service.)
As others have stated already, car dealerships don’t want their existence threatened. Imagine if Ford decided to pursue direct sales, possibly offering a customer experience superior to that of traditional car dealerships. So these car dealerships worked to get laws passed in their locations, stating that vehicle sales must always occur through a third-party dealership.
Latest Answers