why is it necessary to buy a new car from an auto dealership?
In: 12
Because car manufacturers have exclusive deals with the dealerships. Manufacturers have found it’s cheaper to ship to single locations like dealerships and let them be responsible for sale and delivery. The exclusivity also allows them to somewhat inflate the price.
Most states have laws that prohibit direct to consumer sales—they require licensed dealerships. At one point in time, all states required new cars to be sold by dealers, and many had restrictions that made it difficult to form a new dealership. The laws were reportedly justified to increase competition and improve customer service, but I don’t have any statements by lawmakers saying that or studies that show that—just magazine articles saying that competition and consumer protection is the reason.
Car dealerships may be an example of “rent seeking” (https://www.investopedia.com/terms/r/rentseeking.asp), where a business gets profits and economic protection by political and legal protection without creating new wealth. The do provide services—aftermarket modifications (pinstriping, undercoating, …), tag and title registration, mechanics to handle recalls—but those services could be provided by the manufacturers or local governments or third parties.
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It isn’t, at least not in my country.
If I go to (e.g.) [toyota.co.uk](https://toyota.co.uk), they will sell me a new Toyota right there, online, and deliver it to my house. Is that not possible in the USA?
Because it is either the law, or the automaker’s policy, that their vehicles can only be sold at auto dealerships.
In places where it is not the law, companies like Tesla sell their cars without using a dealership network.
It became law several years ago in most states, it made sense many years ago. Because Bob down the road could own a dealership, you could get customer service from someone who probably did care. It also meant supporting local community, and it was good for everyone.
Now dealerships are known as scammers, shady practices, and just not giving a shit about you. Because large companies now own these dealerships and have a network of them. I’m sure lot of car manufacturers would rather sell you a car direct, and would be better for everyone involved (except these shitty companies running dealerships). But the laws are outdated, so it is what it is until the laws are changed.
It’s not universally true, even in the US. Tesla, for example, wants to sell cars directly from their stores. That’s not possible in all states, however. So in those states, Tesla’s stores are just “showrooms” and a customer buys a car from a website.
One ironic example is Texas. Even though Tesla is now based in Texas, Texas state law prohibits Tesla dealers (which are owned and operated by Tesla) from selling directly to the public.
This is actually a really interesting question. I think the ability to buy the car isn’t really the interesting thing, it’s the pricing of the car. Most people don’t pay the sticker price. Compare this to buying a washing machine, if you want a certain brand of washing machine you have to go to the stores that are authorized to sell those machines, but unless the machine is on sale or the store offers price matching you pay the listed price, not like haggling to get a better car price.
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