Elon reveals Cybertruck details / production expectations on Q3 2023 call

[Gurule92]

you know it’s possible to find the data on exactly what the car cost the dealership, determine a fair profit for the dealer, email 20 dealers the offer, and prepare for no one to take it - yeah?

mid no one takes it, it’sbecause you’ve misjudged what a fair profit is on a given model (because they have an available market better than what you’re willing to pay)

again, there are good dealerships and bad dealerships.

but there are also good buyers, and bad buyers

just because an OEM makes everyone pay the same price when the own the ‘store’ doesn’t make it a ‘good’ price

people unwittingly talk out if both sides of their mouth when they say “Tesla stores are better because you know you’re getting a good deal,” then two breaths later say “Tesla’s amazing because it has a 23% margin on their cars”

choose the right vehicle, choose the right offer, choose the right dealership, and one can get a very good deal

if you instead must have that special cobalt blue paint job, feel all offers are alike, and feel all dealers are alike - then the ‘bad deal’ one gets may be in part the ‘fault’ Of the dealer, but it’s not all their fault - mirror time

Woah who said Tesla always gives you a good deal? Lol

I'm merely saying that dealerships (that I have experience with) are con artists and put WAY more pressure on you then needed

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[cvalue13]

The dealership's KPIs would weigh towards profit.

No matter how smart the customer is, he/she is at the mercy of someone who does the same thing every day.

And there are too many unscrupulous salespeople.

Is this is the sort of thinking that causes folks to exclaim that dealerships are bad? Because if so, it just continues to make me think there that prerogative has a high correlation with people who don’t understand car sales, dealership finances, etc.

Of course they weigh towards profit.

Industry wide, dealer “profits” are new-vehicle sales ~16%, F&I sales constituting ~28% percent, and constituting ~43% percent.

Based purely on the above, one can see that a dealership has plenty of ‘profit’ reasons to sell a new car for $0 - because 71% of their profit center has nothing to do with profits on new car sales. They can sell the car for no profit, expecting on average to make far more from F&I and service

but let’s hone in on that ~16% new car sales ‘profits.’

The car staying on their lot costs them money. Now they have more reasons to sell to you for zero profit in the sale.

And, there are ways they still make money even if you pay at or below invoice (eg dealer holdbacks), now they have even more-more reasons to sell to you for zero profit *from you* on the sale.

The rest is up to understanding how markets and negotiation works, at a basic level.

Has everyone who complains about how bad dealerships are just been doing it wrong?

 

[Dusty]

funny thing about all these replies along this vein: I read them and only think “there’s someone who doesn’t know how to buy a car from a dealership”

mall the ‘games’ being played, are being played on you, not everyone

I hope you realize every step you take in "knowing how to buy from a dealership" is a process that exists because the industry's default position is to screw you over. Why would you be apathetic to that system?

And no, everyone doesn't study car buying. If I recall, people on fixed incomes and single parents tend to be particularly penalized, read 'preyed upon', in the process.

The game is even more pointless when I'm dealing with a salesperson who knows less about the car I'm looking at than me, making his value in the process worth even less.

 

[cvalue13]

Woah who said Tesla always gives you a good deal? Lol

I'm merely saying that dealerships (that I have experience with) are con artists and put WAY more pressure on you then needed

wasn’t intending to put those words into your mouth.

Was more of a broad comments towards those others who, yes, suggest they prefer Tesla’s stores because ~’they know they’re getting the best deal’

confusing ‘the best deal’ with ‘not getting more screwed than anyone else’ is a real possibility

 

[CyberGus]

What’s the biggest advantage of the dealership network? Service.

What’s the biggest complaint about Tesla? Service.

Coincidence?

 

[cvalue13]

I hope you realize every step you take in "knowing how to buy from a dealership" is a process that exists because the industry's default position is to screw you over. Why would you be apathetic to that system?

In kind, I hope you realize that ‘getting no more screwed than the next guy’ is not the same as ‘getting a good deal’

There are good doctors and bad doctors. One must determine how to find good doctors, not bad ones. And when you get in the room with a good doctor, one must still know how to get what you want out of it while still giving them what they want out of it.

Sounds nutz to me to think your position here is “I hope you realize every step you take in knowing how to get healthcare is a process that exists because the medical industry’s default position is to screw you over”

It’s nonsensical, and assumes the conclusion (that all doctors are out to be bad doctors).

The world does at some level require people to do their own homework, if they want the grade. If you don’t study, don’t also complain about your grade.

 

[Dusty]

...
It’s nonsensical, and assumes the conclusion (that all doctors are out to be bad doctors).

The world does at some level require people to do their own homework, if they want the grade. If you don’t study, don’t also complain about your grade.

That's the dumbest, weakest, flimsiest counterpoint you've ever posted.

Healthcare and doctors have nothing in common with car sales and salespeople... that comparison is comically off target. C'mon, man. Shit. I expect better from you.

I won't bother arguing with you. It's obvious that you're a car buying hustle-god who only gets the best prices. Dealerships thank you at signing for knowing the intricacies of their operations, yet having enough mercy to allow them retain a meager profit. We should all enjoy the process. Congrats.

 

[PilotPete]

What’s the biggest advantage of the dealership network? Service.

What’s the biggest complaint about Tesla? Service.

Coincidence?

Wait a cotton picking minute here...

I read right here in the interwebthing that fit and finish were the biggest complaint, tied with "My range isn't perfect", tied with the paint job. So don't come in here telling us it's service buddy!

And just because they'll come to your house or job if possible doesn't make it a plus, cause that just means I can't blame not going to work on my car! And on top of that there are dozens of car dealers that come fix your car at your work! why there's... ummmm, ahhhhh, ohhhh, lets see, I think that what's-their-face used to in the 50's, errrrrrr, wow, like don't forget the place over on the corner used to, but now it's a McDonalds, so that leaves... ahhhhh... Who cares anyway!

 

[cvalue13]

That's the dumbest, weakest, flimsiest counterpoint you've ever posted.

Ok, so there aren’t also good and bad doctors.

Let’s instead just say:

At bottom, here’s why dealerships have become a pop-culture meme - at least in the U.S.:

Ten people could go into a dealership and each pay a different amount to buy the same exact vehicle.

People love to hate something, love to complain, love to feel butthurt. And in particular, in the U.S., have a cultural distaste for negotiating.

Here’s two glaring things no one here screaming ‘stealership’ bothers to mention:

(1) of the 10 people mentioned above, ANY data whatsoever regarding how many of the 10 people have paid the dealer an “unfair” profit. They just take as gospel that if 10 people pay different amounts, *someone* must be getting ‘screwed’

(2) and probably more to the point of how people love to be butthurt:

has anyone here saying ~that dealerships is a fundamentally flawed model EVER discussed how dealerships work in other countries, outside the U.S.?

Many places, a ‘dealership’ has a lot with examples of the models offered, for test-drive purposes only. You test drive, order the one you like, and your exact vehicle doesn’t show up for a few weeks. Variations of this. Sound familiar?

Still other places, it’s a cultural norm that almost every consumer good sold is price-negotiated. Cars, clothes, bananas.

So no, I don’t take the pop culture meme that dealerships are inherently flawed, much less globally.

I think some bad apples give the whole bunch a bad name, a spread of blame fueled in no small part by how people love to complain, and have a distaste for negotiation.

If pressed, people in the U.S. don’t know how dealerships profits work: eg that only ~16% of their income is from new car sales, and that the average net profit margin on new car sales for a car dealership is 1–2%. This means that for every $10,000 in new car sales, the dealership makes $100–$200 in profit.

But Tesla stores? The ‘dealer’ there makes far more than 1-2% per car, but absent the meme and absent the distaste for negotiation despite them making more net profit per sale than a dealership, yet they’re held up as the better model for ‘fairness’ to customers

Bother for a moment to reconcile that strange outcome

 

[Gurule92]

wasn’t intending to put those words into your mouth.

Was more of a broad comments towards those others who, yes, suggest they prefer Tesla’s stores because ~’they know they’re getting the best deal’

confusing ‘the best deal’ with ‘not getting more screwed than anyone else’ is a real possibility

Well, I do think that technically, if everyone gets screwed the same amount as you. You are getting the best deal on that product no?

Logically, if there is a set that only has 1 number in it, you are getting the minimum. Which I guess is also the highest. So you're both getting the best deal and worst deal?

What sucks is when you buy the car and then the price drops and now it feels like you're back at the dealer lol

 

[Gurule92]

Ok, so there aren’t also good and bad doctors.

Let’s instead just say:

At bottom, here’s why dealerships have become a pop-culture meme - at least in the U.S.:

Ten people could go into a dealership and each pay a different amount to buy the same exact vehicle.

People love to hate something, love to complain, love to feel butthurt. And in particular, in the U.S., have a cultural distaste for negotiating.

Here’s two glaring things no one here screaming ‘stealership’ bothers to mention:

(1) of the 10 people mentioned above, ANY data whatsoever regarding how many of the 10 people have paid the dealer an “unfair” profit. They just take as gospel that if 10 people pay different amounts, *someone* must be getting ‘screwed’

(2) and probably more to the point of how people love to be butthurt:

has anyone here saying ~that dealerships is a fundamentally flawed model EVER discussed how dealerships work in other countries, outside the U.S.?

Many places, a ‘dealership’ has a lot with examples of the models offered, for test-drive purposes only. You test drive, order the one you like, and your exact vehicle doesn’t show up for a few weeks. Variations of this. Sound familiar?

Still other places, it’s a cultural norm that almost every consumer good sold is price-negotiated. Cars, clothes, bananas.

So no, I don’t take the pop culture meme that dealerships are inherently flawed, much less globally.

I think some bad apples give the whole bunch a bad name, a spread of blame fueled in no small part by how people love to complain, and have a distaste for negotiation.

If pressed, people in the U.S. don’t know how dealerships profits work: eg that only ~16% of their income is from new car sales, and that the average net profit margin on new car sales for a car dealership is 1–2%. This means that for every $10,000 in new car sales, the dealership makes $100–$200 in profit.

But Tesla stores? The ‘dealer’ there makes far more than 1-2% per car, but absent the meme and absent the distaste for negotiation despite them making more net profit per sale than a dealership, yet they’re held up as the better model for ‘fairness’ to customers

Bother for a moment to reconcile that strange outcome

Not to pick sides or anything here. But I do think it's worth mentioning that while the dealerships make less net profit on vehicles sold, they do make a lot of profit on (typically) inflated pricing for services which are a lot more common in gas vehicles.

Also, if they didn't have to buy the cars from the manufacturer, (which I don't 100% understand the process of) wouldn't they make higher new sale margins? It's more like dealer margins + manufacturer margins. Which would be closer to Tesla margins.

So being that Tesla (likely) takes a smaller overall profit for services, it would make sense that they take a higher margin on new vehicle sales. No?

For me personally if the vehicle is worth the price I'll buy it. If not. I don't. That's at any place that sells vehicles

 

[CyberGus]

has anyone here saying ~that dealerships is a fundamentally flawed model...

Salesmen try to maximize profits. Everything for sale is at the highest price the market will bear. It's the American way! Competition is what keeps prices in check.

However, one of the reasons dealerships give off "icky" vibes is because they've lobbied to specifically outlaw certain kinds of competition. (For instance: direct sales. Hmmph.)

 

[cvalue13]

Salesmen try to maximize profits. Everything for sale is at the highest price the market will bear. It's the American way! Competition is what keeps prices in check.

However, one of the reasons dealerships give off "icky" vibes is because they've lobbied to specifically outlaw certain kinds of competition. (For instance: direct sales. Hmmph.)

100%

Lots of *good* critiques of U.S. dealership current status quo - and I'll bang that drum right alongside you.

 

[cvalue13]

Not to pick sides or anything here. But I do think it's worth mentioning that while the dealerships make less net profit on vehicles sold, they do make a lot of profit on (typically) inflated pricing for services which are a lot more common in gas vehicles.

Also, if they didn't have to buy the cars from the manufacturer, (which I don't 100% understand the process of) wouldn't they make higher new sale margins? It's more like dealer margins + manufacturer margins. Which would be closer to Tesla margins.

So being that Tesla (likely) takes a smaller overall profit for services, it would make sense that they take a higher margin on new vehicle sales. No?

For me personally if the vehicle is worth the price I'll buy it. If not. I don't. That's at any place that sells vehicles

Yep, dealerships make 70%+ of their profits from financing and service.

Thankfully, buying a new car does not require using a dealership's financing, or its service.

To that extent, whatever complaints folks might have about dealerships' approach to the sales price of new cars, it's independent of F&I/service model.

And at the same time, folks would have to say a lot more before I just assume away that Tesla doesn't also make money off of F&I and service. I personally don't find it "likely" that this is true. I see plenty of stories of folks talking about the service costs of Tesla. (To say nothing of the dirtly little secret that Tesla is beginning to rely on sending Tesla's to other OEM's service centers for service.)

And while not directly related here's Tesla charging $8,000 to $12,000 for a WRAP - and, strangely, I don't see anyone saying "see how predatory Tesla is!" Some in fact appear (in virtue of being a shareholder?) to slow clap and say, "man, look how profitable and savvy Tesla is."

 

[cvalue13]

What sucks is when you buy the car and then the price drops and now it feels like you're back at the dealer lol

it's a great example of how two things can be sold differently in the same exact way

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