In most states, manufacturers are prohibited from selling directly to consumers.
There are a variety of reasons for it, some were consumer-friendly (like preventing the manufactures from monopolizing repair/service), but it basically created a system of middlemen that raised costs.
I worked at a Honda dealership in college and I learned a lot.
For example, when you finance through a dealership, the dealer doesn’t actually put up any money. They find a 3rd party financer then tack on a few percentage points.
Salespersons also earn higher commissions on dealer-provided upsales, such as window-etching, rust-preventative, custom badging, extended warranties, etc, so they try to push those things.
Dealers are also locked into individual manufacturers, usually. That is, a “family” of dealerships, are actually multiple businesses, each with a contract with a different manufacturer.
The person that owned the Honda dealership I worked at, owned others. On one side, they had a Pontiac-Buick-GMC dealer, then Chevy, Chevy truck, and Cadillac on the other side. Even they it was all General Motors, they were run separately. Down the street, they had a dealership that sold both new Toyotas and Subarus.
The first comment talks about stealership, the next about weird us practice and I have no idea what they are referring to 😁.
In Europe we habe car dealers, franchise, independent or do buy privately but they can all act independently.
Is there a cartel or something in the US for car dealerships?
In most states, manufacturers are prohibited from selling directly to consumers.
There are a variety of reasons for it, some were consumer-friendly (like preventing the manufactures from monopolizing repair/service), but it basically created a system of middlemen that raised costs.
I worked at a Honda dealership in college and I learned a lot.
For example, when you finance through a dealership, the dealer doesn’t actually put up any money. They find a 3rd party financer then tack on a few percentage points.
Salespersons also earn higher commissions on dealer-provided upsales, such as window-etching, rust-preventative, custom badging, extended warranties, etc, so they try to push those things.
Dealers are also locked into individual manufacturers, usually. That is, a “family” of dealerships, are actually multiple businesses, each with a contract with a different manufacturer.
The person that owned the Honda dealership I worked at, owned others. On one side, they had a Pontiac-Buick-GMC dealer, then Chevy, Chevy truck, and Cadillac on the other side. Even they it was all General Motors, they were run separately. Down the street, they had a dealership that sold both new Toyotas and Subarus.