Just read this and I love it, hopefully all car makers have the direct to customer / set prices option.
No more bargaining with dealerships and easier to compare cars. Just wondering what people's thought are on this change? Will cars be more or less expensive?
https://www.news.com.au/technology/innovation/motoring/motor…
or potentially even beat it
Lol 1 minute you want fixed sales, next minute you're mentioning haggling.
You can't have both
It's not really give and take haggling though. If EQC is $150k online and you want to deal with a dealer then either they'll price match it to same $150k or they can better it if they choose. No more arguing whether or not mats are additional extra or should be freebie.
It's the same as grabbing a discounted item price from JB Hifi and asking Officeworks to price match.
If it's $150k online and 'in-store' with no room for any change then I'm pretty OK with that too. You know you're paying RRP and not getting ripped off. I'm fine with that.
They won't haggle… If MB want fixed sales, the dealer will offer you the same. They'll have license agreements to this effect. If they can haggle, then you're just back to the current situation.
Not sure why you can't grasp this lol you either have negotiation or you have fixed prices, there is no middle-ground here!
@spackbace: Well the article states that manufacturers can't dictate dealer prices so thinking they might be able to offer something else. But if not, I'm perfectly happy with fixed sales price then.
@Hybroid: Oh, and if the manufacturer gets their way, no you won't get free mats ;) They cost money, and the manufacturer will want to have accessories as a standard checklist, and you go along and tick boxes and it nicely adds it to the end.
@spackbace: and that's okay too. Nothing's free anyway and you know you're not getting potentially ripped off on the overall cost, even though the mats price alone can be shocking.
You can go to eBay and get some cheap mats if you really wanted, rather than thinking you got them for free but have potentially left $5k on the table like a shmuck.
@Hybroid: Ford Australia attempted to standardise dealer prices last century (90s? Geoff Polites?) A dismal failure with franchise dealerships. Ford Australia attempted to buy them back but didn't have deep enough pockets.
While the manufacturer may be able to control the sell price, they have no control over the trade-in or "extras", so the fixing of the changeover price is still fluid.
@brad1-8tsi: Subaru did online sales of the BRZ, Toyota did online sales of the Supra… Guess what, both are now left in the hands of dealers
@brad1-8tsi: Could be marketing, could be an attempt to stop dealers pushing the price over RRP, not sure without being a fly on the wall tbh
@spackbace: Thats the only way it make sense. Dealers going over RRP. Like when Von S says people dont like going to a BBQ to learn someone paid less for the car. What?
I bought it direct for $155K, you bought from a dealer for $149K. How will this stop the BBQ issue?
And as someone else pointed out. You pay $155K, and you get from Merc direct $1k for your VS commodore. Another gets to pay a dealer $155K and gets 10K for their VS commodore.
Given its illegal to fix prices, how the hell will this work. Saturn in the US did well initially then died in the bum because the customer is so used to bargaining. Hell deals get voted down here if the are 10c cheaper and almost every second electronics type deal has an OW price beat price listed.
@RockyRaccoon: I'm sure you wouldn't be able to trade in if you bought direct online.
A trade in would be no different that selling your car to a dealership without buying a new car, you can sell it to one dealership for 1k or for another one for 10k. Same as selling any other used good.
@spackbace: Fixed prices stops retailers from discounting.
People who buy luxury cars aren't over the moon with a $2000 discount
20% discount is not uncommon at this level.
@greatlamp: Still didn't answer the problem tho.
A $150k car now might be able to be negotiated for $130k. If MB start selling it fixed price at $150k, are you really getting a bargain?
@spackbace: No of course not, I think we can both see that this isn't good for the customer.
I don't think there is any concerns with dealers charging over RRP, it is discounting that destroys the brand MB spent millions in advertising to build..
@greatlamp: But you assume the price will remain at 150k which it might but it might be 140k or 130k?
I don't now how much Mercedes will save from doing it this way but they might pass some savings to the customer.
@spackbace: Toyota NZ started fixed price online sales over 12 months ago and still going. Of course RRP for fixed price method was reduced to take into account previous haggling adjustment.
Great sales model I must say and should be utilised in Australia.
Of course RRP for fixed price method was reduced to take into account previous haggling adjustment.
Strange, when converting the currency to AU$, I don't see any cars that have had price reductions compared to our list prices. NZ$115,990 for a LC200 VX = AU$110,000, which is RRP, and has a decent amount of margin to move on that
@spackbace: You'd have to compare the before change percentage difference to the after change percentage differences in price to see if there was a change, just looking at after doesn't help you because it may have been been more expensive before and now it's cheaper.
@spackbace: See this article
"Toyota NZ retail revamp cuts up to $10k off new-car prices… permanently" Apr 2018
https //www stuff co nz/motoring/news/102757294/toyota-nz-retail-revamp-cuts-up-to-10k-off-newcar-prices-permanently?rm=a
"A few examples: a Highlander GX is now $54,990, a reduction of $9900 over the previous RRP. A Hilux 4x4 SR5 double cab has dropped from $62,990 to a TDP of $53,490 (down $9200). A RAV4 GX 2WD is $32,990 ($5000), the Corolla GX $27,990 ($5300) or a Yaris SX is now $23,990 ($1500)."
The only haggling I suspect is the value of your trade in if you are not selling your old car privately.
love no longer having to haggle
But you don't have to haggle, you can go to a dealer and just pay full RRP which is the same as set pricing.
If they want to sell you extras, just say "no".
Obligatory Life of Brian quote: "He won't haggle!"
Fixed sales has been tried by a few manufacturers now, and they always abolish it soon after. Most customers don't want to drop that sorta coin ($150k in this case) without seeing/driving the car. Then they look at trading cars in as well, which further complicates it.
The problem with someone like MB is the negotiating room in their cars at RRP. Negotiated prices can vary differently, and even stamp duty comes into a major effect at prices over $100k with the stamp variations between states.
Fixed price sales might come at some point, but the end result will be that no one really knows if they got a 'bargain' as they'll have to rule out any notion of price comparison.
If you can negotiate a $150k car down to $130k you'll have 2 thoughts when fixed price sales come in, and that all depends on how the manufacturer sets the price - If they keep RRP at $150k you'll feel ripped off, if they bring it down to a figure closer to your $130k you'll feel ok.
As with other fixed price items, if the fixed price is too high consumers look to competitor models then MB would have to drop their pricing to the lowest possible whilst still making a profit, and if they drop their prices all potential buyers get access to the discount without having to bargain.
If they fluctuate prices too often, resale gets affected. Sure, they could run a sale in December to clear stock etc but you'll find with fixed prices it would stay pretty level
Yes true but no different to other items such as phones that are fixed price and resold. I suppose MB would be a premium offering much like apple and the resale value is stable but other cars would be sold are lowest prices.
We would be seeing more Ozb posts with car sales.
Tesla on the other hand…
Copped flack when they dropped their RRP, yep!
They also have a very small product base, and started their business in that way with fixed sales. They're not having to reinvent and massively change the status quo of their setup
Ah the price you pay to be an early adopter.
Tesla sell a PC with wheels, Mercs have become old junk. BTW some US states prohibit Tesla sales to protect dealers. No problem, reps meet you in coffee shops and deal is done.
IIRC, when Ford did it they kept almost the same inflated RRP for retail customers as they didn't want to put recent buyers offside but kept the massive fleet discount available to government / large fleets (around 35% off RRP). The retail customers stayed away in droves
Probably turns dealers into non-sales showrooms… which they wouldn't like.
Why do you assume the dealer doesn't get their cut?
The only one who loses in this arrangement is the employee
Such decisions are driven by the manufacturers… Look how much the middlemen charge compared to what we sell it to them. Why don't we cut out the middlemen? we can make more!
O don't think it's driven by the desire to reduce the cost to end customers and users.
It's like the manufacturers want to compete with their biggest direct - the dealerships.
The dealerships know what they are doing. For a luxury item like a MB, people mostly appreciate the service. Picking a car, touching it, having our wrapped up in a bow, treated like a VIP - is all part of the experience.
A minority of end customers will like buying directly. But dealerships, and therefore biggest customers for MB, will be annoyed by direct sales if not beneficial to them.
I liked a fixed price. Stops everyone trying to trump each other and I'd generally feel more comfortable buying a car knowing a price upfront.
What's the difference between the dealers anyways? Aren't the cars produced at the same factory, so why are the dealers all charging a different price?
No option to Bargain
Less costs to company - middleperson/dealerships removed
Loss of jobs
Don't see any benefit from it for the customers
A potential benefit would be cheaper prices because they don't have to pay the dealership? Look at other online only sales vs B&M sales channels.
Also potentially higher prices because they know you can only get it for that price, like it or leave it. They set the price, you buy or you don’t. Sure, they’ll have to keep their prices reasonable so you don’t buy a BMW instead, but it will make it harder to determine what the ‘cream’ in the price is because old mate down the road got it $2k cheaper.
That's also possible usually in monopoly/duopoly situation, but there's plenty of competition in the car market. There are plenty of other options besides Merc if the pricing is too high. If too high and no sales, wouldn't the price drop?
@arkie0: True. But they are probably banking on the badge snobbery factor, they’ll need to be competitive to attract new buyers.
@arkie0: There’s competition in the market from other brands. But if you want a Mercedes, this removes competition between dealerships. The fact that car manufacturers are the sole legal importers of their own cars in this country essentially makes it a monopoly. It’s not like you can import your own Mercedes from the UK for half the price. It’s legalised price fixing.
@[Deactivated]: Ok, how would this differ from say an iphone? Prices are pretty much fixed everywhere you go.
Prices are pretty much fixed everywhere you go.
Except, they're not
Truly fixed would mean you wouldn't see deal posts for it unless it had a price reduction.
2 deals have been posted for the Tesla Model S, only when it has actually been put on sale
@spackbace: I'd be happy with a similar sales model from the dealership (without the need to bargain down).
@arkie0: Because you can import an iPhone. We pay twice as much for some Mercs as they do in RHD UK for example.
They would still pass on commission to the nearest delaership (based on customer location), similar to what Subaru did with the BRZ.
Gotta look after the dealerships as they are your brand
nah it had all been done before. Sony was one of the first company to deceive its dealers back in the 70's. Waste of time and effort. prices will go up as a result of extra overhead. And who is going to service it?
Personally I've never bought a car without test driving it first. If they can facilitate that, then it will likely be successful.
I'm sure they can pay the dealership a fixed cost for allow test drives, I suppose the cost of the car might be more expensive due to this.
How about if they do the same thing those new mattress sellers are doing, and give a set period in which you can return the vehicle for a refund?
100 grand refund lol, anyway I believe there's such a thing as "Weekend/short term drive test" just have to ask
Are Mercedes Benz dealerships independently owned or are they all company owned? I remember hearing a while back that Mercedes Benz AU was moving towards a model where they owned all the dealerships but not sure if that ended up happening.
As for the topic around pricing being fixed, whilst I do love a good discount, the haggling process and going between different dealerships was tiresome and felt like a massive waste of time. The reason why you want to shop around is because you want to get the best price and not feel stupid for paying more than you should've. If you remove that aspect, and have transparency over discounting (if any) through fixed pricing or just clear packages/discounts, then it would make the buying process much easier. You do run into other issues though as different dealers may value your trade-in differently (although that's also dependent on who they use for the valuer, whether they plan to sell it themselves, etc) but it does make it less painful IMO.
The other thing which actually steered me away from a certain other German brand was knowing that a lot of my mates got discounts circa 25%. To me, this cheapened it significantly and I felt if a lot of people were getting those discounts, then resale value would be reflective of this.
franchise thiefdom like all dealers.
These dealers were getting all pissy with possible change in import laws allowing grey imports of new MB cars. Some were half the price new.
Toyota done that ages ago, squeeze dealers out on a technicality and then take over. Hitler may have beaten Hirohito but now Naruhito beaten the Krauts…
A few Mercedes dealerships are company owned.
Mercedes ripping off Tesla business model.
Think dealer wont stock this EV model to revolt, thus will make it harder for Benz to move into the EV market long term.
Sort sighted move by MB, they're shooting themselves in the foot.
They’re ripping off the sales model, but not the pricing model. This EQC should retail for more like $110k, not $150k.
Mercedes supplies all the steering components to Tesla, around 23% comes from the Merc factory. Tesla subsidises with "printed" money and are miles ahead while Merc engineers had scuffles with an outdated management.
Not just Mercedes all German manufactures are facing this threat with idiot management running these companies like Nokia.
Having experienced buying a car that was previously online only (Subaru BRZ), I can honestly say that haggling you are always better off even if you aren't good. A smile and an optimistic offer will always get you a few % off even if it ain't the absolute lowest.
One day this will be the norm for all manufacturers, thankfully. Dealerships are outdated and behind the times, they hate to change and it's becoming a huge issue in america. Haggling is stupid as hell, uncomfortable and makes no sense, they should just become show rooms and test-drive centres. Just give us a hard damn price and we can decide if it's worth it to us just like everything else.
One day……. not yet though.
one day the Chinese will take over the net and switch languages eliminating anything non Mandarin. Too bad if you are not smart enough to learn it…
They should bring American cars to Australia. Nothing like a GMC or Lincoln.
German toys are so booooooooring
Yeah, just what we need. More poorly-built gas guzzlers from the Holden mothership. There's a reason you don't see GMCs in Asia and Europe.
Sorry, I wasn't aware that the turbocharged v6s and v8s from our German friends consumed less gas.
Asia and Europe
Yes, there are reasons. European roads are narrow and Asians prefer public transport and don't necessarily have large families or wide roads. Not to mention the cost of owning a car in Asia.
European roads are narrow
European roads are like everywhere else, including Australia: narrow in cities and wider in the country. Do you think these countries have no trucks?
Asians prefer public transport and don't necessarily have large families or wide roads. Not to mention the cost of owning a car in Asia.
By that logic, there shouldn't be cars in Asia at all. Have you been to China? It's rotten with Honda, Toyota, and VW SUVs. Yet you won't find a single Escalade.
To go back to fuel, every automaker is doubling down on hybrids and EV while GMC continues pumping out oversized tin cans. Only in GMC's home market is their poor workmanship and casual disregard for efficiency excused. Outside the US, their cars don't rate.
European roads are like everywhere else, including Australia: narrow in cities and wider in the country. Do you think these countries have no trucks?
Seems you’ve only ever driven on the highways and main roads. Many country roads are narrow enough not to fit two passing cars on the sealed section. Get some real picker moments with oncoming traffic at times. English country roads are very narrow (except the main highways). I except many European roads are the same.
I would have assumed that german cars do actually use less fuel.
It's hard to make a direct comparison, but compare a v8 Ford mustang to an 8 cyl BMW M5
The BMW uses less fuel and produces more power.
The poor reputation of American cars is well deserved, however their engines are probably the stong point.
The poor reputation of American cars is well deserved, however their engines are probably the stong point.
The engines are strong typically, but aren’t known for being refined just brutish power. No need for economy or silence.
bring on the Ford Pinto's back. We need more bushfires…
Not enough Rangers self igniting…
Oh give me a break. The recall was based on vegetation accumulating underneath the car and posing a fire risk. Same goes for any offroader.
Don't make me list all the serious mechanical fault recalls from Mercedes and BMW. They still can't even build a decent hatchback without issuing recalls for steering wrack issues.
I can't tell if you're being serious or not. American cars are among the worst in the world, while Euro cars are fun to drive with excellent build quality for the most part.
Car dealers are the scum of the earth - only because they are professional liars. In the same basket as real estate agents and dodgy door-to-door sales people.
For my next Skoda Octavia in 2021, I want to be able to go on Skoda.com.au, pick a spec, colour, options etc and then have it delivered direct from Czech.
Having said that, I think there is a place for dealerships still, as I don't think fixed price online ordering meets customers every need for a car purchase. How does one test drive, get a feel for size and quality etc.
I think the issue is that the public see car dealers as a necessary evil, rather than a true valuable service. I'm sure Spackbace is a nice guy, but the way that he has to defend his profession against all these people crying out for a change in the industry is not great. It's possibly a symptom that people only tolerate dealerships because there's nothing to replace them and that they will eventually be seen as outdated and replaced.
It's telling that the biggest roadblock to removing dealerships is not why, but how? How many other industries have to constantly justify their existence?
I think the issue is that the public see car dealers as a necessary evil, rather than a true valuable service.
Agreed.
I also believe manufacturers prefer their dealer networks exist rather than having to sell direct. It's easier, it's effectively 'outsourcing' the sales part which I'm sure is fine so they can focus on the manufacturing. It also means they have way less staff under their employment.
I'm sure Spackbace is a nice guy
Yes I'm sure he is, but he's trained to lie for a living :P
people only tolerate dealerships because there's nothing to replace them
Yes, but as I mentioned, the manufacturers like it this way too IMO.
Yes I'm sure he is, but he's trained to lie for a living
What do they have to lie about? They can't make up or deny technical specs. Market indicators are there if you want them and the product is available from multiple sources. There are many alternatives. They can only sell like any other salesperson, trying to pitch you a dream. Perhaps used car dealers can tell some fibs about the car's history; what else?
Comparing car salespeople to real estate agents is like comparing a headache to cancer.
Comparing car salespeople to real estate agents is like comparing a headache to cancer.
LOL
What do they have to lie about?
Here's a few common ones:
"I'm not making any commission on this!"
"This is my lowest offer"
"I'm losing money at this price"
"These car mats are worth $1200, but I'll throw them in for free"
"You need paint protection, it's only $2000"
"No other dealer can offer you a price this low"
"I have a guy coming back tonight to sign the paperwork for this one, but you can get in first"
"I can't offer you this price after today"
"I have to check with my dealer principal"
"There's none of this same model stock anywhere else in the state"
etc.
@Skramit: We learnt to counteract what comes our way:
"I have no idea what my trade is worth"
"Yes, I'm ready to buy now if the price is right"
"No, I don't need to check with my husband/wife"
"No, I won't quote your price to the other dealer/s"
"My trade-in is in perfect condition"
"I have a guy coming back tonight to sign the paperwork for this one, but you can get in first"
Side note, have witnessed customers planning to come down on used cars, and it was sold before they got there, either by a walk-in or a colleague getting a deposit over the phone. Can also happen on new cars if it's the last of that model (before a new model comes out etc).
@spackbace: That's the issue then isn't it, that the relationship has become toxic at both ends. Sooner or later there will have to be a change, and one of those scenarios involves the dealership disappearing.
@cheng2008: It's always been toxic, that's why salespeople have a stereotype, no different to real estate sales. The internet made it so both sides can be deceptive to try to counter the other, except it also meant that salespeople have to be more careful as ever with the popularity of online reviews and surveys.
Treat a customer badly, they'll leave a bad review and it'll make it's way to you. Treat them badly but they buy a car, you get a shit review and everyone in the chain sees it, from department manager to dealer principal to owner to company rep.
@spackbace: It's a bizarre game that only a select few sickos actually enjoy. The rest of us just try to get around dealership crap as best we can with lies of our own.
My favorite for getting away from pushy/talkative salesmen is "I need to check with my wife". When they counter with "Let's make an appointment to bring her in to see it tomorrow" … I pause and think for a while, then I say, very cleverly: "No".
@Skramit: We have better shit to do than to follow up those who aren't interested. The number of people that are too afraid to say "I bought elsewhere" is insane! Just answer the call, or reply to the email and say that. By avoiding it, or saying "we'll just wait a bit longer" just means you'll stay on the call list and we'll have to keep calling you.
Oh and we secretly joke about "check with my wife" scenarios ;)
@spackbace: Agreed.
I'm always disappointed when the dealer doesn't want to talk about my new purchase after that moment :(
@spackbace: Last time I bought a new car I told the dealer I needed to check with the wife. I rang her, checked, then bought the car. Yes, some of us really are scared of our wives!
@Cheapskate Paul: That's fine lol we'll offer for you to call her right there, offer to borrow the car to take to her etc. Instantly work out if it's a genuine excuse or not :)
@spackbace: I would never buy a car without my wife seeing it, probably driving it as well. I'd guess its a genuine excuse for most people who have a spouse. Leveraging the excuse to get away from the pushy salesman doesn't mean it's not a true excuse at the same time.
@spackbace: Funny thing is I actually need to check with my wife since she would be the one driving the car and I was ready to buy right away if the price was right.
That was the first time we drove the car and first time we met the salesman. He was a genuine guy who gave us a good price (slightly above employee price) which I knew we could not match anywhere and we bought it then and there.
Always helps if the salesman is nice, knows his stuff and isn't trying to take you for a ride.
Always helps if the salesman is nice
For sure, and helps if both sides are the same. Can still haggle etc, but don't have to treat either side like shit in the process :)
@Skramit: Fair enough, but these lies are inconsequential if you realise there are a thousand other car sellers waiting to win you over. These are like white lies.
Most selling for profit is essentially a deceit of sorts - one wants to get the most from the other. If you don't hear the lie then the robbery is already built into the price as far as the market will tolerate.
I don’t understand. You can do that now.
Just walk into a dealer, spec the car and pay what the RRP is if that is your thing. No one forces you to haggle.
lol @ the dealers crying foul. There are a portion of customers who just want to put money down on a car, pick a colour and wait for delivery without having to negotiate their way through the 'botique' extravagnaza of a lavishly appointed multi-story showroom and dealership complex.
Though the relationship between dealers and factory for decades has been one of "Leave us to control the local retail markets and we will make sure we can sell as many cars as possible", now Mercedes is starting to see the writing on the wall. The factory used to just made the cars and the dealership network added value by looking after inventory control, ordering, finance, delivery and maintenance. Now as we move into "Industry 4.0" a lot of these value-added propositions don't make much sense.
-Inventory Control & Ordering: Car factories are now set up where cars can be individually ordered to spec and built from scratch through a production line in days. There's no longer any need for the dealership network to hold stock of common configurations. This also gives the customer the choice millions of configuration combinations. It's not inconceivable that an almost 100% automated direct link between website customer order and factory production order being the next logical step.
-Finance: All the big brands run their own significant financial services arm. Dealerships no longer need to offer go out and find a financier to offer products. The dealership finance people are now jsut admin paper pushers to pass your details to the financial services head office for approval. They are unnecessary middle men.
-Delivery: Traditionally the final step in the logistics of getting the car to the customer, quality control and achieving customer satisfaction. Putting a smile and a face to the brand. Logistics being so efficient and automated these days makes the actual delivery a non-issue where as the "your personal salesman" model of sales is quite outdated. People are now more loyal to brand names, rather than to their favourite sales person or dealer.
-Maintenance: Cars are becoming exceedingly reliable now. When EVs start selling in significant numbers there will be even less demand for regular maintenance.
One example of how this can work for a Luxury brand is how Apple operates. They have a small number of 'stores' which are not set up like a typical store and where not many sales are actually made, with the bulk of sales being online. The stores are not staffed with salespeople but with "Geniuses" who can help you out with any Apple product. Brands like BMW are already employing "BMW Geniuses." In the future car dealerships might consolidate to a few large, showy, central locations that showcase the brand and have a bunch of genius staff and delivery staff. Workshops would no longer be co-located but be in more industrial areas to lower costs and would be a shared resource. Maintenance could move to more of an "Apple care" type plan where you get a sort of insurance against things going wrong and provide some nominal yearly inspection.
Very, very rare that anyone buys a new car without sitting in it, test driving it etc.
That in itself throws a huge spanner in your plan. Sure, you might be happy buying without knowing how comfortable the seating position is for you, or if the acceleration is up to your standard, but the majority want to actually make sure it suits their needs.
Tesla sell off the prestige aspect of the brand, hence people put down pre-orders without knowing what the final car will actually be (hello cybertruck), but your run-of-the-mill brands don't have that advantage.
You'll still need retail outlets, with demonstrators, and then people just pay full RRP for their car. It won't go to a purely online ordering process, but both will work alongside each other.
It'll be interesting when it happens, because there's whole cultures who are brought up to haggle, it's in their nature. They struggle with fixed price selling
A possible solution to that would be the car company paying dealerships a set price to act as a showroom.
Or opening their own showroom like Tesla.
Manufacturers don't pay dealerships, it's the other way around
@spackbace: to make this happens, forget the concept of dealership.
the manufacturer either have to employ people to showcase the physical car and test drive and also create service centres.
Or give a contract to companies to do that.
That companies can be either new companies, or existing dealers.
Of course these dealers will take a huge profit cut.
And I doubt that we as customers will get a huge discount on cars using these models because
1. Mfgrs will use this opportunity to increase profit margin
2. They have increase cost for showcase/test drive and service centres.
Totally Agree re spec. This should allow the buyer to get exactly what they want without compromise. And bring back individual options! Sick of the "packs" they are sold in (don't see this happening though).
This is perfect for me, love no longer having to haggle which always thought was stupid way of conducting business. Especially if they can roll out online ordering. Pick the car you want, customise it, pay online and get it delivered. Works for everything else.
I guess effectively, you can get an online price and ask your dealer to price match it then if you want to buy from them (or potentially even beat it).