Blog

Short blog posts, journal entries, and random thoughts. Topics include a mix of personal and the world at large.

Straight cash, homie

The greatest thing Tesla did for the American car market isn’t being the vanguard for the electric vehicles revolution. It is offering an alternative to the traditional dealership method of car buying. For once, you can simply tap on your phone to buy a car, no hassles, no begging some asshole across a desk to sell you a car. The price is the price, no add-ons, no hidden fees.

I’d buy a Tesla car on that procedural benefit alone.

But I’d have to want a Tesla car, which I don’t. So to buy almost any other brand, I have to set foot inside a dealership, and talk to a guy or gal. The incentives at play cannot be more juxtaposed. The customer is trying to pay as little as possible, and the salesperson is trying to sell for as much as possible - because their proverbial food-on-the-table depend on it. When two sides are so directly opposed, each inch given and taketh feels especially painfully emotionally.

By asking to pay a lower price for a car, you are directly hurting the paycheck of the salesperson. It’s kind of perverse when you think about it. That relationship is entirely adversarial, no matter how cordial the conversation may be.

What doubles that whammy is when a customer like me shows up: paying in cash, no vehicle to trade in, and declining all add-ons.

You see, it’s not just on the net profit of a car that a dealership can make money off a customer. When you have a vehicle to trade in, the dealer makes money when they sells that to another party. When you finance a car purchase, banks kick back money to the dealer. Call it a finder’s fee. And we all know about add-ons: extended warranties, wheel insurance, paint protection, et cetera.

So with me, I am robbing the dealership of two thirds of the potential profits. This creates a slightly awkward situation because the sales department knows they are not going to make as much money off me. Depending on the particular car and brand, selling me a car might even be a waste of time! Why make $300 from me when the next person - financing, with trade-in, and amicable to add-ons - is a walking $900 sign asking to be snatched. It would take selling three cars to three of me to equal that one transaction.

I am not surprised then when their attitude with me isn’t as favorable compared to a customer with higher profit potential. Again, the incentives are perverse. If my salary is entirely commission based, of course I am going to treat the higher potential customers with more enthusiasm, if not complete favorable bias.

Try it next time: nothing kills the mood faster than telling a car salesperson that you are paying in cash fully.

Punk the game

It looks like a ton of people are taking advantage of buying a new electric car before the $7,500 Federal tax rebate expires at the end of September. I’ve seen plenty of brand new Tesla Model Ys running around. I would absolutely buy one too, if I didn’t already have a car that I seldomly drive. (I am never selling the M2.) Don’t need another one, that’s for sure.

But if I were in the market for a car, Tesla is the only choice from someone like me who despises hassle. Tesla’s direct sale model, with no haggle pricing and ease of purchasing (do the entire transaction on your phone) is such a gamer changer. Who the heck wants to ever step foot inside a dealership to beg some asshole to please take your money? In a capitalist world where lots of middlemen exist simply to grab a piece of the cake and add zero value, car salesmen are right at the top.

Though I don’t blame them for their ill reputation. It’s the game that’s the problem. The auto dealership sales method creates an adversarial relationship between the buyer and salesperson. Buyer wants to pay as little as possible, and the salesperson wants to sell as pricey as possible (the sales commission alone certainly incentivizes it). Add to that mixture auto manufacturers playing inventory games (looking at you, Toyota), and it’s an instant recipe for bruised egos and hurt feelings.

For those of us outside of 1% earners, car buying through dealerships is just not an enjoyable task. That in it of itself is enough for me to keep the M2 forever. I don’t want to go through the hassle of selling that and buying another car. If the game sucks, we don’t have to play it.

I want to DIY

Speaking of routine maintenance on my BMW M2. For now, I still take the car to the dealership for servicing. The first three years of that was free - every new BMW sold in America has that perk. Then I prepaid for the following two years of maintenance for about $800.

That may read super expensive to you, the person who takes your car to the local Jiffy Lube for $35 oil changes (perhaps it is much higher these days, what with the rampant inflation going on). But that $800 is for more than just two oil changes. Plus, I get a free rental car from the dealership. It would be nice if they give me one of those sharp-looking BMW X1 SUVs for a test drive…

But I will be in a conundrum after year five of owning the M2. Do I continue to pay dealership prices? Once you start changing out spark plugs and the rear differential fluid (every three years), the invoice gets mighty high. If I remember correctly, it’s about $3,000 to change out a full set of four brake pads and rotors! Good thing I don’t put that many miles on the car…

The dream is to have a small warehouse space when I can do all the servicing myself. A space completely dedicated to the car. Obviously, that doesn’t solve the cost problem that I was just rambling about the paragraph before. In fact, paying rent for a warehouse would surely be more expensive than paying for servicing at the dealership. But at least I can be sure the job is done correctly. The old adage goes: “If you want something done right, you do it yourself.” I would like nothing more than to have the space and tools to maintain my cars properly, with my own hands.

Ask any car enthusiast again

Another horror story I ran into on the r/cars subreddit is this story of a Subaru dealership messing with a customer’s WRX. Allegedly, a service tech took this guy’s WRX out to learn how to drive a manual transmission. As one would expect, some mechanically destructive stuff ensued. They even washed the WRX, after the customer specifically asked the dealership not to. It’s a complete violation of the trust between customer and business. Next to having your car stolen, this is another worst nightmare as car enthusiast.

This story brings up a good reminder: very few people know how to drive a stick-shift these days, especially the younger generation. Think about the age group of the minimum-wage dealership porters tasked with moving cars. Do you really expect some young thing in his 20s to know how to operate manual transmission? And I don’t even put the blame on him! Stick-shift cars are so relatively rare that the opportunities to learn are difficult to come by.

Owners of a cars with a manual gearbox have a conundrum, then: can you trust a dealership to have someone capable of moving it around properly? We’re not even talking about the actual servicing!

It depends on the brand, too. I have trust in a Porsche dealership, because manual Porsches are high-dollar sports cars. The dealers are used to shuffling around expensive metal. A Honda dealership I would be highly anxious about taking a Civic Type R in for servicing. Not only is it likely the only manual transmission car the service department sees all year, but the rare Type R stands out so specially that some young technician might be enticed to take it out for a joy ride.

Solution? I wouldn’t buy another stick-shift sports car in the future without the capability and space to service it myself. (My current BMW M2 is a dual-clutch automatic.)

Beg some asshole

On a recent perusing of Reddit, I encountered a discussion about how difficult it still is to buy a new car these days. Inventories remain low, therefore dealership markups are still a thing to contend with. Basic supply and demand: whichever party has the power can dictate the terms.

Of course, that doesn’t mean people can’t complain about it. Especially those who want to buy a new car, but not exactly in a hurry to do so. These buyers can wait it out and try different dealerships to get the best price possible. But that in itself can be a time consuming, frustrating process. You’re begging people to shut up and take your money, yet they won’t do it. One Reddit commenter summed it up perfectly: “I just fundamentally can't bring my self to go beg some asshole to take my 60K.”

I think that is a big reason why the Tesla Model Y is the best selling vehicle - in the world - for the first quarter of 2023. Tesla sells cars directly to the customer, one price (that can change periodically), no markups or discounts. You can do the entire transaction on your smartphone, never needing to talk to a dealership salesperson. There isn’t a finance manager to upsell you on extended warranties either. In a time when when finding a car at MSRP is akin to hitting the lottery, the Tesla method of selling is highly attractive.

The pendulum will eventually swing back in the customer’s favor. Unless the traditional automaker constrain supply intentionally. That would be too cynical. I don’t think the automakers can sell (especially) electric vehicles while still relying on the dealership/markups method. Tesla’s direct-sale model will simply continue to eat their proverbial lunch. Those with the money and patience want low hassle above all else.

Car buying dread

Early next year and I maybe (hopefully) will be in the market for another car. As I get older the traditional car buy process is just tiring. I bet a big reason Tesla cars are so popular is the absolute ease of buying one. You wouldn’t even have to leave the house! It can all be done online, from selection to financing. At the end your car gets delivered right to your home or desired location (mistress’ home).

Direct-to-consumer sale is where it’s at. It’s like buying a car on Amazon. You skip the headache of negotiating a price with a dealership salesperson (Tesla is famously one static price). In this current climate of low inventory, the customer is negotiating from a huge disadvantage. And that’s only the first gauntlet. Up next is the financing department, where they upsell you on extended warranties and maintenance plans. Better look at the contract carefully before you sign.

The quickest car-buying process I ever did still took a bit over two hours at the dealership. And that’s with me already agreeing to the price via email. In a time when my generation and younger are so used to buying stuff online and having it shipped to us (always a ton of Amazon boxes in the recycling bins during the holidays), the old way of buying a car at a franchise dealership is hugely obsolete. Traditional car brands are losing out to Tesla in this way.

What we want is options. The dealership model can stay, but automakers should offer the option to buy directly from them - online. That way the old timers can get their coffee and scones while a salesperson show them the intricacies of a particular car, while people like me - who already know exactly what I want - can simply do a few clicks on the smartphone to order the car.

Besides, dealership still have an important role that isn’t sales: servicing.

Test drive: BMW M340i

In buying a car from a luxury brand such as BMW, you pay for the privilege of excellent service at their dealerships. One such perk is the availability of service loaners, something mainstream brands aren’t wont to provide (at least the local Toyota dealership offers a shuttle). The convenience of dropping your car off and then leaving in a replacement car cannot be overstated. UBER is nice and all, but driving yourself is better, especially during this pandemic of ours.

Service loaners also provide a great opportunity to sample other cars from the same manufacturer. Sadly, often times dealerships stick you with the most poverty-spec model. Even a premium automaker like Porsche provides owners with the base-model Macan, the least expensive car they produce. Why not use the latest 911 as a loaner? Perhaps the extended “test drive” can entice a few to actually buy it. Missed opportunity, I would say.

Whether by luck or on purpose, I was provided with a brand-new BMW M340i as a courtesy car when I took the M2 Competition for its first service last week. The loaner barely has 50 miles on it, with protective wrap still present on the media displays. Maybe M-car owners get better treatment? I was expecting the lowest spec X1, so it’s a pleasant surprise to get the top-trim 3 Series - an over $60,0000 car. Obviously, I took full advantage of the situation and drove the M340i as extensively as I can during a working Friday.

With 382-horsepower on tap, the BMW is effortlessly quick and comfortable. The latest 3 Series have grown in size, but somehow the interior still feels intimate and cramped. The ZF 8-speed automatic is expectedly superb, though not as rapid to shift as the dual-clutch gearbox in my M2. The M340i is a competent cruiser that’s perfect for commuting, with enough power to get you into trouble very easily.

However, the steering is dead numb. The M2’s rack isn’t exactly super feel-some, but the M340i is ever worst. If the forthcoming M3 keeps this steering, I’m not sure it can be considered a proper driver’s car.