Automotive

Why Buying A Car Is So Awful

  • Last Updated:
  • Sep 19th, 2014 7:10 pm
Tags:
None
[OP]
Deal Addict
User avatar
Apr 4, 2004
3957 posts
333 upvotes
Toronto

Why Buying A Car Is So Awful

Why Buying A Car Is So Awful

Listened to this podcast from NPR's Planet Money series and was wondering if the same laws are true here in Canada? Too much work to research it myself.
To put it simply, car buying sucks because of outdated franchise laws in the states that protect franchisees. Do we have similar laws in Canada?

I wonder if one of the fast growing Chinese manufacturers would ever enter North America. If so, they could perhaps enter with a different sales/distribution model that would put pressure on the current method (assuming there is a demand for their product).

My recent car buying experience wasn't terrible, but I still dislike that I can't go to any dealership and pay the same price for the same vehicle and not be stuck in some high pressure tactics.
93 replies
Deal Guru
User avatar
Jan 10, 2008
13923 posts
27785 upvotes
Cant wait for the day we can buy cars online .This "dealership" thing and practices makes me sick
Deal Fanatic
User avatar
Feb 15, 2005
6254 posts
1788 upvotes
Buying a car in Canada sucks due to the adversarial relationship between the dealership and the customer.
1. The customer wants $2000 off a $17000 base model Kia Rio. This isn't going to happen because the dealer only has a $800 markup. Customers seem to think that dealers are making thousands on low-cost, high volume models. They don't. Most of the margin are in high value or "fully equipped" vehicles.
2. Dealers build $50,000,000 dealerships with marble floors, free coffee for everyone, PS3, etc, ec. Someone has to pay for this. The "acquisition fee" or equivalent can be up to $1000. That's YOUR share of their mortgage.
3. Profit chasing. Dealers add frivolous items like window/glass etching, security fee, advertising fees, etc, etc. Up to $1000 to cover the dealer's general operating costs.
4. Lack of understanding of standard and optional features from the customer. Ever notice that tiny writing 2 pixels high on the bottom of the commercials? Chances are that whatever is on the commercial is an option or the top-end model. Consumers just assume that it's included. And consumers don't understand the cost of these options.
5. High shop rate. See #2. Marble, coffee, PS3, and netflix isn't free.

I've been to many dealerships and there's very little high pressure sales. They get you at the signing with extended warranties, undercoatings, etchings, etc.

Last thing is that many dealerships are now part of a consortium. Don't like Dealer A? Well, Dealer B is probably part of the same consortium. Over here, Go Auto group, the Yachimec Group, the Pattison group, and the Weber group seem to own most of the dealerships covering all brands.
⬆⬆⬇⬇⬅➡⬅➡BA
Deal Fanatic
User avatar
Feb 15, 2005
6254 posts
1788 upvotes
stephroll wrote: Cant wait for the day we can buy cars online .This "dealership" thing and practices makes me sick
It's called www.costcoauto.com. USA only and fixed pricing, just like anything else at costco. Their staff has already done the work for you.
⬆⬆⬇⬇⬅➡⬅➡BA
Deal Addict
Feb 11, 2007
1124 posts
182 upvotes
Whitby
rf134a wrote: It's called www.costcoauto.com. USA only and fixed pricing, just like anything else at costco. Their staff has already done the work for you.
Useless. Selecting a car there reveals:
"This isn’t the price you’ll pay. Every eligible vehicle has Costco pricing exclusively for you. Locate and contact a participating Costco dealer to see your savings."

The price does not appear to be truly fixed or as printed. You still have to contact and speak to a dealer. The dream is to click a car, build and price, "add to cart" put down a deposit by credit card and select a nearby pickup location.

At least that site is a step towards that.
Deal Expert
User avatar
Feb 9, 2003
19149 posts
3372 upvotes
9347934 downvotes
Fortunately, my uncle works at a dealership, so I can walk in and get a car with minimum markup and no bs. He also has a lot of friends at other brands, theres a lot of movement, amongst former coworkers.
Deal Expert
User avatar
Nov 15, 2004
20083 posts
3953 upvotes
Toronto
Tesla Motors doesn't have dealers and uses the direct sale model, which has lead to them getting sued by dealer associations because bypassing them is apparently illegal in the US. Visit their store in Yorkdale and check them out.
[OP]
Deal Addict
User avatar
Apr 4, 2004
3957 posts
333 upvotes
Toronto
rf134a wrote: Buying a car in Canada sucks due to the adversarial relationship between the dealership and the customer.
1. The customer wants $2000 off a $17000 base model Kia Rio. This isn't going to happen because the dealer only has a $800 markup. Customers seem to think that dealers are making thousands on low-cost, high volume models. They don't. Most of the margin are in high value or "fully equipped" vehicles.
2. Dealers build $50,000,000 dealerships with marble floors, free coffee for everyone, PS3, etc, ec. Someone has to pay for this. The "acquisition fee" or equivalent can be up to $1000. That's YOUR share of their mortgage.
3. Profit chasing. Dealers add frivolous items like window/glass etching, security fee, advertising fees, etc, etc. Up to $1000 to cover the dealer's general operating costs.
4. Lack of understanding of standard and optional features from the customer. Ever notice that tiny writing 2 pixels high on the bottom of the commercials? Chances are that whatever is on the commercial is an option or the top-end model. Consumers just assume that it's included. And consumers don't understand the cost of these options.
5. High shop rate. See #2. Marble, coffee, PS3, and netflix isn't free.

I've been to many dealerships and there's very little high pressure sales. They get you at the signing with extended warranties, undercoatings, etchings, etc.

Last thing is that many dealerships are now part of a consortium. Don't like Dealer A? Well, Dealer B is probably part of the same consortium. Over here, Go Auto group, the Yachimec Group, the Pattison group, and the Weber group seem to own most of the dealerships covering all brands.
Yeah, not a fan of the consortiums, but understand the economics behind it.
I don't think you can blame the adversarial relationship on customer expectations or maximizing dealership profits. Every major retail chain/business wants to do the same. But for some reason, people have greater disdain for the car buying experience than any other purchasing decision.
Perhaps it is simply because of the high cost in car ownership, or maybe an unfair perptuation of a stereotype.

But I still don't like the fact that I can't got to Dealer A and buy the exact same car for the exact same price as I can get from Dealer B. I'm not buying a car so I can walk on marble floors, drink coffee, or play video games.
[OP]
Deal Addict
User avatar
Apr 4, 2004
3957 posts
333 upvotes
Toronto
Piro21 wrote: Tesla Motors doesn't have dealers and uses the direct sale model, which has lead to them getting sued by dealer associations because bypassing them is apparently illegal in the US. Visit their store in Yorkdale and check them out.
Tesla's Yorkdale store is pretty nice. But unfortunately, they'll never sell in high enough volumes for the industry to change.
BTW, a judge dismissed the suit, but it is being appealed.
Newbie
Dec 8, 2012
12 posts
2 upvotes
GRIMSBY
Dealers are here to make money fellas. They're not here to make zero dollars selling you a brand new car. NOBODY deserves to be ripped off, and at the same token, i dont think there is any harm in them making a little bit of cash. As a dealer for Toyota, I often tell stubborn customers how much money we wanna make on a certain deal and take it from there. I feel even worse for the new car salesman that get absolutely nickle'd and dime'd to death by cheap cheap customers that take the price down the road so the other dealer can beat it by 50-100 dollars---sad.

Sometimes, excellent customer service and white glove treatment have a certain value too. As for the dealership itself having "marble floors and a PS3" you need to keep in mind a couple of things. 1. the way the dealership looks is governed and monitored by the manufacturers head office. 2. Do you wanna walk into a ***** hole when buying or servicing your car? Most likely not :) High pressure sales tactics are a thing of the 70's and 80's- we have every right to ask you for the business, but no one should HAMMER you into a deal :)
Deal Expert
User avatar
Nov 15, 2004
20083 posts
3953 upvotes
Toronto
mjl_toronto wrote: Tesla's Yorkdale store is pretty nice. But unfortunately, they'll never sell in high enough volumes for the industry to change.
BTW, a judge dismissed the suit, but it is being appealed.
Maybe not their current models, but if they ever sell something that competes in the Nissan Leaf/Honda Civic range I'll be on it in a second, even if the cost of everything but the actual car stays the same. $600 a year for servicing doesn't sound too bad.
Deal Expert
Mar 23, 2004
31746 posts
13109 upvotes
Piro21 wrote: Tesla Motors doesn't have dealers and uses the direct sale model, which has lead to them getting sued by dealer associations because bypassing them is apparently illegal in the US. Visit their store in Yorkdale and check them out.
And with models starting at "just" $52k, I'm sure RFDers are starting to lineup already, lol.
Deal Expert
Dec 4, 2010
19519 posts
2234 upvotes
Quarantine Bubble
Tesla Can suck my nuts. I hope Nikolas heirs are getting royalties.
[OP]
Deal Addict
User avatar
Apr 4, 2004
3957 posts
333 upvotes
Toronto
Striker01 wrote: Dealers are here to make money fellas. They're not here to make zero dollars selling you a brand new car. NOBODY deserves to be ripped off, and at the same token, i dont think there is any harm in them making a little bit of cash. As a dealer for Toyota, I often tell stubborn customers how much money we wanna make on a certain deal and take it from there. I feel even worse for the new car salesman that get absolutely nickle'd and dime'd to death by cheap cheap customers that take the price down the road so the other dealer can beat it by 50-100 dollars---sad.

Sometimes, excellent customer service and white glove treatment have a certain value too. As for the dealership itself having "marble floors and a PS3" you need to keep in mind a couple of things. 1. the way the dealership looks is governed and monitored by the manufacturers head office. 2. Do you wanna walk into a ***** hole when buying or servicing your car? Most likely not :) High pressure sales tactics are a thing of the 70's and 80's- we have every right to ask you for the business, but no one should HAMMER you into a deal :)
I'm not against dealers/salespeople making money. But I am against different prices for the same vehicle.

Since you are a dealer, would happen to know if there are laws are in place in Canada that protect franchise owners?
Piro21 wrote: Maybe not their current models, but if they ever sell something that competes in the Nissan Leaf/Honda Civic range I'll be on it in a second, even if the cost of everything but the actual car stays the same. $600 a year for servicing doesn't sound too bad.
Supercooled wrote: Tesla Can suck my nuts. I hope Nikolas heirs are getting royalties.
ES_Revenge wrote: And with models starting at "just" $52k, I'm sure RFDers are starting to lineup already, lol.
Why all this talk about Tesla cars? I'm interested in their method of selling, not the car.
Deal Fanatic
User avatar
Feb 15, 2005
6254 posts
1788 upvotes
Striker01 wrote: Dealers are here to make money fellas. They're not here to make zero dollars selling you a brand new car. NOBODY deserves to be ripped off, and at the same token, i dont think there is any harm in them making a little bit of cash. As a dealer for Toyota, I often tell stubborn customers how much money we wanna make on a certain deal and take it from there. I feel even worse for the new car salesman that get absolutely nickle'd and dime'd to death by cheap cheap customers that take the price down the road so the other dealer can beat it by 50-100 dollars---sad.

Sometimes, excellent customer service and white glove treatment have a certain value too. As for the dealership itself having "marble floors and a PS3" you need to keep in mind a couple of things. 1. the way the dealership looks is governed and monitored by the manufacturers head office. 2. Do you wanna walk into a ***** hole when buying or servicing your car? Most likely not :) High pressure sales tactics are a thing of the 70's and 80's- we have every right to ask you for the business, but no one should HAMMER you into a deal :)
I know certain brands have a specific image to uphold, but fold the price of the dealership into the price. No one wants to see $1000 of BS fees.

Those cheap (aka devil customers) are the least wanted for any retail business. One of the reasons I liked Saturn is due to their fixed pricing.
⬆⬆⬇⬇⬅➡⬅➡BA
Deal Expert
User avatar
Feb 9, 2003
19149 posts
3372 upvotes
9347934 downvotes
Vernon (Texas) Auto Group has fixed pricing. I was having a hard time finding a decent used truck, my plan was to buy new from there if I didn't find anything by spring.
Deal Fanatic
Oct 26, 2008
6639 posts
2366 upvotes
BC
rf134a wrote: ..............................
Last thing is that many dealerships are now part of a consortium. Don't like Dealer A? Well, Dealer B is probably part of the same consortium. Over here, Go Auto group, the Yachimec Group, the Pattison group, and the Weber group seem to own most of the dealerships covering all brands.
Very true! Most car shoppers are blissfully unaware of who actually owns a dealership as opposed to who manages it.

Out here, the Nissan and Honda dealerships are in the same consortium, and some consortiums are not just regional, but Canada-wide.

For example, Dr. Sylvester Chuang of Oakville - http://www.thebulletin.ca/cbulletin/con ... id=1000566
bought the Mercedes dealership in Victoria about 7 years ago, and then the BMW Mini dealership, closely followed by building a brand new facility for it across town.

As long as this trend in wealthy ownership continues, I can't see the buying & selling model changing too quickly.

There may not be much money to be made in selling new cars, but owning a portfolio of dealerships obviously is rewarding.
Deal Fanatic
Nov 3, 2007
8336 posts
1989 upvotes
Toronto
macnut wrote: There may not be much money to be made in selling new cars, but owning a portfolio of dealerships obviously is rewarding.
It's like owning the entire street in Monopoly!
Deal Addict
User avatar
Aug 22, 2008
2891 posts
253 upvotes
Supercooled wrote: Tesla Can suck my nuts. I hope Nikolas heirs are getting royalties.
Agreed.

Even sadder is that most people on this planet have no idea who Nikola Tesla was....
The best way to become ordinary is to follow the advice of ordinary people.
Unless you've actually tried something, your comments are virtually meaningless.
Condemnation before investigation is the highest form of ignorance

Top