According to the video below, the Toyota’s (Lexus) CEO wants to sale cars directly to US customers. Comments?

 

Of course he does. Very difficult to do here because of the franchise laws

 

EV's are software defined vehicles and in many cases have issues corrected remotely. Aside from routine tire maintenance, the main failures will be around electric motors and batteries and software updates. I see EV's becoming like home appliance repair companies where a truck shows up at your house with Tesla, Toyota, GM, etc. on the side showing all they repair/maintain. This alone will cut costs considerably as brick and mortar will be needed much less.

 

i couldn't get through the 5 month old clickbait video. where did toyota ceo 'announce' this?

dealers should be showrooms and service, but not sales... they totally suck at the sales process for most consumers, AND they're hurting many manufacturers including toyota by slathering on b.s. 'packages' and 'adm' (additional dealer markup) on models in demand.

 

Looks like a fictional video to me.

As far as that great Tesla sales model, I have to ask, how do you trade in your old car for a new Tesla? In Indiana. I pay 7% sales tax on cars and most other things. If I trade a $35,000 used car for a $55,000 new car, I pay $20,000 plus $1400 tax (7% on the $20,000 cash difference). If I sell my old $35,000 car to a private buyer, I get $35,000 and the buyer pays $2450 tax directly to the state (7% on his $35,000 cost). Then I pay $55,000 for the new car plus $3850 tax (7% of $55,000). As much bother as it is to negotiate a trade-in value and a discount off MSRP with a dealer, I will do it every time in order to avoid trying to make a private cash sale and then paying tax on the whole price of a new car. Dealers can be a pain when you are making a new car deal, but they can make the trading process very easy and convenient compared to the alternative.

 

ICE cars are loaded with electronics there isn't much difference outside of engine management. Maintenance of EVs of course is drastically lower you have brake fluid that's basically it.
If he did Toyota dealers would have raised a giant stink. Didn't happen. The video is so dumb it claims in vague terms that Toyota will somehow sell direct and keep their dealers happy. Sure.

 

The existing franchise agreements OEMs have in the US and the US franchise laws make this impossible for legacy automakers. Brand new automakers like Tesla and Lucid and Rivian etc can do this, but not any automaker that already has existing franchise agreements.

 

Some states tax it the less beneficial way anyway.

Regardless, you're likely losing more on the lower dealer trade than you are gaining on the tax saving.

 

The Scion franchise (which was once part of Toyota) got around that nonsense by outlawing price-markups (or discounts) and simply mandating all dealer-sales be at MSRP....somewhat like Saturn's policy, except that Saturn also had a 30-day money-back guarantee if one was not completely satisfied, had buyer's remorse, and there was no damage to the vehicle. Both brands ultimately failed, NOT because of those policies, but because the vehicle-content of the brands was mismanaged.

There was one weakness, however, at Saturn with that policy.......and I don't remember if that was also the case with Scion. Dealers COULD, on vehicles in high-demand, add factory-approved accessories to the vehicle, and sell that at factory-approved accessory-prices, thus increasing their profits on the sale....which was already around 14% even without accessories.

 

Same way with Tesla like any other brands. The only difference is their offer is ridiculously low. I think it's their intention. They don't want to deal with/sell your trade in.

You're most likely right. Stealers know and will factor this in and low ball because they know it's not convenient for customers to go sell somewhere and come back to get the car. In my history of trading, one Lexus would always do this in my favor because apparently I had gotten many from them. When they had a new big boss, they stopped matching. One BMW, one MB did match. Last BMW wanted to keep it 200 short. Carmax is only a mile from them but I didn't want to deal with any potential at CarMax so I just let them have 200.

 

To be clear, they actually can't do that. Franchise laws don't allow a manufacturer to specifically outlaw selling products over MSRP (or under), they can do that indirectly but they can't mandate it. Manufacturers do that by withholding inventory and financing to dealers who won't follow along. Scion and Saturn existed in a time where there weren't markups, dealers played ball because it gave them a way to resist discounting...but if they had the opportunity to sell cars for over MSRP and pocket all that profit it would have been a different story lol

Manufacturers HATE dealers selling over MSRP, it doesn't benefit them financially and only makes them look bad...but they can only control it so much.

 

Toyota has its holy owned flagship dealers in Europe that I know about (probably in other continents too).

It is still a dealer.

My Tesla dealer thats 1 mile from my house is still a dealer. It has a showroom, has sales people, has service bays and service advisors.

Only difference between Toyota owned dealer thats 5 miles from my house and Tesla owned dealer thats 1 mile from my house, is that with Tesla, app helps when ordering and communicating with service. So instead of emailing me, they contact me via app.

Still a dealer.

 

Classic mark-ups existed even before Saturn and Scion came along. I distinctly remember big mark-ups on the first Honda CRX models in 1984/85, the first Mazda Miatas in 1989, and the first Toyota MR2s in the mid-1980s.

With Saturn, it was not so much a matter of franchise laws as company policy. No one forced you to become a Saturn Retailer (Dealer)...it was voluntary, but, in order to receive a franchise, you signed an agreement with Saturn that you would charge only MSRP, although you were allowed to add on approved accessories. If you did not keep your end of the bargain, and customers complained, you could lose your franchise.

I bought two new Saturns, BTW (and actually got my money back on the second one within the 30-day period, because I considered it a lemon) ......I knew their sales/service policies well.

 

right on.

yes, but we don't have manufacturer owned dealers in the u.s.

i believe such an agreement would be illegal. toyota must have done it some other way, such as limiting inventory depending on average selling price of a franchise or something, although any kind of price fixing is illegal.

this press release from toyota is interesting though. it says dealers could set selling prices but customers would not be able to negotiate from it. so perhaps that stopped dealers from going higher, knowing customers would just go elsewhere since they couldn't 'haggle'.

https://pressroom.toyota.com/scion-transition-toyota/

snip:

 

You never had widespread markups before like we did after COVID.

You are incorrect. Franchise law applies to all franchise agreements, a franchisor is not legally able to control what pricing you set in that way. So, no...they cannot take a dealer's franchise away if that dealer refused to abide by the no haggle policy or marked a car up over MSRP. They can withhold incentives etc to dealers who won't play ball, but they could not take their franchises away or limit their ability to set their own pricing.

So yes there was a "commitment" signed, but that commitment really meant nothing because there was no way to enforce it since it wasn't legal. You can't hold a party to an agreement that is not legal.