Car dealership

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Typical car dealership (in this case a Jeep dealer) selling used cars outside, new cars in the showroom, as well as a vehicle entrance to the parts and service area in the back of the building Car dealership in Rockville Maryland Jeep.jpg
Typical car dealership (in this case a Jeep dealer) selling used cars outside, new cars in the showroom, as well as a vehicle entrance to the parts and service area in the back of the building
An aerial view of auto dealer's service in Kuopio, Finland Ilmakuva1 (Large).png
An aerial view of auto dealer's service in Kuopio, Finland
Service and repair entrance Car dealership in Rockville Maryland shop entrance.jpg
Service and repair entrance
Auto dealer's service and repair facility Car dealership in Rockville Maryland shop 1.jpg
Auto dealer's service and repair facility
Dealer for vintage cars Beverly Hills Heritage Classics P4060231.jpg
Dealer for vintage cars

A car dealership, or vehicle local distribution, is a business that sells new or used cars at the retail level, based on a dealership contract with an automaker or its sales subsidiary. It can also carry a variety of Certified Pre-Owned vehicles. It employs automobile salespeople to sell their automotive vehicles. It may also provide maintenance services for cars, and employ automotive technicians to stock and sell spare automobile parts and process warranty claims.

Contents

History of car dealerships in the United States

The early cars were sold by automakers to customers directly or through a variety of channels, including mail order, department stores, and traveling representatives. The first dealership in the United States was established in 1898 by William E. Metzger. Today, direct sales by an automaker to consumers are limited by most states in the U.S. through franchise laws that require new cars to be sold only by licensed and bonded, independently owned dealerships. [1] The first woman car dealer in the United States was Rachel "Mommy" Krouse who in 1903 opened her business, Krouse Motor Car Company, in Philadelphia, Pennsylvania. [2]

Car dealerships are usually franchised to sell and service vehicles by specific companies. They are often located on properties offering enough room to have buildings housing a showroom, mechanical service, and body repair facilities, as well as to provide storage for used and new vehicles. Many dealerships are located out of town or on the edge of town centers. An example of a traditional single proprietorship car dealership was Collier Motors in North Carolina. [3] Many modern dealerships are now part of corporate-owned chains such as AutoNation with over 300 franchises. Dealership profits in the US mainly come from servicing, some from used cars, and little from new cars. [4]

Most automotive manufacturers have shifted the focus of their franchised retailers to branding and technology. New or refurbished facilities are required to have a standard look for its dealerships and have product experts to liaise with customers. [5] [6] Audi has experimented with a hi-tech showroom that allows customers to configure and experience cars on 1:1 scale digital screens. [7] [8] In markets where it is permitted, Mercedes-Benz opened city centre brand stores. [9]

Tesla Motors has rejected the dealership sales model based on the idea that dealerships do not properly explain the advantages of their cars, and they could not rely on third party dealerships to handle their sales. However, in the United States, direct manufacturer auto sales are prohibited in almost every state by franchise laws requiring that new cars be sold only by dealers. [10] In response, Tesla has opened city centre galleries where prospective customers can view cars that can only be ordered online. [11] [12] These stores were inspired by the Apple Stores. [13] Tesla's model was the first of its kind, and has given them unique advantages as a new car company. [14]

Dispute

At least one study has found that franchises increase car costs. [15]

Additionally, the issuance of new dealership licenses is subject to geographical restriction; if there is already a dealership for a company in an area, no one else can open one. This has led to dealerships becoming in essence hereditary, with families running dealerships in an area since the original issuance of their license with no fear of competition or any need to prove qualification or consumer benefit (beyond proving they meet minimum legal standards), as franchises in most jurisdictions can only be withdrawn for illegal activity and no other reason. [16]

This has led to consumer campaigns for establishment or reform, which have been met by huge lobbying efforts by franchise holders. New companies trying to enter the market, such as Tesla, have been restricted by this model and have either been forced out or been forced to work around the franchise model, facing constant legal pressure. [17]

Multibrand car dealers

Multibrand and multimaker car dealers sell cars from different and independent carmakers. [18] [19] Some are specialized in electric vehicles. [20] [21]

Auto transport

Auto transport is used to move vehicles from the factory to the dealerships. This includes international and domestic shipping. It was largely a commercial activity conducted by manufacturers, dealers, and brokers. Internet use has encouraged this niche service to expand and reach the general consumer marketplace.

See also

Organizations

Related Research Articles

Lexus Japanese luxury vehicle brand owned by Toyota

Lexus is the luxury vehicle division of the Japanese automaker Toyota. The Lexus brand is marketed in more than 70 countries and territories worldwide and is Japan's largest-selling make of premium cars. It has ranked among the 10 largest Japanese global brands in market value. Lexus is headquartered in Nagoya, Japan. Operational centers are located in Brussels, Belgium, and Plano, Texas, United States.

Car dealerships in the United States

In the United States, a car dealer is a business that sells cars. A car dealership can either be a franchised dealership, which is a retailer that sells new and used cars, or a used car dealership which only sells used cars. In most cases franchised dealerships include certified pre-owned vehicles, employ trained automotive technicians, and offer financing. In the United States, direct manufacturer auto sales are prohibited in almost every state by franchise laws requiring that new cars be sold only by dealers.

Captive import is a marketing term and a strategy for a vehicle that is foreign-built and sold under the name of an importer or by a domestic automaker through its own dealer distribution system.

AutoNation American automotive retailer

AutoNation is an American automotive retailer based in Fort Lauderdale which provides new and pre-owned vehicles and associated services in the United States. The company was founded by Wayne Huizenga in 1996, and has more than 360 retail outlets.

Sonic Automotive is a Fortune 500 company based in Charlotte, North Carolina, and is the fifth largest automotive retailer in the United States. The company's founder and Executive Chairman O. Bruton Smith is also the Executive Chairman and a director of Speedway Motorsports.

Automobile repair shop

An automobile repair shop is an establishment where automobiles are repaired by auto mechanics and technicians.

Tesla, Inc. American automotive and energy company

Tesla, Inc. is an American electric vehicle and clean energy company based in Palo Alto, California. Tesla's current products include electric cars, battery energy storage from home to grid-scale, solar panels and solar roof tiles, as well as other related products and services. In 2020, Tesla had the highest sales in the plug-in and battery electric passenger car segments, capturing 16% of the plug-in market and 23% of the battery-electric market. Through its subsidiary Tesla Energy, the company develops and is a major installer of solar photovoltaic energy generation systems in the United States. Tesla Energy is also one of the largest global suppliers of battery energy storage systems, with 3 GWh of battery storage supplied in 2020.

In the automotive industry, the term Big Three refers to a country's three largest automobile manufacturers.

Jeep-Eagle

Jeep-Eagle was the name of the automobile sales division created by the Chrysler Corporation after the US$2 billion takeover of American Motors Corporation (AMC) in 1987. The division marketed a variety of vehicles until 1997.

Automotive industry in China Overview of the automotive industry in China

The automotive industry in China has been the largest in the world measured by automobile unit production since 2008. Since 2009, annual production of automobiles in China exceeds both that of the European Union and that of the United States and Japan combined.

Pre-production car

Pre-production cars are vehicles that allow the automaker to find problems before a new model goes on sale to the public. Pre-production cars come after prototypes, or development mules which themselves are preceded by concept cars. Pre-production vehicles are followed by production vehicles in the mass production of them for distribution through car dealerships.

Manheim, Inc. is an automobile auction company and the world's largest wholesale auto auction based on trade volume with 145 auctions located in North America, Europe, Asia and Australia. As a subsidiary of Cox Automotive, a subsidiary of privately owned Cox Enterprises, Inc. based in Atlanta, Georgia, Manheim's primary business is wholesaling vehicles via a bidding process using traditional and online formats. Manheim also provides other vital dealership and wholesale services, such as financing, title work, transportation, recovery, auto body repair, dealership management systems, dent repair and automotive reconditioning, and automotive re-marketing at each location.

National Automobile Dealers Association

The National Automobile Dealers Association (NADA) is an American trade organization representing nearly 16,500 franchised new car and truck dealerships, both domestic and foreign. Established in 1917, the organization is based in Tysons Corner, Virginia. As the automotive retail industry's primary trade association, NADA monitors federal legislation and regulation affecting dealerships and publishes forecasts and reports about industry trends. American Truck Dealers, established in 1970, is a division of NADA representing nearly 1,800 heavy- and medium-duty truck dealerships throughout the United States.

Car finance refers to the various financial products which allow someone to acquire a car, including car loans and leases.

The automotive industry crisis of 2008–2010 was a part of the financial crisis of 2007–2008 and the resulting Great Recession. The crisis affected European and Asian automobile manufacturers, but it was primarily felt in the American automobile manufacturing industry. The downturn also affected Canada by virtue of the Automotive Products Trade Agreement.

The Motor Vehicle Owners' Right to Repair Act, sometimes also referred to as Right to Repair, is a name for several related proposed bills in the United States Congress and several state legislatures which would require automobile manufacturers to provide the same information to independent repair shops as they do for dealer shops.

Automotive industry in the United States Began in the 1890s and, as a result of the size of the domestic market and the use of mass production

The automotive industry in the United States began in the 1890s and, as a result of the size of the domestic market and the use of mass production, rapidly evolved into the largest in the world. The United States was the first country in the world to have a mass market for vehicle production and sales and is a pioneer of the automotive industry and mass market production process. During the course of the 20th century global competitors emerged especially in the second half of the century primarily across European and Asian markets, such as Germany, France, Italy, Japan and South Korea. The U.S.A is currently second among the largest manufacturer(s) in the world by volume.

Homer B. Roberts (1885–1952) was a graduate of Kansas State Agricultural College and veteran of World War I who was the first black man to attain the rank of lieutenant in the United States Army Signal Corps. He began his auto business by placing ads in the local paper advertising used cars. By the end of 1919, Roberts had negotiated over 60 car sales exclusively for African-American buyers. He hired two salesmen to work his lot, offered auto insurance and payment terms to customers, and later founded Roberts Motors, the first African-American owned car dealership in the United States.

Tesla, Inc. has faced dealership disputes in several U.S. states as a result of local laws. In the United States, direct manufacturer auto sales are prohibited in many states by franchise laws requiring that new cars be sold only by independent dealers. The electric car manufacturer Tesla maintains that to properly explain to their customers the advantages their cars have over traditional vehicles with an internal combustion engine, they cannot rely on third-party dealerships to handle their sales.

Toyota dealerships (Japan)

Toyota vehicles in Japan are distributed to numerous dealership chains throughout the country. Up to May 2020, each dealership chains had a different product offering, with some models restricted to one chain to maintain exclusivity. Since May 2020, every Toyota models in Japan were made available in any dealership chains. Current dealership chains include Toyota Store, Toyopet Store, Toyota Corolla Store, and Netz Store.

References

  1. Quinland, Roger M. "Has the Traditional Automobile Franchise System Run Out of Gas?". The Franchise Lawyer. Archived from the original on 14 May 2016. Retrieved 21 April 2016.
  2. cite The Evening Bulletin (published by Philadelphia Bulletin) December 7, 1953 page 1 (column 3) and page 16 (column 4) and The Evening Bulletin January 29, 1954 (obituary)
  3. Cotter, Tom (22 September 2013). "Former AMC Dealership Full of Cars". Barn Finds. Retrieved 8 September 2019.
  4. "NADA Data 2015 the annual financial profile of new-car dealerships". National Automobile Dealers Association. 2015. pp. 6–7. Retrieved 8 September 2019.
  5. "New BMW stores to be big, open, beige".
  6. "Geniuses smart move for dealers, BMW says".
  7. "Subscribe to read". Archived from the original on 2 July 2014.Cite uses generic title (help)
  8. Singh, Sarwant. "The Future of Car Retailing". Archived from the original on 29 April 2017.
  9. Archived 8 January 2014 at the Wayback Machine
  10. Bodisch, Gerald R. (May 2009). "Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers". United States Department of Justice. Archived from the original on 19 June 2015. Retrieved 21 August 2016.
  11. "Tesla sets up shop in Dallas -- minus test-drives and sales".
  12. "Tesla: we're not car dealerships". Archived from the original on 30 May 2016.
  13. "The Perfect Tesla Store". www.tesla.com. Archived from the original on 6 December 2017.
  14. Gross, Daniel (11 April 2016). "Tesla's Real Innovation Isn't the Electric Car". Archived from the original on 6 December 2017 via Slate.
  15. "Auto Franchise Laws Restrict Consumer Choice and Increase Prices".
  16. "State Franchise Law Carjacks Auto Buyers".
  17. Yglesias, Matthew (26 October 2014). "Car dealers are awful. It's time to kill the dumb laws that keep them in business". Vox. Retrieved 2 October 2020.
  18. Town, Mellisa (7 June 2014). "A Guide To Determining How Much Your Car Is Worth". sellmax.com. Sellmax Journal. Archived from the original on 26 December 2017. Retrieved 31 January 2017.
  19. "Archived copy" (PDF). Archived (PDF) from the original on 2 April 2015. Retrieved 22 March 2015.CS1 maint: archived copy as title (link)
  20. Blanco, Sebastian. "First EVEN EV store opens in Iceland's biggest shopping mall". Archived from the original on 6 April 2015.
  21. "Calgary Honda Dealership". Sunday, 25 April 2021

Further reading