While enjoying my first cup of Lipton tea, I browse the sub-reddit through the electric car to see if there have been any interesting developments in the EV world over the past 24 hours. Recently, I found one that I would like to share with our readers. Here is the original message from Reddit user (and Audi e-tron owner) David Maybury, who wants to buy a new Mustang Mach-E:
‘We chose the car, brought a quote from CarMax to our exchange and my own financing offer. The trader can get me a better interest rate, so it’s just as good, but it does not seem to pick up the payments. So I asked for the explanation. At first they ‘forgot’ to include the exchange, and then they said they could not match CarMax. (Seller said they would do that). Well. I will take it to CarMax.
‘Then they the’ did your salesman talk to you about prices? ‘and admitted that they noticed the car $ 5,000. But there was a $ 1600 discount. I told them I would not pay one dollar surcharge. They added another $ 3,000 rebate, bringing the net surcharge to $ 400. So I told them we were outside and started walking. They tried very hard to let us stay, where I started getting angry. They made one last call to the GM, who did not want to leave the $ 400, and I walked away.
‘Driving aggressively from Riverside to Culver City (more than an hour) to get this treatment was aggressively not worth it. I have another one reserved at a dealer that promises to behave better, but I am reconsidering my options now. Just need to wave a little. ‘
Maybury’s message received more than 365 comments, many of them from people who have had similar experiences at other retailers. The issue is by no means limited to Ford dealers. There are even a few Tesla owners who have found their buying experience somewhat less than the ‘no problem’ the company promises.
Image courtesy of Ford
In theory, Ford is putting pressure on its dealers not to attract this ‘market adjustment’ stuff to Mach-E buyers. Mark Levine, director of communications at Ford, recently posted a tweet promising to help any Mach-E buyers with the comments from dealers. He also uses the opportunity to make a turn at Tesla, but that’s OK. I assume this is his job.
Any Mach-E customer who sees a dealer adding a formatting can contact me. I will help them find another dealer. Good luck reaching out to Tesla to get your FSD.
– Mike Levine (@mrlevine) 21 March 2021
Maybury tweeted Levine but has yet to receive a response. In an update to his original post, he reported similar screens at two other Ford dealers he contacted. Part of the problem may be that he lives in California, which is the largest zero for the electric car movement in America. Would anyone in Peoria or Poughkeepsie have similar issues? Feel free to let us know in the comments section if you would like to add something to this story.
Traders sit in it for the money!
Horrible! It turns out that car dealers are in it for the money. Who wanted to do that? Strange as it may seem, there is not that much money to sell the cars themselves. The real money is earned in the service department and in the financial office. Oil changes, brakes and tires are profitable items. Thus, the commissions paid by credit unions and finance companies pay for the business sent by the R&D departments. Undercoating, paint protection (refer to the famous scene from the movie Fargo), LoJack, extended warranties – these are just a few of the extras that dealers trust to keep them profitable. Then there are all the bizarre financial transactions between the manufacturers and the dealers that may affect the merchant’s profits of which few customers know anything.
You may bring The Incredible Hulk to help you negotiate with a dealer, but you’re an amateur. They do it for their money and have a complete checklist of sales techniques that have been perfected over decades. Trading schools run by NADA and others actually teach traders how to get the maximum number of dollars from each customer. No matter what strategy you think you have, they have heard it before and have an answer that has been played years in advance. They do this 7 days a week. You do this once every three years. If you’re a weekend tennis player playing against Serena Williams, who do you think will win?
In the bad old days, a seller would ask for your keys as soon as you walked in so they could ‘evaluate your trade’. At some dealers they will throw the keys on the roof and say you have to buy a car from them to drive home. Things are not quite so wild today, but the customer certainly has a downside in most new (or used) car negotiations.
An opposite view
Last month we did a story about how dealers are a major barrier on the highway for a future EV. A person using the Disqus username of DealerVoice commented on the story in which he defends the dealer model and its industry. I give him a lot of credit for walking in the lions’ den. Every story has at least two sides and we rarely get input from real traders. Here is what he said in his comment:
‘Thank you Steve for this article. As the owner of a family trader that spans four generations. I can assure you that it is not the retailer that is an obstacle to EV sales. We welcome the change. We have invested in EV exhibitions, technical training, charging stations, etc. I believe you give more power than we actually have. Transportation in America is a system, which depends on roads, fuel, service, etc. If the square pin that is an EV falls into the round hole of US private ICE transportation, it will slowly adjust.
‘The fact is that the majority of Americans do not ask for EVs … and it is not the dealers who manufacture these millions of ICE vehicles every year. We sell what is available and what is demanded, and serve it when they break, take it into the trade. And if these are not independent retailers, there will be stores in the factory that operate on the same model as a traditional retailer that sells ICEs. In this scenario, the consumer will have less power and price competition will be reduced (no brand-to-brand competition)
‘Instead of pointing the finger at retailers, here are the questions to ask:
1. Can the average American afford an EV?
2. Do they have the time to wait 30-45 minutes until a pure electric power recharges?
3. DO THEY OWN A HOUSE IN WHICH THEY ARE READY TO DOWNLOAD $$ AT A LOADING STATION?
4. Does an EV fit their needs? How long is their commute?
5. What does the secondary USED market for EVs look like (VAT, this is where most people buy their cars in America)
6. What is the replacement cost of a battery in an EV? What is the value after ten years?
7. What will be my electric bill under a world of ALL EVs? Who will I pay for?
‘Most EV buyers who walk into our dealers’s ALSO own an ICE vehicle. The EV is a second car, a toy – because if they have to undertake long rides or if the EV can not charge, they know they can start the old reliable ICE and get the job done.
“So, the REAL BOUNDARY is a QUESTION of the consumer. Traders do not create the demand … they meet it. Manufacturing now claims that the EV series should simply bulge stocks in response to Tesla’s remarkably high market value… ..But Ford GM and others will make ICE, as long as it makes ECONOMIC sense.
“Dealers sell cars because people need comfortable, private and affordable transport … and they can drive less that pushes the wheels ICE petrol or EV COAL-based electric ……
“Thank you”
Again, I give this person high marks for taking the time to state his point of view. I have been in the “car prayer” myself for a number of years and know that the people I worked for had an ethical operation, which did not prevent them from making a good living. Do our customers offer protection against paint and LoJacks and extended warranties? Yes we have. Some bought it, others not, but they were not strongly armed to buy it. During my five years at the company, no car was a “market adjustment” applied to the MSRP. Not one.
Brave new world
The issue is not whether Ford (or any other dealer) has the right to feed their families. The issue is that EV buyers are participating in a new experiment and are highly resistant to the old fashioned way. Apple does not negotiate the price of its iPhones and iPads. Amazon does not negotiate the price of the products it offers. Best Buy does not negotiate the price of its digital TVs. People who are used to doing business online expect to be treated a certain way. The traditional trader model falls to them just like last century and contrary to their needs and expectations.
The EV revolution is going to disrupt the conventional dealer model just as surely as it is going to disrupt the car manufacturing business. The traders who thrive are those who recognize the new realities of the market and embrace them. Some established car companies will no longer work as EVs take over more and more of the market. This is inevitable. And some well-established traders will not work either.
It does not have to be this way. The only constant in life is change and those who refuse to recognize that principle are doomed. As Bob Dylan would say, ‘Your old road is getting old fast. Please get out of the new one if you can not reach out because the times change. ‘Amen to that.
