Hacker News Reader

Yes and no. Yes, we could see the inventory of every Honda dealer in the region. And yes, we could exchange cars.

However, the "requirement" that cars be swapped was something that managers told customers to ease their minds while they steered them towards a car that was on our lot. The only requirement was that both dealers had to agree on which cars were being swapped.

Why tell them that? Because managers are loathe to exchange cars since it often doesn't work out:

- We couldn't legally bind them to buy a car we didn't have possession of yet, so we had to wait for the exchange to finish.

- Customers change their minds easily and may not really want the car once they see it. Or, they may hear back from another dealer while you're exchanging and go there instead.

- It takes a salesperson off the floor for hours which costs the manager money.

- The other dealer gets to demand what they want of your inventory and may ask for a higher-demand vehicle in exchange.

- Customers hate having "mileage" on a new car (I once had to swap a 21 mile car for a 7 mile care because a customer was so put off) and the manager knows that once they see the "mileage" they may decide otherwise.

That said, a manager may authorize a transfer for rare cars. I once had to drive for an hour and half, from Virginia to Maryland, to another dealer in an S2000 to exchange based on color. Got turned around leaving the other dealer, wound up in Pennsylvania. My manager never believed that I didn't go for a joyride.

EDIT: How do you create bullet lists on HN?

You can't. It's aggravating.

https://news.ycombinator.com/formatdoc

  - You can fake it.
  - Start with a blank line.
  - Indent each subsequent line with two spaces.
  - Use hyphens as your bullet.
  - Lines that are too long will cause
    horizontal scroll, so break them manually.

Thank you.

> Customers hate having "mileage" on a new car

I don't know why the swaps are driven. Why doesn't the dealer get a 1-ton truck and trailer, and haul the car to keep the odometer low? Oh, and the story about "Our swaps are gently driven by retirees" is bogus. I've been passed by those guys going 90 mph.

Now you've just taken a deal, which was probably worth $200, and made it even more expensive to execute. Not to mention, this is a customer who is already demanding enough to warrant a swap, so who's to say the demands won't increase once you've already sunk some cost into it. (See my note about swaps not being legally-binding until the sale.)

> Oh, and the story about...

Oh my goodness, salespeople absolutely abuse the cars. (For the record, I did not.)

When I bought my Volkswagen, the dealer swapped with another in a diff state. The salesperson told me that he had accidentally left it in 4th gear the entire time (interstate driving at 75+). The gearbox is pretty good, but I was a bit peeved.

For what it is worth, my retired grandfather did exactly that job for many years. Swapping cars between dealerships all over Minnesota.

The article misses the issue. New cars are very nearly sold direct, the dealer doesn't arbitrarily mark up prices, in fact I think some manufacturers prevent it. There is a fixed profit for the dealer, for the most part. The manufacturers go to fairly good lengths to get the cars people want to the dealers too and then they try to have an assortment of dealer customizations that can be done, like the dealer can change the stereo out and do things like that. It's just pure brand for the dealers, why they sell new cars is just to avoid being labeled a "used car dealer."

Service and used cars are the broken market, those subsidize new car sales. "Certified used cars" and such are almost always over paid for. If can be dramatic too, we tracked my wives old Subaru through from trade-in. They gave us about $2000, then the last we saw it it was still in the region (about 80 miles away in a smaller town) listed for just under $8000. It was very clean and needed a new head gasket, they may have done that, maybe not, that would have cost us about $2000 so it didn't cost them that. even if it did they were still asking 100% more and we don't know what price the eventual buyer negotiated.

The laws that protect the dealers may be a problem, it looks like most states just want to protect the big "local" businesses from the big corporations though. The used car market seems like it could really benefit from disruption though.

I work in the used car industry and it hurts my soul. You're absolutely right that it needs disruption, specifically the "buy here-pay here" (BHPH) model.

BHPH sales are when people with no/terrible credit get an overpriced used car financed by the dealership where it was purchased at 29% interest and $300 bi-weekly payments (for example). The dealers bank on the fact that these people will probably default in a couple of months. Then, the dealer repossesses the vehicle (easily with starter interrupt and GPS devices), and then it can be resold at the exact same price (and the dealer can sue for deficiency balances owed by the previous owner if they so choose). The people who have to resort to this way of car buying are already desperate, and the BHPH dealers are designed to profit off of them.

The FTC and Consumer Financial Protection Bureau are slowly starting to catch on, but the lobbying by groups like the National Independent Auto Dealers Association is very strong -- they have A LOT of money, and they're always looking for ways around the law. The latest trend is changing a few words on the contract, calling it a "lease" and ripping off the consumers in just the same way.

When a customer is offered a monthly/weekly price of $X and the car is in the exact condition described by the dealer, it cannot be a ripoff. Now if the dealer is filling their head with nonsense like the car's value will increase over time (a la mortgages), then maybe you might have some fraud aspect.

Laws can't protect stupid people from wasting their money and I don't want a world so locked down where they could. And what's the worst case scenario? The car gets repossessed and their credit goes down (ie less people will trust them to make purchasing decisions in the future). There is no debtors prison and its highly unlikely they would have wages garnished unless the car was destroyed.

The "worst case scenario" is losing your entire source of income, since a working vehicle is NECESSARY to earn a living in most of the US. The people patronizing these BHPH dealerships don't have a choice in what they pay due to damaged credit, so they're forced to choose between an exorbitant interest rate on a vehicle that's marked up significantly, or no way to get to work.

Toyota is also a little funny because there's the sales groups associated with Toyota Motor North America (affiliated with Toyota Motor Corp) who service most of the country, and then there's Southeast Toyota Distributors (SET) who are independent of Toyota proper.

I found out about that subtle difference the hard way when I had a problem with a Toyota and expected Toyota to honor their advertisements. Turns out I bought from SET, so Toyota didn't care.

I just purchased a new Honda and this is basically what happened. The car I wanted wasn't at the dealer I was at, so they sent a guy 100 miles away to another part of the region to drive it back down so I could drive away with it that day. They knew from the shared inventory system that the other dealer had it.

I had negotiated a pretty large discount on the car so I have no idea what sort of shenanigans the two dealers had to go through to exchange inventory.

>I had negotiated a pretty large discount on the car so I have no idea what sort of shenanigans the two dealers had to go through to exchange inventory.

The Toyota manager said they exchange on either MSRP-to-MSRP or dealer-cost-to-dealer-cost basis. Either way they do it, it comes out the same for them. Whatever amount of discount you were able to negotiate from a dealer would be independent from their internal swap basis.

You can imagine why a logistics guy like Tim Cook might look at this situation and get almost as excited as Jony Ive.