If you have a computer, access to the Internet, and a major credit card, the world can be your oyster. Books, music, ugly lamps and baseball memorabilia all can be yours with a few clicks of a mouse.
The one thing you can’t have for now, by law, is a car directly from the manufacturer. Why not? Why can’t educated consumers with a laptop and Internet service provider buy a car or truck directly and possibly save thousands of dollars?
The answer is almost simple. Long ago, automakers cut a deal with the government to avoid antitrust violations. They sold off all of their company-owned dealerships, which means that today, all cars and trucks must be sold through independent dealers. Yes, of course you can buy a car or truck over the Internet. But there are intermediaries — you’re prevented by law from purchasing directly from Ford, GM, Toyota and the like.
Working for change
If the laws regarding franchising and selling vehicles seem outdated, you’re not alone. The Consumer Federation of America (CFA) is working to allow cyberbuyers to skip the dealer altogether and purchase cars and trucks online. By changing laws to allow it, the association claims that buyers would be able to save as much as $1500 on each vehicle.
The CFA cites a handful of examples that make car buying anti-competitive. Laws in nine states require cars to be sold through dealerships franchised by the automakers, they say. An additional two dozen states are mulling laws that would stop manufacturers and other companies from circumventing dealers via the Internet.
And when it comes to independent online sellers, the CFA is even more suspect. According to them, companies that can sell cars and trucks over the Internet, such as Autobytel.com and CarsDirect.com, have worked out deals with dealership chains to build their inventories. The group said that’s a double hit for consumers because they must pay the dealers’ markup as well as the dot-coms.
On the defensive
Odd as it may seem, at least in public, the automakers are defending dealers. On several occasions the big carmakers have said they do not want to cut out dealers from the process. On the other hand, many companies such as Ford are moving forward with plans to institute a “build-to-order” system that would permit buyers to select and equip their cars and trucks on the Net.
Today all automakers stop short of letting online users buy cars and trucks directly. They can “build” a vehicle, choosing colors, options, etc. At Saturn, surfers can schedule a test drive and even fill out a short version of a credit application to get the buying process started.
The future of this process is evident. Ford Motor Co. is working on a system that allows the customer to track the progress of his or her vehicle as it wends its way through the production process.
Dealerships hit the Web
Many dealers have attempted to take advantage of the Internet for everything but sales. Some schedule service appointments via the Web, send service reminders and mirror the dealer’s corporate site by letting consumers “build” a vehicle. Most of these sites ask for information to allow the dealer to follow up with the user. Response times typically vary from 24 to 72 hours.
But when it comes to selling directly, it’s understandable that independent dealers are opposed to the Big Three and others controlling sales themselves. And yet, dealers deny efforts to eliminate the purchase of vehicles over the Internet. “Ultimately, the business model that strikes the best balance between consumer protection and consumer convenience is one that combines online sales with facilities anchored in the local community,” said David Hyatt of the National Automobile Dealers Association to ABCNews.com.
For its part, the CFA is trying to out-lobby car dealers in states where the act of buying a vehicle directly from an automaker is illegal. The group is targeting Arizona, where the purchase and finance of new vehicles is restricted to dealers; Florida; Texas; and Virginia, where the state legislature is proposing new laws to limit automakers’ ability to offer lower prices.
It’s easy to picture a day when a carmaker not currently selling in the U.S. sets up a direct link between its customers and its assembly line. In the meantime, today’s dealers and carmakers will continue to try to outmaneuver each other to make your sale.