Why Are Cars Sold At Dealerships?

Have you ever wondered why an average car user can only buy their vehicles from car dealers and not from the car manufacturers directly? Well, you will find out some of the reasons why this is so in this article.

The following reasons are why most cars are only sold at dealerships and not directly by the manufacture.

Simplicity

It is one thing to build a car; it is a whole other thing to have the required skill to sell one to the public. These are two different fields that require different skill sets. To remove the stress of selling after building, manufacturers prefer to outsource sales to organizations that can do that. The organization, in this case, is the Huntsville car dealerships. They possess the skills required to sell vehicles. Besides the auto industry, many other top companies can’t handle manufacturing with sales. Therefore, for the auto industry, simplicity is one reason why cars are sold at dealerships.

Employment And Wealth Creation

The auto industry is one of the most important industries globally. It employs a significant number of labor and creates wealth for many people around the globe. A car dealership is another big industry under the auto industry. Thus, should manufacturers decide to begin to sell their products without passing through dealerships, they would have eliminated the income of a lot of car dealerships.

If car manufacturers decide to start selling their cars themselves, there is a high chance that the car dealership industry will die a natural death. This is because the cars sold by the manufacturers will surely be cheaper than those sold by third parties. This means people will prefer to buy from the manufacturers directly.

Therefore, car dealerships are a must for employment and wealth creation purposes.

Cost-Effectiveness

If a car manufacturer decides to start selling their cars without dealerships, they will surely need to build a team around this. And to be successful at this, they need to be closer to their potential customers. To achieve this, they’ll have to set up in other parts of the world. This is because it is illogical for potential customers from other parts of the world to travel down to their factory before they get the vehicle they need. By trying to get closer to customers, they’ll have to invest heavily in dealerships. It is, therefore, better and more economical to sell franchise rights to dealers.

Guaranteed Earnings

Another reason why manufacturers prefer to sell their cars to dealerships is that it guarantees their earnings. They don’t have to wait for prospective buyers to come down and get the vehicles one at a time. Instead, they sell in bulk to dealers, which guarantees their earnings. The dealers are left with the problem of selling the vehicles. This way the manufacture has made money even before their products reach the street. This type of guaranteed earning can not be achieved if they try to sell their cars on their own. They will have to wait till the cars get sold before they can produce more. Also, the longer the car stays with them, the more it depreciates.

Market Penetration

Different marketing strategies work for different geographic locations. A car manufacturer might only understand what works for the geographic location they’re sited. This means if they decide to expand to other geographic markets, they may end up having low sales because they don’t understand how to penetrate the market in that specific area. This is another reason why manufacturers prefer to sell to car dealerships.

Local Service Centers

Generally, a dealership doesn’t just sell cars. They also offer services such as maintenance and repair. They provide a warranty for customers; therefore, they are responsible for fixing any damage that falls under the warranty conditions. Now, imagine a car manufacturer doing this; it means they need to establish a significant number of sales points across the world. This is, therefore, another reason why cars are sold at dealerships.

Considering all the points listed above, you will see that car manufacturer have more to gain from selling their products to car dealerships than trying to sell them themselves.

Dealerships make it easy for anyone to buy whatever type of car they want, any time they want it. The value-added services provided by dealerships is another key reason why it makes sense to buy from a dealership instead of directly from the manufacturer.