“Why You Can’t Buy a New Car Online”

I’ve wondered about that sometimes. Mother Jones reports:

Americans can buy virtually anything over the Internet these days — sex, booze, houses — everything, that is, but a new car. If you want to buy a new Ford Fusion, you have to go down to your local dealership and haggle with the car salesmen, an unpleasant and daunting task. The process usually subjects consumers to hours in the dealership hotbox and can add hundreds, if not thousands, of dollars to the price of the car. Wouldn’t it be nice if you could cut out the middleman and just order your Prius straight from Toyota?

But you can’t. And there’s one reason why: the car-dealer lobby, which has worked hard to ensure that this will never happen. Since the late 1990s, car dealers have used their considerable political clout to pass or better enforce state franchise laws that in many cases make it a criminal offense for an auto manufacturer to sell a new car to anyone but a state-licensed car dealer. The laws governing who can sell new cars are among the most anti-competitive of any domestic industry. By creating local monopolies for dealerships and prohibiting online sales for new cars, they constitute a major restraint on interstate commerce; in 2001, the Consumer Federation of America estimated [pdf] that the laws added at least $1,500 to the price of every new car.

These parochial state laws also make the distribution system for new cars incredibly inefficient and expensive, one factor in the financial problems facing the Big Three in Detroit. Online sales would help companies like GM and Chrysler align production to sales better by allowing more people to buy their cars built-to-order from the factory, rather than having Detroit send out truckloads of vehicles to sit around on dealer lots for months in the hopes that a rebate offer will finally entice someone to buy them.

Now that the federal government is bailing out GM and Chrysler to the tune of $13.4 billion, and Congress is demanding major changes in the way they’re run, consumer advocates think the time is ripe for Congress to clear the way for online sales as part of its effort to move Detroit out of the Stone Age. You’d think they would find a sympathetic ear among deregulatory Republicans who take great umbrage over any state interference with the free market, but you’d be wrong. Most free-market Republicans have no interest in taking on the car dealers, who are among their strongest local supporters. Since 1990, American car dealers have given more than $66 million to federal candidates, with more than three-quarters going to Republicans.

Read the whole thing here.

One thought on ““Why You Can’t Buy a New Car Online”

  1. I wouldn’t buy a car totally on line because I would want to test drive it first.

    Before I bought my current car I went to several web sites such as Consumer Guide and Edmonds to find out what I should pay for the model I wanted.

    Then as a AAA member I logged onto AAA’s site where I received the names of dealers who were part of AAA’s special pricing program, and the name and phone number of a sales person at each dealership who would give me the dealer’s no-haggle bottom line price.

    I picked the most conveniently located dealer and made an appointment for a test drive. They had the model I wanted with the options I wanted in stock, and the price was what Consumer Guide said it should be. So I bought the car, and I’m glad I did.

    AAA membership is not expensive, and getting a good price on a new car is worth it.

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