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Over the past few years, buying a car has presented consumers with many challenges. Between chip shortages that left a huge void in the market, higher markups due to increased demand, and electric vehicle competition as tax credits went online, the race for new cars quickly went from 0 to 60.
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Considering how much it costs to sell a vehicle today, some are trying to find ways to save on the total cost. Consumer Reports recently detailed one idea of his, buying cars directly from automakers instead of leaving it to dealers and paying middlemen.
CarsDirect states that the average markup that dealers apply to vehicles they are selling is generally about 9.9% above the MSRP, or a median commission of $3,753. Eliminating it entirely would be a big savings, but is it possible?
At least in some cases, as Consumer Reports pointed out. New automakers such as Tesla, Rivian, and Lucid offer options. “Most of the time, these automakers don’t mark anything up. If you buy on their website, the car will be delivered when it’s ready,” said Steve Elek of Consumer Reports. increase.
Generally, these modern automakers have their own car “gallery” rather than traditional dealerships. This is because many states have longstanding franchise laws that prevent automakers from having their own showrooms. Such laws were enacted to protect independent dealers from direct competition and going out of business, according to Consumer Reports.
Because of these laws, it is not easy to enter into direct-to-consumer sales agreements with automakers unless the automakers are creative in circumventing the strict laws. For example, Consumer Reports gives an example of Tesla opening a sales and service center on Native American land in New Mexico (technically a sovereign state and not bound by the laws of New Mexico). Pointed out and found a loophole.
However, some of the more established automakers do not offer the same opportunities as they rely heavily on their ‘dealer network’. You can visit their website to customize your new vehicle and pay a deposit, but you must choose to work with the dealer of your choice to finalize your order. In such cases, “the dealer cannot be circumvented.”
Consumer Reports provided some tips when considering a new (or first-time) ride.
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Call your dealer to see if your vehicle has markups and ask for line-by-line itemization for greater transparency. If you find a more competitive deal at another showroom, you may be able to barter with the dealer.
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When purchasing, ask for a purchase order receipt, not a deposit receipt. This gives you a better case to lock in the price if the suggested retail price increases before you finalize the deal. It acts like a legally binding contract.
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There are also opportunities to purchase on the private market through websites such as AutoTraders.com, CarGurus.com and Cars.com, but they do not offer the same protection as dealing with authorized dealers.
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This article originally appeared on GOBankingRates.com: Can you save money by buying a car directly from a car manufacturer?
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