about is the process of acquiring them.

The American car dealership experience is one many seem to regard as a

necessary evil.

Buying cars often feels like an anxiety inducing ordeal that can last

hours. Some surveys suggest Americans don't have a terribly high opinion

of automotive salespeople either.

Yet in the years since the American economy began recovering in the wake

of the financial crisis, new car sales have repeatedly reached record

levels. And industry analysts say Americans overall seem to be relatively

satisfied with their purchases once they drive away with them.

There certainly are things they would like to change about it, and some

already are using tools now available online.

Meanwhile, dealers face their own challenges, including a consolidating

landscape, tight competition and threats from new business models

promoting contactless virtual transactions which have thrived during the

age of covid-19 outbreaks.

To survive, dealers will have to keep up and find ways to accommodate

buyers less willing to go through the rigamarole they have endured in the

past. There are parts of America you can only scout if you come in

here for International Harvester dealer showroom, a rugged scout to 476

has great off road handling and snows a lot of gear.

You can choose a four cylinder engine and selective four wheel drive.

Come in for a test drive.

Scotty and the others pass.

In the U.S., the vast majority of automakers don't sell their cars directly

to consumers, they sell them to dealers, which are basically separately

owned franchises that fly the banner for a particular brand of cars, often

several, and have a close, if sometimes contentious, relationship with the

companies that produce those vehicles.

Cars made by any automaker operating in the U.S.

are considered sold to a certain dealer as soon as they roll off the

assembly line. Dealers are then tasked with turning those cars over to

buyers, preferably as fast as possible.

The franchise model saved automakers the expense and trouble of opening and

operating their own stores, allowing them to rapidly expand their reach

across the United States without footing the bill.

Every U.S. state, in turn, has dealer franchise laws designed to protect

dealers who have invested in building a brand's presence in a territory.

These were created to assuage the fear that manufacturers might move into

an area a dealer had already established and run them out of business.

These laws have become a point of controversy in the 21st century,

primarily because of one very disruptive company, Tesla.

The electric carmaker has long insisted on selling its cars directly to

customers over the Internet.

Tesla has been involved in legal battles in several states to set up its

own kiosks without creating franchised dealerships.

But when Tesla was still a fledgling electric carmaker, churning out a

tiny number of high end electric cars, other larger trends were already

shaking up the dealership landscape.

The industry has gone through a tremendous degree of consolidation over

the last few decades, and now there are massive publicly traded dealership

groups such as AutoNation and Lithium Motors, which have steadily bought

up many of the once independently owned dealerships that dotted the

country. The way Americans buy cars is also often quite different from the

way they are bought in other countries.

In Japan, for example, cars are typically custom ordered at a showroom and

then delivered to the buyer.

Later, while Americans can special order vehicles at dealerships, most car

shoppers in the U.S.

choose their cars from whatever is already available on the lot.

Of course, the dread that many consumers feel prior to a trip to the

dealership has long been widely known.

I think what's really interesting about car buying is that a number of

years ago, John Kravchuk, who was the head of U.S.

Hyundai Hyundai Automobiles and he was ahead of the group, said something

to the effect of it's almost a situation where people would rather go to

the dentist than go and buy a new car because of just how the consumer is

almost beaten down into submission just to then give their money over to

take home a product that they're then going to have to bring back to the

dealer on a regular basis for service and repairs and such.

And it's gotten better over the years because there's more information out

there. But it's almost a double edged sword because at the same time,

there's so much information out there, it's almost more confusing.

A 2014 study from industry research firm Edmunds found that people have

such low levels of enthusiasm for car buying.

Many shoppers said they would rather give up sex or do their taxes than go

through it. A Harris poll found that 52 percent of car shoppers said a

trip to the dealership makes them anxious.

One Gallup poll evaluating public perceptions of professions found that

car salespeople were rated the lowest in terms of their perceived

commitment to honesty and ethics.

They came in below chiropractors, insurance salespeople, advertisers,

lawyers and members of Congress.

About 65 percent of Americans think U.S.

car dealership practices are unethical, according to data cited in a 2008

paper from consulting firm KPMG.

But also, of course, there are plenty of buyers who are happy with their

purchases once they have them.

Most customers, they like their sales, so they might not like the process

of getting a price or the salesperson has to talk to the manager.

But in general, they like the sales consultants, probably why they buy

that specific dealer.

And I think they also believe that in most cases, the dealer does a pretty

good job of explaining the technical issues with the vehicle and products

and features of the vehicle.

A vehicle certainly got more complex over the years and I think for most

consumers, they feel that dealership does a good job in that the most

frequently cited pain points tend to be when customers are sitting in the

finance and insurance office, often for up to an hour or more, filling out

paperwork, applying for credit and negotiating terms of the deal.

Many customers feel they are deeply unprepared for this part of the

process and do not enjoy the hours long, complex discussion with sales

representatives. A car is among the few purchases shoppers have to haggle

for, and it also happens to be one of the biggest purchases a person will

make in their lifetime.

Many buyers don't have the experience negotiating they might like to have,

especially with professional salespeople.

And we don't negotiate for much besides houses and cars in the United

States, so it's not something that people are very used to a very

comfortable with. A lot of times they just want to get out of there.

During this time, customers are offered extended warranties and a whole

suite of add ons many of them don't expect to encounter and don't know

what to make sense of.

Like my pointed to dealers as well as lenders is is pull that information

up front because consumers can educate themselves.

What is the value of an extended service contract?

What is the value of an extended warranty?

Why do I need gap insurance and I might choose those products before I

even come to the dealership? Hey, this makes sense to me.

I'd like to buy this particular service contract.

And I know going to keep the car for this many years.

I like like the warranty.

I like the maintenance agreement.

By the way, I think Gap Insurance makes good sense for me because I'm

going to keep this car for a while and maybe it's a good product so that

education process can happen up front versus in dealership.

That said, fewer than five percent of shoppers have walked away from a sale

due to high pressure sales tactics.

According to J.D.

Power's sales satisfaction survey.

The most common reason for turning away from a purchase which 30 percent

of customers cited, is that a dealership didn't have the right model in

stock. And a lot of cases, it's just a model I shot grand in model way and

end up buying Model B because there were features or priced around that

model that they didn't like.

But for some customers, there's areas within the negotiation process.

They feel some of the back and forth.

The pricing can be a reason for rejection.

There are a few brands that do seem to stand out.

According to J.D. Power, among luxury consumers, Porsche owners seem to be

exceptionally happy with their car buying experience.

The brand ranked first in the luxury segment on J.D.

Power S.I.

three times between 2015 and 2019.

Mercedes came in second in 2019 among more mainstream brands, Buick and

GMC, which are both owned by General Motors, came in first and second in

2019, and the quirky small car brand Mini came in third.

Like Porsche and luxury, Buick has topped the mainstream list three out of

four years between 2015 and 2019.

Despite the angst, Americans continue to buy cars during the economic

recovery. New sales in the United States reached record levels in some

years and even surpassed expectations in 2019.

Dealership giant lithium motors saw sales grow from about two billion in

2010 to twelve point seven billion in 2019 as of August 18th, 2020.

Shares of Lithia had climbed nearly 24 percent since the company's 1996 IPO

and nearly 86 percent since the beginning of the year.

Likewise, sales at another dealer, giant AutoNation, grew from about

twelve point five dollars billion in 2010 to about twenty one point three

dollars billion in 2019.

Its shares rose about 20 percent from the beginning of twenty twenty to

August 18th and have risen more than 12000 percent over the course of its

entire history. Of course, sales levels like these are not expected to

last forever. The automotive industry is a cyclical business and there

have been concerns that younger buyers are not as interested in car

ownership as their elders.

But some economists have argued that the millennials killed the car.

Narrative has been overblown.

A 2013 analysis from MIT found that millennials are actually buying cars

at about the same rates as older generations.

However, there are some shifts taking place in the automotive market that

carmakers and dealers are watching.

Ride hailing apps such as Uber and Lyft have become popular around the

country. Companies continue to research and develop self-driving cars in

myriad other industries.

Businesses have increasingly looked for ways to reach customers through

their smartphones, where a growing share of shopping is done.

The Internet has also contributed considerably to the rise of membership

and service models of selling, and consumers have grown more interested in

the idea of paying monthly or annual fees for access to a product that is

periodically updated or replaced.

Even smartphone makers such as Apple have programs like this.

Carmakers and others in the automotive industry have rolled out their own

attempts to lure customers with models such as these online marketplaces

for cars and subscription services that are similar to Lease's but include

service plans, insurance and registration fees.

However, these new business models have so far attracted small portions of

the market, and strong new car sales over the last several years have

given dealers little incentive to invest heavily in them.

But online sales have seen a boost since the coronavirus pandemic began,

dealers have responded to retail shutdowns and crowd weary shoppers by

putting inventories on shopping sites, offering contactless test drives

and home delivery.

Automakers are also offering services for their dealer networks.

General Motors, for example, set up a program called Shop Click and Drive

that allows customers to configure vehicles online, get estimates for

their trade in, sort out their financing options, and either take delivery

at home or at a showroom.

Over the last several years, a number of companies have sprung up that

exclusively sell cars online.

One such firm called Vroom held its initial public offering in June right

in the middle of the coronavirus pandemic as of August 18th.

Shares of room were up more than twenty four percent in twenty nineteen

more than half of rooms.

Sales had come from traditional dealerships.

It offers contact, free transactions and seven day returns.

Highly unusual for car sales.

Perhaps the best known name among online only car sellers is Caravana,

which went public in late April 2017.

As of August 18th, shares had risen by more than 17 percent.

The stock was up more than 120 percent just since the beginning of 2020.

Some industry analysts do expect that some of the jump in online sales seen

during the pandemic may remain the piece of the process customers do seem

increasingly prefer doing online is the paperwork that they would

otherwise do at the dealership.

Surveys show customers want to have as much information about the financing