This is still only the US though. A big part of the global car market, sure, but it would be interesting to know how it works elsewhere. It doesn't work that way in Europe (at least I don't think there are EU states with the US setup)

There’s a lot of hatred for dealerships, because the sales process is not very enjoyable. But historically the franchise model allowed the manufacturers to extend their available credit to expand across the country. The local knowledge and independence that a local business person had also made (and makes) dealerships more nimble and better able to meet local demands.

Ultimately though, the nature of manufacturing determines almost everything in automotive. For manufacturers to be competitive they have to highly efficient assembly lines, which means a nearly constant output of vehicles per month from a typical plant. Supply is constant, and But demand is seasonal, and responds to various factors, many of them regional, and some of them hyper-regional (a hail storm for instance). Manufacturer’s need to be able to keep vehicles from stockpiling outside of the factory, and they work with dealers to do this through various incentives, loans, and programs.

Dealerships provide a measure of adaptiveness, because each dealer has his or her own lines of credit and capital, relationships with local city councils, charities, and media, and local knowledge of real estate in a way that would be difficult for a vertically integrated system to manage. Successful dealers are treated well, and unsuccessful ones are muscled out if they aren’t doing their job of moving units in their region.

If you dig around on the forums where Tesla bears hang out you can see photos of parking lots full of newly built cars with nowhere to go, and how hard of a time they are having managing a slightly higher rate of production.

as far as i know the setup as it is done in the US does not exist in (most) EU countries.

But let's not forget owning a car in europe is vastly more expensive and also far less needed for a lot of people. (especially those living in large cities with public transportation).

Im in my mid twenties and don't own a car, neither do most of my peers.

The ones who do all buy older, second or third hand vechicles which are easier to maintain and also cheaper. (toyota/volvo for instance). Most people seem to be mostly concerned with the primary function of a car, which is getting someone from A to B. Other functions seem to be less "useful" for most people i know.

Also, driving distances are vastly shorter for a majority of europeans.

Luxury cars seem to be mainly gained by using either a private lease contract or getting one on a company's expanse for bussiness purposes.

Why? I mean... can we not change that?

Probably not. In small towns, the car dealership is one of the most important locally-owned businesses. They sponsor all the community events and contribute to the local politicians. They've got a lot more money to work with than the other typically local-owned businesses like restaurants or retail stores. Pissing off the car dealers is not something any politician - whether red or blue - wants to do if they're going to get rural votes.

All it takes is for a few states to change and have a critical mass of direct sales. NJ for example can’t insulate its market forever if neighboring states which are a short drive away offer consumers more options that they want.

Some states are working on it. The reason it's illegal in most states is because it's an old law that was created to prevent Ford, Chevy, etc. from using their huge amount of resources to force smaller dealerships out of business. It's like how Wal-Mart uses it's huge amount of money to keep low prices until it forces all of the local competition out of business, then raises them once their is nothing you can do about it. Most people want it to go away now though, since it's obviously bad for new automakers that want to enter the market but don't have the mass appeal to get independent dealerships to risk having a bunch of relatively niche cars in stock that never get sold.

>It's like how Wal-Mart uses it's huge amount of money to keep low prices until it forces all of the local competition out of business, then raises them once their is nothing you can do about it.

That's not really how walmart works. They don't jack up prices in local areas after the businesses go away. They just operate on much smaller margins and sell cheaper versions of things which is what gives them so much staying power.

They appear to have been found guilty of predatory pricing in at least one case:

https://www.nytimes.com/1993/10/13/business/company-news-wal...

Searching "Walmart predatory pricing" returns quite a lot of results.

Then perhaps you should point to one that isn't 25 years old!

That's the first, obvious example of Walmart losing in court. A few minutes of skimming yields cases from 1993, 1995 and 2000 in the US, then 2003 in Germany and 2012 in Costa Rica. That's as much effort as I'm willing to put into a comment on HN. Maybe Walmart has completely changed their business practices in the last six years...

Not just smaller dealerships - other manufacturers. If an area only has Ford dealerships in it (because Ford bought them all), they would then have a monopoly over car sales and maintenance in that area. If the area's big enough that people wouldn't be expected to travel much further to make a purchase or look for after-sales service, this would have meant a significant reduction in competition.

Because elected officials at the State level receives contributions from dealers in exchange for doing their bidding.

The “pro” argument for it is that it keeps more money intra State rather than sending it upstream to the parent company’s home country / State.

The con is that you’re shafting consumers and eliminating true competition.

How do the dealers eliminate competition?

We could, but dealers spend a lot of money lobbying to make sure we don't.

Tesla struggling to sell direct in New Jersey is an interesting case study in exactly that.

https://www.washingtonpost.com/news/the-switch/wp/2015/03/18...

In the US? Good luck out-lobbying GM, Ford, etc.

The point here is that they are out-lobbying Ford and GM. The car companies want to sell direct to consumer, and the dealers have managed to maintain their role as government-mandated middlemen despite that.

Is that true? We know the car companies cannot sell direct, but would they if they could? Dealers are required to have trained mechanics who actually know to deal with the car.

https://en.wikipedia.org/wiki/Lobbying_in_the_United_States It can be changed but that costs money: To change the law via lobbying or by challenging the law in court.

Yes, but somebody has to do all the work the dealer does. It's much easier for a manufacturer to delegate the work to the dealers where they get their slim cut. BTW, dealers make very little profit these days

What work is it that dealers do? I've bought a couple of cars from dealers, but I really wished they would do a lot less of the "work" they tried to do in those interactions.