Automakers Want To Become Order Takers

Jan 25, 2022 3 min read
Automakers Want To Become Order Takers

They’re trying to “train” Americans to like this new way…

An article published this month by Axios points out a phenomenon we’ve been noticing for a while: car dealerships in America are becoming like dealerships in Europe. More specifically, shoppers here are now growing accustomed to going to a dealer not to buy a new car, truck, or SUV on the spot, but instead to order the exact spec they want. Then, in a month or a few, the vehicle they ordered arrives at the dealership and the customer takes delivery.

Learn which American city is alarmed by an increase in car thefts here.

Not everyone is excited about this new reality, although Axios sure seems to like it. The article argues this European way is more efficient since automakers and dealerships know exactly what customers want and cars are made to order. Sure, people could always order a car from the dealer, but a lot of Americans preferred to just find something which floated their boat and was in stock, then drive it home the same day.

Automakers also seem to like this new way of doing business in America, especially Ford. Ford CEO Jim Farley is quoted in the article: "You cannot imagine ... how much money we waste by not -- by guessing what our launch mix is for a new product." He was speaking to investors back in October when he said this, but you can understand why Ford is offering a $1,000 discount up front if you pre-order a vehicle.

So far, Ford has successfully been training Mach-E customers to order their ride, then wait for it to be made. This is possible, Axios claims, because the all-electric, four-door Mustang crossover is “in high demand.”

What Axios doesn’t point out is this pre-order shopping scheme gives automakers and dealerships plenty of leverage. You, as the consumer, can’t negotiate on price nearly as much. In other words, the recently increasing cost of new cars could be attributed in part to this new way of doing business.

Michelle Krebs of Cox Automotive pours some cold water on the enthusiasm for the made-to-order car shopping model. She rightly points out the main reason Americans are willing to pre-order their vehicles right now is because of the “unusual situation” we’re in. However, people on this continent aren’t going to go along with this forever. With a free market, the automakers and dealer networks which cater to the preferences of consumers in the long run will win out, which would mean a return to normal instead of the establishment of a new normal.

As Axios does admit, this way of selling cars through orders only has been tried in America before and failed each time. While it might work in certain circumstances, overall people will exercise their free market options, opting to buy from those who are willing to give them what they want immediately.

Check out the Axios article for yourself here.

Photos via Ford and GM.

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