This video is part of our Kite & Key Shorts series—easy to understand...but hard to forget.
Americans hate dealing with car salesmen.
A 2016 poll found that 87% of consumers dislike the process of buying a new car.i And the average time it takes to buy a car at a dealership is over 3 1/2 hours.ii
Part of the reason your car-buying experience might be miserable? A series of old laws.
In the mid-20th century, many states banned manufacturers from selling cars directly to consumers. They also passed laws to stop rival dealerships from selling the same cars in the same neighborhood.iii
This lack of competition has made customer service worse and driven up the price of cars.
Estimates suggest eliminating these regulations could bring around 2 million more cars to market, and that increasing supply by that much could lower average car prices by an estimated 8%.iv (That’s over $3,500 off the price of an average new car.)v
Making it easier for new dealerships to open could also save money. A 2015 study found that increasing the distance between Honda dealerships by just 30 miles increased the average price of the Honda Accord by $500.vi
If buying a car straight from the manufacturer sounds weird, you should know that several states have created an exception to the rules, allowing Tesla to do direct sales.vii
But in over half of states, direct sales are still prohibited for all other brands.viii
Buying a new car is always going to be a big decision, but does it need to be this complicated?
WHAT YOU NEED TO KNOW:
- A 2016 poll found that 87% of consumers dislike the process of car buying.
- Eliminating dealership restrictions could increase the supply of cars and lower the average car price.
- Several states have created an exception that allows Tesla to do direct sales.
