Jim Chen, The Man From Rivian Who Wants to Change How We Buy Cars [Wall St Journal Article]

[PVguy]

Dealerships aren’t owned by the manufacture. They’re separate companies.

Ok, if that is the case, it seems that the manufacturer would not be too keen on the dealership model as it would add a level of complexity and they would have less control over how their product is marketed, serviced, etc.

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[buddha2lotus]

I for one have not set foot in to buy anything in a car dealership since 2015 and couldn't be happier. Perhaps it's a force of habit that some people would prefer the dealership model. What makes cars different from any manufactured goods such as a smart phone that they would necessitate a middleman in order to purchase them?! I am completely happy to bypass the dealership where I had spent far too many unnecessary hours because they were trying to squeeze the last dollar out of me (with the same cliche song and dance of "oh, let me check with the manager about that price....), never again,

 

[Donald Stanfield]

Stealerships need to get relegated to the dustbin of history. I don’t see in what world dealerships serve as consumer protection. They add a layer of complexity and markup to the consumer chain. They cost everyone more money.

The manufacturer still sets the price to the dealers, then the dealer goes on to mark it up more for the end consumer. Couple that with the whole dealers being in bed with finance companies that leads them to screwing over uninformed consumers with sky high finance rates and getting kickbacks for doing so.

That’s why they hassle you to take a financing deal whereas Rivian doesn’t give you shit if you pay by ACH. They aren’t getting kickbacks from finance companies. I’ve had stealerships come at me with finance rates of like 11% before and I have an 800 credit score.

When you call them on it it’s all “oopsie we made a mistake”. Mistake my ass. Not to mention the new concept of an ADM, pricing cars thousands of dollars over manufacturers list price to strong arm customers during periods of increased market demand.

 

[SeaGeo]

Ok, if that is the case, it seems that the manufacturer would not be too keen on the dealership model as it would add a level of complexity and they would have less control over how their product is marketed, serviced, etc.

They aren't. Though they do reduce some risk for the manufacturer.

 

[Outdoorsman]

I have purchased many vehicles from dealers over the past 45 years and not one of those experiences has left me feeling warm and fuzzy. It’s a battle plain and simple. Service has been a nightmare. There is currently a 3 to 4 week wait to get my Dodge Ram serviced. The dealership is 45 minutes away from my home. I have never been offered a loaner without having to pay for it. I am currently putting off a recall fix to the tailgate that supposedly opens by itself while driving. The last mandatory fix they installed forces the truck into park if a door is open. I’m told this is for my own safety, whatever! I am basically forced to do my own maintenance or find another mechanic. In a nutshell, service sucks!
Recently I visited a Hyundai dealer to inquire about their new IONIQ. There was one ICE vehicle in the showroom and very little inventory in the lot. I live in Scottsdale so this is not a sleepy town with no consumer demand. I was put on a waiting list for future shipments. Now I get weekly emails informing me that a car(1) has arrived and is ready for deposit. I’m assuming I’m not the only person getting this email so what does that scene look like at the dealer. A dozen people basically bidding for the car. By the way the email had a copy of the manufacturer list of options, the price is shown as TBD. So I’m left in a bidding war with other nice folks for this marginally useful SUV. Mileage is like a secret and is not printed anywhere. The salesman said he thinks it’ll get 250 miles to a charge. So drive it real quick and make a decision. That’s NOT how I spend my hard earned money. I would rather wait, peruse other peoples experience’s in the forum and then make my decision. I did a test drive of the R1T and loved it! I’m hoping I get to drive the S soon as my reservation is for a R1S. And by the way the folks at the Rivian service center were amazingly helpful and truly excited about their product! Without getting all conspiratorial, lobbyists, drug companies, and the government in general are controlling and limiting more and more of the decision’s in our lives. Any alternative to that has appeal to me! Rivian is not perfect and I don’t expect everything to go perfectly but this is a way the consumer can choose. Choice is always a good thing. Maybe the dealerships should offer flu shots for the sheep and the kool-aid drinkers. Sorry I couldn’t resist.
Good luck to all, happy driving!

 

[COdogman]

I have purchased many vehicles from dealers over the past 45 years and not one of those experiences has left me feeling warm and fuzzy. It’s a battle plain and simple. Service has been a nightmare. There is currently a 3 to 4 week wait to get my Dodge Ram serviced. The dealership is 45 minutes away from my home. I have never been offered a loaner without having to pay for it. I am currently putting off a recall fix to the tailgate that supposedly opens by itself while driving. The last mandatory fix they installed forces the truck into park if a door is open. I’m told this is for my own safety, whatever! I am basically forced to do my own maintenance or find another mechanic. In a nutshell, service sucks!
Recently I visited a Hyundai dealer to inquire about their new IONIQ. There was one ICE vehicle in the showroom and very little inventory in the lot. I live in Scottsdale so this is not a sleepy town with no consumer demand. I was put on a waiting list for future shipments. Now I get weekly emails informing me that a car(1) has arrived and is ready for deposit. I’m assuming I’m not the only person getting this email so what does that scene look like at the dealer. A dozen people basically bidding for the car. By the way the email had a copy of the manufacturer list of options, the price is shown as TBD. So I’m left in a bidding war with other nice folks for this marginally useful SUV. Mileage is like a secret and is not printed anywhere. The salesman said he thinks it’ll get 250 miles to a charge. So drive it real quick and make a decision. That’s NOT how I spend my hard earned money. I would rather wait, peruse other peoples experience’s in the forum and then make my decision. I did a test drive of the R1T and loved it! I’m hoping I get to drive the S soon as my reservation is for a R1S. And by the way the folks at the Rivian service center were amazingly helpful and truly excited about their product! Without getting all conspiratorial, lobbyists, drug companies, and the government in general are controlling and limiting more and more of the decision’s in our lives. Any alternative to that has appeal to me! Rivian is not perfect and I don’t expect everything to go perfectly but this is a way the consumer can choose. Choice is always a good thing. Maybe the dealerships should offer flu shots for the sheep and the kool-aid drinkers. Sorry I couldn’t resist.
Good luck to all, happy driving!

All of those great dealer experiences and games are for your own good! It’s a service to the community!

 

[atebit]

If you believe that then I've got an undercoating package to sell you.

That TruCoat, they install that at the factory, ya’ know.

 

[atebit]

It should simply be a matter of a popular vote in each state.

 

[Outdoorsman]

This is the email I got from Hyundai. How thrilling is this!

 

[COdogman]

This is the email I got from Hyundai. How thrilling is this!

That is great customer service - here’s a vehicle that will probably be at the dealership in 2 months - we won’t say if we already have it or not - and we won’t say how much it might cost - and we won’t say how many other people we sent this same “allocation advice report” to…. And if you do want to bid against xxx other people for this car you still get to look forward to sitting in our finance manager‘s office for 2 hours even if you have your own loan arranged.

 

[Ari]

So are you suggesting that if Rivian had franchise dealerships around the country that your experience waiting for your R1S (or anyone else waiting for their R1 to be manufactured) would somehow be different? It certainly wouldn't change anything about the manufacturing or the information coming out of Rivian.

From a sales perspective, dealers are an added layer of cost, nothing more. Competition between dealerships only serves to keep the dealer markup in check (and only to a limited degree based on some of the markups observed with various Ford and Kia dealerships over the last year or 2), it does nothing to control manufacturer pricing. For sales, skipping the middle man always benefits the consumer.

I can see some benefits to service with a franchise model but I say let the market decide what works - we don't need legislation binding us to 100 year old business models. There is no shortage of automobile companies to choose from these days. If one manufacturer starts to take advantage of their customers, those customers will take their business to another brand.

100% agree! The market/consumers should pick the winners and losers, not politicians and certainly not the fat middle layer that says "there are rules in place for a reason"... Who do you think got those rules in the books???

 

[atebit]

“If it breaks and you can’t get to work they will fix it or offer you a replacement”

Talk about saying it for the lulz. If you manage to prevail in lemon law arbitration, it’s the manufacturer, not the dealer that “offers a replacement”.

If you put it to a popular vote, I think more than 9 out of 10 people would be fine with a direct sales model. The < 1% wold be car salesman or franchise owners.

 

[zigzagzap]

So are you suggesting that if Rivian had franchise dealerships around the country that your experience waiting for your R1S (or anyone else waiting for their R1 to be manufactured) would somehow be different? It certainly wouldn't change anything about the manufacturing or the information coming out of Rivian.

From a sales perspective, dealers are an added layer of cost, nothing more. Competition between dealerships only serves to keep the dealer markup in check (and only to a limited degree based on some of the markups observed with various Ford and Kia dealerships over the last year or 2), it does nothing to control manufacturer pricing. For sales, skipping the middle man always benefits the consumer.

I can see some benefits to service with a franchise model but I say let the market decide what works - we don't need legislation binding us to 100 year old business models. There is no shortage of automobile companies to choose from these days. If one manufacturer starts to take advantage of their customers, those customers will take their business to another brand.

That dealer/middleman lives in my community and historically has been the most charitable donor(s) in my town. They employ people who live in my community and contribute to the tax base of the town I live in. What is Rivian doing for my hometown? For your home town?

How much money does a venture capitalist (middleman) expect from their investment in Rivian? Is it more or less than a dealer? These people do not strike me as the most altruistic folks on the planet. Their ROI is built into the sales price we pay without delivering any added value to us or our communities.

The typical car dealer makes about $3,500 on the average car. They make 40-60% of revenues on service and repairs. They also make money on financing and warranties. These are not normal times and many dealers are ruthlessly charging thousands above the sticker price to John Q Public. This is disgraceful.

The new 300-mile-per-charge Chevy Equinox goes 0-60 in 6 seconds and will cost $30,000. It's not a Rivian but is the Rivian 3 times better? I don't know but the battery is typically the highest costing part and both are delivering similar mileage output. Will Rivian be the leader in the truck SUV and truck space in 5-10 years or will it be Ford and Chevy? Those boys play for keeps and have many built-in advantages. Ford's new hybrid sales model will change the way MOST people buy cars to mimic the Rivian/Tesla experience. A customer will log on to Ford.com configure and purchase the cars for a price set by Ford. Customers will then take delivery at a local dealer who will handle delivery, financing, service, and repairs. This system seeks to eliminate dealer greed and dealers will see a haircut on their revenues.

That said I will continue to patiently wait and cheer on Rivian to be the best they can be so that they compete with the legacy players. As a Rivian investor, I see competition as a major risk for Rivian and I don't believe they will be a Tesla unicorn but I do see much upside and a marketplace that values the creativity and innovations that RJ has delivered.

 

[johnnylawson]

It processes the online transactions in Illinois, the site of its first factory, and then ships vehicles directly to the buyer. Those transportation expenses, however, act as a drag on the company’s earnings.​

Rivian should be jumping at any Customer that offers to come to the factory to pick up.... Win win for both

 

[Guy]

It processes the online transactions in Illinois, the site of its first factory, and then ships vehicles directly to the buyer. Those transportation expenses, however, act as a drag on the company’s earnings.​

Rivian should be jumping at any Customer that offers to come to the factory to pick up.... Win win for both

You would think so but they don’t seem to have scaled that up from some reports.

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