Here are some more reader Qs – along with my answers:
I was wondering what you think is the cost impact to consumers of the state laws that prohibit auto manufacturers from selling vehicles directly to the public.
It’s at least several hundred dollars per car – the “destination and delivery” fees tacked on to every new car purchase, which reflect the cost of shipping a vehicle from its point of assembly to the dealership. If one could pick up a car directly, at the plant, these costs would be eliminated or greatly reduced.
Of course, you’d have to “prep” the car yourself – which means removing all the protective plastic and so on that is installed by the factory – as well as (for some cars) install parts such as air dams and so on that are typically put in the trunk for safekeeping until the car reaches the dealer.
Beyond D&D, there is also the cost of the mark-up. That is, the difference between what the dealer paid for the car and what the dealer charges you for the car. So-called “invoice” pricing doesn’t always reflect the actual number, because there are hidden manufacturer-to-dealer incentives and other such that the buyer isn’t aware of.
I agree with you that it ought to be possible – legal, at least – to simply buy a car directly from the manufacturer rather than have to purchase it from a dealership.
Berl also asks:
You pointed out on a recent Tom Woods episode that there were a multitude of sub-compact models that all look like.
Can you comment on the impact of federal standards that influence the look of vehicles?
I wonder if, absent these standards entirely, there would be more innovation and more variation in styles.
I have always thought that standards interfere with innovation. An excellent example of that is in the public schools: the more that education is standardized, the less risk taking you get, and hence you get less innovation. Very evident in school playgrounds: they all look alike because of the strict codes.
There is no question that the need for each car to pass federal crash tests and meet bumper impact and other “safety” standards has homogenized car design. These standards have had the effect of creating a kind of design template, which tends to make cars look more and more alike.
It is very difficult to create – as an example – a radically different front end shape that also passes muster with the Feds. It can be done, but the cost is higher – which is why it is rarely done.