"Consumer choice" is bit of a misnomer

When the One Big Beautiful Bill brought the end of the federal EV tax incentives, the Trump Administration lauded it as bringing choice back to the consumer. Trump then gutted the EPA and its enforcement ability, which also allows for more consumer choice. The government even wants to roll back safety requirements for the sake of consumer choice.

There wasn’t an EV mandate, at least not yet, and there are hundreds of new cars available today that aren’t powered by an electric motor. But adding massive tariffs to cheap cars doesn’t help with the supposed north star of consumer choice, and neither does cutting safety standards that save lives. Unless the choice you want is for less safe, more expensive cars.

With Ford killing the BEV Lightning officially, and Ford dealers suddenly whining about not having affordable vehicles, it has me thinking more and more about this idea of consumer choice, and how there isn’t true consumer choice in most new car showrooms.

For most of the cars that sit on lots at new car dealerships, the dealership was allocated those cars from the manufacturer. They receive a shipment based on what the automaker wants them to have. With Americans more accustomed to buying off the showroom floor, the choice is limited to what’s on the showroom floor. If the automaker wants to push a particular model, they’ll send more of that model.

Dealers do order cars to sell, which also impacts what’s on the showroom floor. So they also have control over which cars (i.e., the more profitable ones) get stocked. It costs money to keep cars on the floor, so they also want stuff that’ll turn over quickly.

There are also typically sales goals and incentives from the manufacturer and the dealership that push a salesperson to recommend certain vehicles. Since most car salespeople are paid on a commission basis, with bonuses for meeting sales targets, there’s an incentive to steer a buyer to a more expensive vehicle.

The same applies to the finance office, where the choice of saying no to optional extras is virtually non-existent (at least in the unscrupulous showrooms).

So, affordability becomes a self-fulfilling prophecy. Automakers don’t send cheap versions of their cars to dealerships. Dealers push people into more expensive cars so they make more money. Banks help by adding incentives to push long and longer loan terms, which reduce monthly payments but increase overall cost. Then the cheap cars get cut because nobody bought them.

I’m a firm believer that people don’t want to necessarily buy expensive or more luxurious things, but they also don’t want to be reminded they they are poor or choose not to buy the more expensive option. A lot of the inexpensive cars (tens of thousands less than the average new car transaction price) are nice places to be. And affordable cars sell.

But it’s also clear there isn’t a pure choice in the matter. In some towns, there might be only one or two car dealerships. Franchise laws protect those dealerships from direct competition, so you won’t have two Ford stores in the same area. If it were a Subway, that’s good, because prices are the same and you don’t want to hurt a franchisee. But in the case of a dealership, where prices can vary wildly (along with the level of service from the service department), there’s no real reason to compete.

Sure, a customer can choose to walk away from a deal (which is a power move more people should employ), but there might not be anywhere to walk to that’s at all convenient to the car buyer.

There is still some choice out there. There are hundreds of new cars on sale, and if you’re willing to do some legwork, you can usually find an acceptable deal. But you have to agree that this freedom of choice that everyone keeps harping about when making decisions isn’t as unbiased as they want you to think.

Direct-to-consumer can be tricky, too. Volkswagen dealers really want the EREV versions of the new Scout brand (they seem not to care about BEVs at all, which is why Scout wants to go it alone), but I’ve also been to a Tesla store with a friend ready to buy, and they were incredibly crappy to him for wanting a demo drive.

What’s the fix? You’re not going to get grocery store-type setups, where you walk in and can just choose from the selection. Though a Trader Joe setup, where everything is the “house brand,” would be interesting. A Ford dealership that just stocks stuff and people can buy stuff without negotiating or backroom dealing would be an interesting experience to see what people actually buy when they aren’t pressured in a particular way.

I do think we should reform dealership franchise laws, and I also think there shouldn’t be negotiations on the price of a car. The MSRP should be the price. Pro-consumer finance laws would help, as well. There’s nothing wrong with selling add-ons if the customer wants them. There’s also nothing wrong with trying to beat a financing deal by trying other banks. But when there are additional incentives behind the scenes, the customer doesn’t know about affecting things; it’s hard for a consumer to make the most informed decision.

But when someone, whether it be a dealership group or lobby, or an automaker, or even a politician, says they’re doing something for the benefit of consumer choice, don’t just take it at face value. Sometimes they absolutely are working for the best interest of the consumer. Sometimes they aren’t.

There can be a healthy in-between where everyone comes out of the new car purchase process a winner, but it’s hard to get all parties on board without consumer protections in place.

P.S. Kei cars aren’t going to be the answer. Sure, they’ll be cheaper than a normal car, but that’s not a magic pill for affordability. Additionally, I’m still confused about how offering fewer EV models improves choice? If you wanted an EV, you have fewer options now than before. But I digress.

P.P.S. If Volkswagen dealerships want Scout so badly, VW should tell them they can sell Scout as long as they also take and sell Cupra. Which they won’t do.