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Differences Between Independent & Franchise Used Car Dealers

Where to buy your need vehicle

When you’re looking to buy a used car from a dealership, you have two choices. You can buy from an “independent” dealership or a “franchise” dealership.

Image result for used car lot

Independent Car Dealers – These are used car dealerships that don’t have agreements with any particular car manufacturers to sell certain makes of vehicles and they won’t feature the name of any particular manufacturer in their name. They’ll usually have names like “Quality Used Cars” or “Smitty’s Motor Company.” Since they’re not linked with any specific car manufacturer, independent dealers don’t sell new cars and will offer a larger variety of used cars from many different makes.

Franchise Car Dealers – These are dealers that have the authorization or “franchise” from certain automakers to act as an agent in selling their vehicles. Franchise dealers can be easily spotted because the dealership’s name will usually contain a car brand’s name in it –  “John Doe Hyundai”, for example.

Here are the differences in buying a used car between the two types of dealers

  1. Vehicle Variety – Independent car dealers will typically have a much bigger variety of used vehicles.  Franchise dealers that also sell new cars typically don’t put as much focus on the used cars they offer.
  2. Financing – Franchise dealers usually have manufacturer’s financial services arm – Toyota Financial or Ford Motor Company Credit, for example. The franchise have more customers to choice from, so they tend to focus on the higher end customer.  Independent dealers’ are not bound by the manufacturer, so they can use any bank available to them. They are also more likely to offer financing to people with less than excellent credit, making it easy for someone with a checkered credit history to finance a car that would be turned down at a franchise dealer.
  3. Vehicles – Used cars at franchise dealerships are usually the make of their brand. Independent dealers stock all makes and  models, but also typically have a selection of cars that are focused on the area they are in. The independent dealer can buy whatever the customers want and need, while franchises focus more on what the manufacturer requires. If you need a special order, independents are definitely much more cooperative.
  4. Price – Prices for used cars at franchise dealerships are often higher than at independent used car lots. Since the used inventory at independent dealers is their only resource unlike the new vehicle options at a franchise dealer, you’re more likely to find cars for lower prices at an independent dealership. The overhead is always a factor when dealerships price their inventory. The larger franchises have much more overhead and require larger profits on each sale to maintain their costs. An independent, even rather large ones, have less overhead which means the saving can be pasted on the consumer.
  5. Customer Service – Customer service can be a determining factor whether you purchase a vehicle or not. Many times the service before and after the sale is more important than the price of the vehicle. Franchise dealerships are required to maintain a CSI, Customer Satisfaction Index, to receive all the money from the manufacturer. This is good for the customer because they don’t get the full amount unless they maintain a certain level of satisfaction set by the Manufacturer. Independent dealers are not required by a manufacturer and have no requirements for customer service. However, the independent dealers have more at risk than a franchise. With the limited amount of customer they see, it is harder to recoup from bad customer service. For an independent dealer, the customer service is more genuine and can be the difference in their success or failure.

Overall, there are many benefits for both the franchise dealerships and independents. With a larger audience the franchise dealership typically have many options to choice from. The independent dealers is smaller and have a more friendlier environment. Franchises can afford to make more mistakes than an independent dealership. Franchise dealerships have more turnover of employees and make it hard to find the same person you purchased a vehicle from the last time you visited. The independent dealerships have less resources and aren’t able to reach as many people in their marketing.

The vehicle is similar, although no two used cars are alike, you should be able to find what you want either place. The question is whether you want to have personal attention and genuine service, or if your looking for the easiest way to purchase a vehicle.

 

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