Supply Chain Council of European Union | Scceu.org
Operations

How to Order a Car from the Factory

It’s no secret that buying a car has become a challenge. Supply chain issues have led to fewer cars being delivered to dealerships, which has in turn led to fierce competition for those new cars. That leads to higher prices and a more limited selection. You might have to compromise and either pay more for features you don’t want or forgo features you’d planned to buy, based on what’s available on the lot when you’re car shopping.

Car dealership lot

Car dealership lotGetty Images

But there is another way, one that has been popular in Europe for years: you can order your car from the manufacturer rather than buying from the dealership’s available inventory. This strategy is so common throughout the world that Mercedes-Benz announced it’s closing 10% of its showrooms globally (though not in the U.S.). The German carmaker is going to aim for 80% of its sales coming through this agency model, as it’s sometimes known, by 2025. Brands under the Stellantis umbrella, will be making a similar move in Europe. Volkswagen and Audi are already selling electric vehicles through the agency model, like their EV rivals Tesla, Rivian and Lucid.

It’s a trend that’s gaining traction in the United States too, thanks in part to the buying habits shoppers turned to at the start of the COVID-19 pandemic. People began doing more of their car shopping online, including the negotiation and paperwork processes, and dealers even offered delivery services. In a move to meet buyers were they are – in front of their screens – Ford instituted a direct ordering system. More than half of Ford’s U.S. retail sales in June 2021 came from direct ordering.

Ordering from the factory is a little different from the home deliveries dealerships were offering during the pandemic and continue to offer in some areas. Many dealerships were allowing shoppers to buy vehicles that were on the lot, much as you would do in person. Custom ordering means that the car doesn’t exist until you place your order and it’s entered into the schedule at the factory where that model is built. Then they build it just for you, according to what you ordered.

As with anything, there are some pros and cons for ordering a vehicle from the manufacturer, and we’ll look at those below. But first, let’s walk through the ordering process.

How to Order a Car

Choose Your Dealership: In nearly every case, a dealership will act as a middleman between you and the manufacturer. Check reviews of local dealerships and choose one to work with for this process. Good communication is especially important when ordering a car that’s going to take some time to arrive.

Configure Your Car: This step is probably the most fun. Most manufacturers have a configuration tool on their websites that allows you to choose the colors, trim, engine, transmission and features that you’d like. Remember that this is a real car that costs real money, so be mindful of your budget.

Pay a Deposit: Most manufacturers ask for $500 to $1,000 as a deposit. That might be refundable if you back out of the sale, but it might not be, depending on manufacturer, so read the fine print.

Three people sitting around a table in a car dealership

Three people sitting around a table in a car dealershipGetty Images

Get Documentation: Be sure you have the build sheet, the estimated delivery date and the final negotiated price including any rebates or incentives in hand, or at least in your email inbox. You want to see every feature that you’ve selected and the price for each option and package listed.

Learn the Cutoff Dates: The dealership or manufacturer should be clear about cutoff dates. When do you have to finalize your order? How far along in the process can you request changes? When is the last day that you could back out of the sale completely? Will you lose your deposit at that point?

Prepare to Wait: You’ll typically wait about eight weeks for cars built in the U.S. and three months for cars built outside the country. Remember, though, that supply chain shortages don’t only mean fewer cars on the lot; they also mean fewer parts for those cars at the factory. You might need to wait longer. Ford will allow you to follow your car through the process as soon as it’s been assigned a VIN. Some manufacturers, such as Toyota, allocate cars to order rather than build them from scratch. That means that you configure your car, and they find a model somewhere that matches your specifications. Then they ship that car from wherever it might be to a dealership near you.

Arrange for Financing: After paying the deposit and placing your order, you have time to shop around for good interest rates. Check the offers available through the dealership against the auto loan rates at banks and credit unions.

Arrange for Insurance: Since you know everything there is to know about your car before it’s even built, you can shop around for insurance too.

Be Ready: You’ll want to be prepared to take delivery of your new car as soon as you can once it’s arrived at the dealership. You might need to head to the dealer to finalize the paperwork, or they may have a system to allow you to finalize the sale online and have it driven from the dealership to your home. Depending on the terms in your contract, the dealership could try to resell it if you let it linger on the lot.

Check Your New Car Carefully: If you’ve rented a car, you’re likely familiar with the routine. Look for dings, dents, scratches and anything that shouldn’t be there on a new car. But also make sure everything that should be there is there. Check all the features on the build sheet against the car that’s now sitting in front of you.

Make the Trade: If you’re going to trade in your old vehicle, now is the time to go through that process with the dealership.

Why You Should Order

As we noted earlier, if you order a car, you get exactly what you want. You won’t have to pay for features you don’t want, nor will you have to settle for a car that doesn’t have features you need. You’re not at the whim of any dealership’s inventory.

A person ordering a Porsche online

A person ordering a Porsche onlineGetty Images

Speaking of which, you’re also potentially saving money. Dealerships sometimes have more midlevel trims available, as those are usually popular. But if you’re on a budget or just not a fussy shopper, you might only want the least expensive base trim. Sometimes the only way to get that trim – and not be upsold on features you don’t need – is to order it.

During the first couple of years of the COVID-19 pandemic, when car shopping was at its most competitive, we saw new vehicles being marked up by thousands of dollars over their sticker price. If you order a car, you’ll pay the suggested retail price for the features you select, plus tax, title and fees, without the markup.

Ordering at home also takes the pressure off. You can make choices based on your needs and budget without a salesperson making “helpful” – and expensive – suggestions as you shop. There’s also no incentive to “act now,” since the car you’re going to buy doesn’t even exist yet. This is car shopping like the tortoise, not the hare.

Why You Shouldn’t Order a Car

The biggest drawback to ordering a car is the wait time. You’re looking at minimum a month before the car is in your driveway. If your old car is beyond hope, or it has been totaled in an accident, you might not have the luxury of waiting a month or two for a new custom-built car.

Ford Factory

Ford FactoryGetty Images

Ordering a car also doesn’t get you around the supply chain issues everyone is experiencing. We said it before, but it’s important to remember that it’s not just whole cars that are backed up, it’s the parts that make those cars, especially microchips. There’s no way to predict if your three-week delivery time might be affected by a new shortage of a critical car part.

On the plus side, you’ll be paying the sticker price without a markup. On the minus side, you’ll be paying the sticker price with little room for negotiation. In addition, many of the advertised financing deals and incentives are restricted to a dealership’s current inventory. Those won’t apply to a car you order.

Building a car exactly to your specifications is rewarding. But be careful in your choices if you hope to sell it on in a few years. Wild paint colors or expensive sound systems might limit the resale market for your car. Just because you paid extra for a feature you love doesn’t mean the next potential buyer will pay for that feature.

Car Ordering FAQ

  • Is it cheaper to buy cars from the factory? It can be, especially if you’re looking to buy a basic trim or avoid markups in a tight market.
  • How long does it take to factory order a vehicle? You’ll typically take delivery of your new car in three weeks from a factory in the U.S. and eight weeks from a factory outside the country. These times are higher at the present time due to supply chain constraints.
  • Can you pick up a car from the factory? A select few manufacturers let you pick up the car at the factory, such as the Volvo Overseas Delivery program.
  • Can you order a car online? Yes, you can order a car online. But you will still be going through a dealership to finalize the ordering process and to arrange for pickup or delivery of the vehicle.

Related posts

Finland’s Nokian Tyres defends move to retain control of Russian factory

scceu

Factory roof collapses 4 dead-ANI

scceu

MRED preps for Gokey factory tour, Startup Moniteau program

scceu