Fresh Air Coming To Car Retailing?

2 years ago by Tesla Mondo 32

Inside Tesla's Pop-Up Store (via David Wexler)

Inside Tesla’s Pop-Up Store (via David Wexler)

Tesla's Innovative Pop-Up Store Makes US Debut

Tesla’s Innovative Pop-Up Store Makes US Debut

If we believe what we read, we should conclude that car salespeople are more keen on smoking and texting than assisting mankind’s shift to electric vehicles. Consumer Reports told us so, albeit not exactly in those words, and now the NYT concurs.

Even some auto manufacturers don’t like to sell EVs. FCA chief Sergio Marchionne, in a move he will regret someday*, outright flogged EVs by begging the public to avoid his electric Fiat because it represents a loss to the company. Yet Tesla sells EVs pretty effortlessly, without even advertising them, and at premium prices. Why?

  1. Compelling product. Already discussed at length, and the topic will continue ad infinitum. Other automakers are plotting their Tesla-killers, as the press constantly reminds us, blah blah blah.
  2. Compelling customer experience. Tesla controls its stores. Other automakers struggle to control theirs, so saddled are they with the grandfathered franchise system.

While number 1 gets the headlines, number 2 is quietly getting some much-needed attention. Lexus says it’s watching Tesla’s retail model very closely. TeslaMondo’s sources inside Toyota speak of a new “transparent” process in the works. BMW has opened a mall store already. And now Audi plots a retail re-boot. So Tesla is simultaneously eroding century-old complacency in both auto development and auto retailing. At last, some fresh thinking. It will be interesting to see how Tesla’s service model withstands the exponential sales growth. Will we witness broad change in automotive servicing too? Probably, and just in time for autonomous pay-per-use cars to force a thorough re-write of this post.

*Can you name a single instance when flouting technological change has worked out swimmingly for any company?

*Editor’s Note: For additional background and insight on the New York Times story, check out our coverage here.  Interested in checking out more of TeslaMondo’s work? You’ll find it all here.

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32 responses to "Fresh Air Coming To Car Retailing?"

  1. Ed says:

    Unfortunately it’s not up to the auto manufacturers. The auto dealers cartel is enshrined in state laws and this won’t change while the dealers continue to control our state legislatures.

    1. Not so sure about that Ed. Don’t get me wrong, I am disgusted by the amount of political influence held by the auto dealers in many states. But Tesla can and does sell directly to customers in most states. I suspect if a major auto manufacturer like Toyota or BMW etc wanted to try a direct sales model they could do it. If the state tried to shut them down due to pressure from dealers, the manufacturer could say “look, either allow this or I can pull out of your state completely.” Maybe a bit risky, but imagine the backlash politicians would feel when constituents started calling them asking why they could no longer buy a BMW? Politicians like contributions, but even more than that they can’t stand angry voters.

      1. James says:

        Nope. I’m with Ed. Politicians like contributions MUCH more than they dread angry voters.

        1. Nick says:

          Politicians can’t collect contributions if they don’t get reelected. I think swarms of people complaining about lack of access to a major brand (such as Lexus or BMW) would sway even the most corrupt of politicians.

          1. Nelson says:

            It would probably take a collective effort on the part of all car manufacturers to arrange direct sales in any given State. “If we all can’t sell direct in your State we’ll pull out and you will lose income tax and sales revenue.”

            NPNS! SBF!
            Volt#671

  2. Scott says:

    Had a rotten experience with a Chevy Dealer the other day. Went to LOOK at a Volt and got caught in a time share full court press. On top of that the salesman knew nothing of the car.

    On a positive note I MB asked me to do an online survey, and the questions were geared to buying cars online. Brilliant!

    Though some dealers do the old fashion thing well. My local BMW dealer was very knowledgeable and actually listened to my questions.

    1. Assaf says:

      Time share? You mean metaphorically or literally?

      1. Joe Hays says:

        He meant the full court press one receives when anyone shows even a slight interest in buying a timeshare. They try to keep you in the building for hours and wear you down until you just give up and buy at their price.

        1. Brian says:

          I once went on a test drive and they wanted my keys to do a trade in value on my car. Two hours later I finally got my keys back after telling them I was about to call the cops. 10/10 would recommend getting three people sitting down with you and pressuring to sign.

          1. James says:

            Wow. You guys could use a little tutorial on buying cars. If anyone…and I mean anyone ANYWHERE insisted on my keys to do a trade-in assessment and I politely told them, “No, I’m only here to —– I can do that when/if I return ready to buy” – and they persisted, it’s an easy next move – JUST LEAVE!!!! LEAVE!

            One anyone feels pressured in any way – just tell them you’re feeling pressure, this is negative, and it’s time for you to leave that place of business. General rule of visiting an auto dealership is: You make the rules – not them. When I sold cars 25 years ago, my manager made sure I understood how important it is not to let a customer walk – Because they will just go to the next town and do business with another dealer…So this big emphasis on keeping you there was one thing I absolutely detested.

            Dealers to this day want to work your own trade against your sale. So it’s hurry-up and grab that car and then work it against the sale price. It’s trickery. It’s old. And it’s OLD. “I can get you this new car at ________ price, and seriously, all your trade-in is worth is $__________……..

            – The ole, “Would’ja if I could…” routine.

          2. AlanSqB says:

            Shady salesperson trick #1 in play there. Be sure that if they take anything from you, you get it back before you talk with them anymore. They take keys for “test drive” DL for a copy “for insurance” or credit card “to show you are serious.” Politely inform them that you will be happy to resume the negotiations once the item is returned to you, but that while they have your item the discussion stops. If they don’t like/agree to that then you should leave immediately.

        2. Jacked says:

          Normally I tell them I will sell the car myself for more than they could possibly offer. That usually shuts them up.

    2. Epicurus says:

      Knowledgeable EV/PHEV salesmen are rare. I know one in N. Texas, and he knows one or two others in FW or Dallas. He sells Volts, and he owns three of them.

      Maybe the first question to ask the sales manager is whether any salesman at the dealership owns an EV or PHEV. If the answer is no, try another dealership.

  3. jelloslug says:

    When I bought my i3 my local dealer was dreadful. They knew nothing about the product, nothing about the intensives, and basically would do nothing without me being in the store. I got a tip about a dealer in another city and within 3 emails I was on my way to that dealer to sign the paperwork.

    1. Michel says:

      Same thing for my self and 2 years later they didn’t change much. So for the next Volt or Bolt I’ll drive 250km again . Talking to them about EV is like talking to a wall. They are clueless in the sale department also in the service department.

  4. John Hansen says:

    “*Can you name a single instance when flouting technological change has worked out swimmingly for any company?”

    The organic food revolution, and every company that has made millions from it. That seems to be a somewhat unrelated industry though. 🙂

    1. Assaf says:

      …no, that would fall under the same rubric.

      In the West, large-scale organic food production in the West is a new technology, replacing the 20th Century paradigm of industrial, monoculture, nuke-everything-with-chemicals agriculture.

      Following your logic, one could say EVs are “flouting change” because once upon a time, 100+ years ago, they were as common as ICE cars and we’re just rolling back the clock. We’re not, neither on EVs nor on organic agriculture.

  5. Pushmi-Pullyu says:

    Economic forces are inexorable. They are more powerful than governments; look what happened to the Soviet Union!

    But the grinding forces of economics are not necessarily swift. It took 69 years, more or less, for the Soviet system to collapse. And North Korea is still struggling on under a similar system, despite the desperate poverty of its people.

    The auto dealership (or “stealership”, as some call it) system is outmoded and arguably obsolete. It’s inevitable that it will be abandoned, and good riddance to it. As they say: “Get rid of the middle man!”

    But it may not be abandoned soon.

    * * * * *

    The article says:

    “Other automakers are plotting their Tesla-killers, as the press constantly reminds us, blah blah blah.”

    Well, in many or perhaps most cases, that seems to be the media merely using “Tesla-killer” as a hi-tech buzz word to generate interest in an article or news report, rather than an actual plan on the part of the auto maker to directly challenge Tesla.

    As an EV enthusiast, I would really like to see some other auto maker offer a plug-in EV as compelling as the Tesla Model S. So far, at least, there hasn’t been much. Those very few cars actually appearing to offer a similar quality are much more expensive, and there isn’t any attempt to make and sell them in large numbers.

    1. Three Electrics says:

      The reason you don’t see more cars like Tesla’s at a similar price point is simple: other manufacturers desire to make money, but Tesla has other motives. The story of Tesla is that you can do amazing things if you’re willing to pile up two billion in negative retained earnings. It’s Amazon to the nth degree, but given how well Amazon is doing now, it’s hard to fault that strategy–assuming the numbers work out. Amazon’s CFO stuck around for twelve years.

      1. Three Electrics says:

        Put another way: at one point Tesla was on the verge of selling itself to Google. Would BMW, GM, or Nissan be willing to place a gun to their own head and play Russian Roulette? No. They’re not going to take existential risks and bet the company. They prefer to move from strength to strength. However, Tesla is willing to take more risk–and so far they’re still alive. These strategies work wonders, until one day they don’t, and you’re dead.

        1. Pushmi-Pullyu says:

          Three Electrics said:

          “…at one point Tesla was on the verge of selling itself to Google.”

          Amazing, I didn’t realize “corporate persons” were capable of such negotiations. [/snark]

          No, it was Elon Musk who said, years after the fact, that he was at one point seriously considering selling Tesla to Google. But even if that’s not an exaggeration, even if it’s not “improving the tale” upon retelling, the financial difficulties of Tesla were in large part due to the failure of both Martin Eberhard and Elon Musk to properly control costs in Tesla’s early years. That’s not a cautionary tale about startup EV manufacturing; it’s a cautionary tale about entrepreneurs who create startups without proper attention to controlling costs.

  6. M. St. J. says:

    Why can’t Nissan take their leaf technology and put it in one of their 2016 Murano’s with a 60 kW battery? The RMD to develop the car has already been expensed out. All you need to do now is insert the leaf powertrain. It doesn’t have to be 0 to 60 in five seconds like the Tesla. It’s a beautiful car that would sell like crazy and 150 mile range with the 60 kW battery

    1. Bret says:

      I was thinking something smaller like the Rogue would work well on a 60kWh LEAF power train. Either way, the small crossover platform is red hot and should be included in the EV mix.

    2. Mister G says:

      Nissan won’t do that because it would upset the car dealership cartel…ICE is more profitable than BEV to dealerships.

    3. Alonso Perez says:

      It will. Renault-Nissan has sold more electric cars than anybody, by far. It feels slow but if you look at the big picture it’s really quite remarkable, and that without the benefit of the second generation batteries becoming available now.
      The alliance will continue to gradually but deliberately expand their offerings.

  7. Stimpy says:

    In the US the manufacturers may be strangled to death by the National Auto Dealers Association before they ever overcome it’s stranglehold.

  8. sven says:

    “It will be interesting to see how Tesla’s service model withstands the exponential sales growth.”

    It will also be interesting to see the cost of service at Tesla service centers when Tesla vehicles are out of warranty. Tesla’s “compelling customer service” ain’t cheap, and the cost ultimately gets passed onto the customer.

  9. goodbyegascar says:

    If I understand this (in a nutshell), auto makers cannot sell directly to the consumer in any state where they also sell through dealers.

    Perhaps today’s automakers could get around this by simply offering new brands that have never been sold through dealers.

  10. Kandiru says:

    After I bugged, pestered, and test drove Teslas for two years, I bought an S85D sight unseen from 2500 miles away.

    When I showed it to the friendly Tesla gallery employees I received a shower of compliments and 20% off all accessories as an owner. Never have I felt pressured to buy, they were more like friendly advisors, NADA beware.

  11. Mister G says:

    Bernie sanders Tesla google it

  12. JimGord says:

    No chance.
    New car dealers are still building Taj Mahal and trashing electrics and live in fear of losing their service centre cash cow.
    in cage or die. Dealers have opted for fie

  13. Bill Howland says:

    I’ve had years of experience dealing with Tesla, and also, obviously with conventional dealerships.

    Since I am not within 200 miles of a Tesla Service Center (other than Toronto, Ontario; and therefore warranty service *Cannot* be performed there, – I checked – ), it is simply too difficult from where I am to purchase another Tesla.

    Good dealerships are in the minority it seems, but I’ve found a good one with my ELR purchase. Perhaps more importantly, GM stands behind the Volt and ELR more than Tesla did with my Roadster.

    Tesla renegged on their warranty with the Tesla regarding their ranger service, until I was calling them every day, and still refused to fix a factory-generated alignment problem which my local mechanic found and they wouldn’t reimburse me the $180 for the repair. That’s exceptionally tight-fisted considering a $109,000 purchase.

    So people here who frankly, are just ‘arm-chairing’ how they think things work have not personally dealt with what things are in real life.

    I don’t care that CR personnel gave the car 110 out of 100 points, and that the car was by far the best thing ever made on earth, but then put the car as ‘not recommened’ after they got the stock price to go up.