Forbes: “Tesla is Smarter Than Other Auto Companies”

MAY 1 2014 BY ERIC LOVEDAY 17

Tesla Store

Tesla Store

Recently, Forbes posted a lengthy article with a title of “Tesla Is Smarter Than Other Auto Companies.”

Tesla Logo

Tesla Logo

The article opens with the following line:

“Car dealers are idiots.”

The article starts out with this first-hand retelling of how it went when an exec visited a BMW dealership in an attempt to trade her Lexus in for a BMW SUV:

It was evening, and this Vice President of a large health care equipment company was meeting me to brainstorm some business ideas. I asked her how her day went, when she gave the response above.

She then proceeded to tell me she wanted to trade in her Lexus for a new, small SUV. She had gone to the BMW dealer, and after being studiously ignored for 30 minutes she asked “ do the salespeople at this dealership talk to customers?” Whereupon the salespeople fell all over themselves making really stupid excuses like “we thought you were waiting for your husband,” and “we felt you would be more comfortable when your husband arrived.”

My friend is not married. And she certainly doesn’t need a man’s help to buy a car.

Unfortunately, stories similar to this one seem to be the norm rather than the exception at dealerships.  These stories, coupled with the fact that salespeople routinely top survey lists for being the least trusted occupation, led Tesla Motors to take a different approach, one that was mostly pioneered by Apple:

Tesla Store

Tesla Store

“Rather than trying to find dealers for its cars, Tesla decided it would sell them directly from the manufacturer . Which created an uproar amongst dealers who have long had a cushy “almost no way to lose money” business, due to a raft of legal protections created to support them after the great DuPont-General Motors anti-trust case.”

The Forbes article then discusses in detail how trends emerge and how Tesla is fighting a regulation designed to protect the minority.  As Forbes states:

“Attacking regulations sounds – and is – a daunting task. But, when regulations support a minority of people outside the public good there is reason to expect change.”

“Today Americans do not need a protected group of dealers to save them from big, bad auto companies. To the contrary, forced distribution via protected dealers inhibits competition because it keeps new competitors from entering the U.S. market.”

Back to trends for a moment.  As Forbes states, “trends inevitably win out.”  Forbes adds:

“Today Millennials are true on-line shoppers. They have no patience for traditional auto dealer shenanigans. After watching their parents, and grandparents, struggle for fairness with dealers they are eager for a change. As are almost all the auto buyers out there.”

The entire Forbes article is expertly written and deserving of a full read.  It concludes with this:

“It’s rarely smart to refuse a trend, and almost always smart to support it. Tesla looks to be positioning itself as much smarter than older, larger auto companies once again.”

Source: Forbes

Categories: Tesla

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17 Comments on "Forbes: “Tesla is Smarter Than Other Auto Companies”"

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The old dealership model is on the wrong side of history, and will only continue to lose ground to direct sales.

The change won’t be monotonic, and it won’t happen at a steady or swift pace, but it will be relentless.

I’ve had more than my share of bad experiences with morons at car dealerships, as I’m sure most people who read this site have. Bad service, bad information, a constant struggle to not be ripped off — there’s almost no end to the awfulness they inflict on their customers.

The sooner that business model’s monopoly ends, the better.

The last place to seek automotive assistance is at a dealership. Their prices are outrageous.

They work within a sales system that they control. Their only competition is aftermarket repair shops and parts companies.

And, now that car makers own and will not release their controlling CanBus software, repair shops are grossly disadvantaged.

I believe car companies must provide this software as part of the purchase cost of the car and it should be within the Public domain. Tesla selling direct is a start to fair play in the auto business.

The problem with software and service information is also present, in spades, at Tesla. Just try to get ANY service info from them. They have a complete monopoly on sales and service and almost complete on body work.

These articles and related evidence will be most useful in court…

Tesla is just a car company. Transpotation and energy are two fields of contradictions, among many, where the Conservative image of favoring “competition” simply doesn’t survive. Too many “Capitalist Tools” want to do away with it, and they aren’t the type Malcom Forbes would have approved of.

And how funny that government is helping them get protected from competition…

Electric-Car-Insider.com

It will be interesting to see who the next non-Tesla disruptor is in the automotive retail space.

Cars.com, True and other Internet sites may be in a better position to innovate than even the manufacturers.

A lot of times I do notice that the car dealers like to play stupid when it comes to EV’s. Such as this one Nissan Dealer has some leafs but they don’t sell them instead they keep them out back behind the bathrooms and out of sight. And another thing about them is they treat you like crap if you are simply looking and not committed to buy.

I see nothing wrong with Tesla’s direct model but why can’t dealers evolve too?

There’s nothing stopping current manufacturers from tossing out old sales models, customs and salesman themselves and revitalizing things with informed, helpful staff.

That might sound pie-in-the-sky but eventually more non-geeks will be considering EVs and I think a good dealership model could help EVs progress.

How can “current manufacturers toss out old sales models, customs and salesmen” in the face of current dealer protectionist laws?

You must sell via an independent dealer. You can only provide guidelines and can never control the dealer.

1) I got my Leaf via the Nissan VPP program. Price is printed upfront. Went to ALL my local Nissan dealers – they all claimed to participate in VPP but all gave me a price higher than VPP. When I pushed further, all wanted me to come in and visit them. Disgusting. Had to travel 40 miles to a honest dealer.

2) Was at a dealership earlier this week. Saw a couple of higher end Nissan cars with “Dealer Markup”.

Tell me again how dealerships look out for the customer? How dealerships encourage competition? That’s what they say in defense of existing twisted laws.

Forgot to add that when those dirty Nissan dealers that claim to participate in VPP but won’t give me VPP pricing, I complained to Nissan North America VPP Marketing Manager (my company is a big Nissan partner). All she could do for me is explain to them how VPP works but she said Nissan is unable to enforce it. I had to go look for dealers that would honor it.

Why do I have to go through that pain for autos when nothing else in America is like that? I want the Apple model – walk in, pricing is upfront.

You won’t have those pricing problems at Tesla. You’ll pay full list prices, no discounts, as listed by Tesla, anywhere in the US. Not sure if that’s any different than what you’re complaining about.

MSRP is FAKE!
Anyone who believes it needs help.

Why would anyone think that when a third party (read NADA) HAS to get involved in a sale, the price would be less?!?!?!?

Do you think these dealers are doing this out of the goodness of their hearts and not get paid?
where do you think the money comes from to pay these Sharks?

I’m pretty sure Tesla includes a similar bump in price as other car manufacturers you just don’t get to argue the price. They don’t build them to break even.

Were you talking about the “apples” model, as in, buying just about anything at a grocery store, or any other business for that matter? Other than cars, I can’t think of any mass-produced item which requires this tedious shopping and negotiating process to purchase. I find it fun to haggle over 2$ souvenirs in Morocco. For 30k$ items, not so much. To get my Leaf, I visited or contacted like a dozen Nissan dealers. I was thoroughly disgusted with two of them, to the point where I seriously considered just giving the brand the finger. I did log a complain with the company. Most of the others were “meh”, clueless about EVs, marking up like nuts and/or apparently not eager to sell me one. At the other end of the spectrum, two went the extra mile to make me happy. Didn’t act arrogant or question my choice of an electric (short of making sure my commute etc was adequate), researched questions they were unsure about instead of making up bs on the spot like most others, stuck to all the promises made on the phone… Wow, some integrity? What a concept! Much later, I did visit a Tesla store, just… Read more »

That occurs when you drive your Chevy to a Toyota lot or your Ford to a Chevy lot or your Nissan to a BMW lot or your BMW to a Benz lot or your…….

What’s your point?

It’s competition.

No, it doesn’t. When I visited Nissan dealerships, a lot of negative comments about my old Honda would have been justified. Yet, of course, even at the worst ones, absolutely none was made; salespersons there focused on highlighting the qualities of their own vehicles.

At a minimum, I would have expected the same at Tesla’s.

If you visit, say, a hair salon or nice clothing store, how would you feel if the staff started making derogatory remarks on your current look?

My point was, my experience at this Tesla store was no different than a regular dealership. I’d rate it actually slightly worse overall.

This Forbes article completely failed to see that which company owns the store has nothing to do with how professional the staff is.