Tesla Store

Tesla Store

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

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