Why Dealerships Fail At Selling Electric Cars

SEP 2 2016 BY TESLAMONDO 44

WHY DEALERS STINK AT SELLING EVS

The Sierra Club did a “secret shopper” survey to gauge the EV scene at dealerships and, of course, found that car dealers make lousy EV evangelists. They don’t have any EVs, or can’t find the keys, or have their sole EV stashed somewhere behind the dumpster, or forget to charge it. Consumer Reports has done similar studies and reached similar conclusions. EVs get lousy retail support — excepting Tesla, of course.

Tesla's Shanghai Hongqiao Store & Service Center

Tesla’s Shanghai Hongqiao Store & Service Center

But so far, no study has discovered one of the primary sources of the malaise. Dealer insiders will understand this post better than the average reader, but here goes anyway. Ready? Every manufacturer surveys its customers and compiles a customer satisfaction index (CSI) for each dealership and each salesperson. Under-performing dealers face fines. They often pass those fines onto the under-performing salespeople. Sometimes CSI is the sole topic of morning meetings. It’s a big issue. Many dollars are at stake. Jobs are at stake.

So far, this sounds like a reason for dealerships to stay on the ball, right? Yes, it becomes imperative to dodge hot potato situations that could result in bad surveys. EVs are hot potatoes. Despite their alleged simplicity, they’re complicated. They raise questions that salespeople might not be able to answer because they’ve forgotten the stuff they learned in that training course six months ago. EVs even draw sticky tax questions. Yeek! All of this spells CSI disaster.

Also, EV customers might have a bit of a ‘tude, or may come across that way because they feel like they’re imposing on the staff by even breaching the subject. They can read body language.

The bottom line: If an EV customer leaves the dealership without a car, it’s a bullet dodged, plain and simple. Let someone else take the CSI hit and face the fines. And so, folks, many dealers will continue to boot EVs behind the dumpster because they represent big risk with little reward.

Sales manager: “Are you still with that cruncher?”
Salesperson: “No, she finally left.”
Sales manager: “Good. Stay alert and get another up.”

You think this kind of dialogue would freak out the dealer principal if he/she were to hear it? Absolutely not. A job well done. This isn’t the week to be dabbling with dorks. The dealer is a half-point below the regional CSI average and can’t afford a bad survey right now.

So what would it take to get this situation turned around? TeslaMondo sees three possible paths to better EV retailing:

  1. Wait it out. Eventually, the technology will become commonplace, so dialogue between salesperson and customer will rise to the current ICE level. In other words, it will go from exasperating to merely annoying.
  2. Automakers must take control of the retail experience. This means inciting war by trampling dealer franchise agreements, but the outcome might justify the brutal bloodshed. Think Normandy.
  3. Build better EVs. The sales staff would love talking about truly exciting products. But who wants to talk about a friggin’ i-MiEV? Compliance cars get short shrift at dealerships because they deserve no better, period.

*Editor’s Note: This and other Tesla-related posts appear on TeslaMondo. Check it out here.

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44 Comments on "Why Dealerships Fail At Selling Electric Cars"

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The stealership experience gets worse when you go to a “Sale-a-bration” or “End of year clearance sale” looking for an EV.

So what you are trying to say in this article, in so many words, is that dealers are stupid, lazy, self absorbed, greedy and uninformed.

Too easy.

The core issue is that except for certain areas, EVs are still rare and exotic. They slow the process down. Dealers are about throughput. I am willing to bet that in your local area, there is one dealer who makes the effort to understand and sell their OEM’s EV products. If you do a quick search online, and find out which one that is, you will have a nice experience.

It’s probably true that if I wanted to buy a Leaf I could find a dealer well informed concerning evs. The others, not so much, been there done that.

Of course, as you suggest, not all dealerships are bad, some actually give you near the extra %5 over the cost of the vehicle, that you pay when a you purchase a vehicle through a dealership.
Of course they are figuring in oil changes and regular service, always overpriced, that the vehicle will require in the future.
Evs, as a general category require less maintenance, no 2x oil changes and other service, so dealerships are disinclined to sell them.

This is very bad for GM and Ford. If the dealership is holding back these companies success in innovation, it means long term, there is no long term for GM and Ford.

They’ll both go bankrupt by the dealership model.

I bet Tesla sells 50,000 electric pickups before Ford sells 50,000 EV or Hybrid pickup trucks. And if that’s true Ford is DEAD.

Tesla will probably sell 50,000 EV Pickup’s before Lutz’s Via sells 50,000 also.

Which explains the ultra low PE of their stocks.
“The Market” sees no future for these companies.

Oh, and Exxon’s PE means the company stock price is 200% overvalued, as Saudi Arabia has said $50 oil is the price target.

Via Motors is just doing conversion vehicles, isn’t it?

That’s hardly a fair comparison. No company making conversion vehicles could ever possibly compete on volume with a company which mass produces cars. Conversion vehicles are a niche market, and will always remain so.

I seriously doubt Ford or GM is going bankrupt because of EVs or the dealer model.

Both companies make the bulk of their profits from trucks and SUVs and that isn’t going to change anytime soon. They have pretty strong monthly sales of the Volt and Energi models. I also predict the Bolt will be a strong seller. When trucks and large SUVs go PHEV (like the Via) you can bet they will be right on top of it. There is way too much at stake for them to drop the ball.

Right, but wasn’t that what Kodak was saying about digital camera. If reaction is late, the big turn get missed and the company goes off cliff no matter how big.

Oh, that is a perfect comparison. Wish I had thought of ir

I tried a local GM and Nissan dealer … both told me to “go to a larger dealer with EV specialists”. Unfortunately those dealers are 200+ km (120 miles) away…

The dealership model is a broken and outdated system in so many ways. Almost completely incapable of adaptation and change.

Do away with the special legal protections for it and it will die a well deserved death.

“Do away with the special legal protections for it and it will die a well deserved death.
Reply”

Possibly before the ink even dries 🙂

Only if traditional car makers start selling directly

Not so. The stealership dealership business model is inherently inefficient; it’s based on the idea that the customer doesn’t know what the car actually costs and therefore has a weak position when negotiating a sale price. In the Internet age, this is no longer true. Potential customers can easily find out the exact price they should be paying for any car.

“Cutting out the middle man” is exactly what Tesla has done, and it’s one of the ways that Tesla has managed to successfully compete against long-established auto makers, despite the majority of financial analysts predicting Tesla would fail.

If legacy auto makers don’t abandon the outmoded and inefficient dealership model, then they will lose out to competition from new companies which, like Tesla, cut out the middleman.

That really depends on the dealer. With Nissan I have good experiences. From my next three Nissan dealers, every chief drives the Leaf 🙂 and that sinice around 2012. So they also know everything about it.

This would probably have the best chance of making a difference under the current system – if it’s their daily driver, then they get it, and will be confident enough to sell it.

A dealer could be good for ev if he only sells ev. For instance a Tesla dealer would have salers perhaps trying to get you to buy a higher model level but not an ice. So dealers are not fundamentally incompatible with ev cars but it doesn’t work when they also sells ice, even less when the salers gains a bigger bonus on selling an ice. But if they gets a bigger bonus by selling a Model S P90D instead of a Model S 60, it doesn’t hurt ev sales.

It sounds like what they need to do is to apply bonus points to the CSI for an EV sales. Then they would have a good effect on the score. They could apply enough bonus to give a good boost for an “average” experience but no boost for a “the most negative” experience.

Tesla needs to get copies of all these studies. This will provide them great ammunition for allowing them to have their own sales stores because traditional dealerships will not properly handle Tesla sales.

Yep, Musk’s arguments have been accurate, but empirical. Actual evidence never hurts.

When I first started shopping for a Volt in 2011, they had only two sales people who had been through the Volt sales training. So every time any of the other sales people got somebody asking about the Volt, they had to turn them over to the Volt sales people, and they lost their “Up”.

That created a situation where every single other salesperson in the dealership hated to see people looking at the Volt in the showroom. They knew they could never make a commission on that customer, so all the salespeople either stayed far away from them, or tried to point them to a Malibu on the floor “because the rear seat was bigger”.

To make the problem worse, the car salesperson turnover rate has gone through the roof in recent years, with turnover rate in non-luxury dealerships hitting a whopping 74% at one point:

http://www.autonews.com/article/20141208/RETAIL06/312089963/high-salesperson-turnover-getting-worse-study-finds

With all this turn-over, there is little reason for dealerships to spend money training their sales people on how to sell EV’s. The sales person helping you on your Nissan Leaf purchase, was probably selling Kia’s last month.

Wow – that’s horrifying – what insane stress levels they must be under!!

Have you seen the movie “Glengarry Glen Ross”? That’s about real estate salesmen, but I have to wonder if new car salesmen aren’t subjected to much the same high pressure to make sales or be fired.

I worked at a Chevy dealership in the ’80’s, they had a simple policy, every month, the bottom salesperson in a rolling 90 days got fired. They were always hiring, and burning through people. The guy with the seniority was only there about two years.

The vast majority of EV buyers probably know FAR MORE about the EVs than the sales people. That probably irks the sales people and they just want to get rid of those smart-Alec EV do-gooders.

Just out of curiosity, that picture at the top, with all the Leaves — where is that? I assume that would be one of the better dealers to shop at.

I see the filename says “San Jose”…

Good sleuthing, its Premier Nissan of San Jose

http://www.nissanofsanjose.com/

“Automakers must take control of the retail experience.”

The automakers (except Tesla) have no incentive to sell the cars either. GM would much rather sell a gas truck. They make more money.

Much as I appreciate sarcastic humor, when you make that the basis for an entire article, it leaves the reader rather uninformed about the supposed subject. The article didn’t even mention what I think are the two most important points: 1. Stealerships generally make more money off their service departments than they do selling cars. EVs need significantly less service than gasmobiles, so there is less long-term opportunity to make money off the customer. Therefore, it’s understandable that stealerships would rather sell you a gasmobile than an EV. 2. To promote the advantages of an EV, the salesman has to dis all the gasmobiles the stealership sells. This is absolutely contrary to how a new car salesman is taught to sell; they want to “steer” a customer to whatever cars the stealership is promoting this week. If the salesman explains to the potential customer all the reasons why an EV is better than a gasmobile, that makes it much harder to turn around and convince someone that it would be wonderful to own one of those gasmobiles they just dissed. All in all, I really do wonder if we’ll ever see significant sales of PEVs from legacy auto makers unless… Read more »

“All in all, I really do wonder if we’ll ever see significant sales of PEVs from legacy auto makers unless and until they create separate divisions, separate badges, just for their PEVs.

Are you for real? PHEVs are a much much easier sell than BEVs. You don’t need a separate division to sell them; the public are taking a warming to them all by themselves.

I think Pushmi-Pullyu was using PEV as in Plug-in Electric Vehicle. (both PHEVs and BEVs).

Thanks, shane.

Yes, PEV = Plug-in Electric Vehicle. Sorry for the confusion.

But many horror stories have been posted at InsideEVs from people trying to buy a Volt from unwilling Chevy dealers; stories which lead me to suspect legacy American auto dealers don’t like selling robust PHEVs any more than BEVs. Perhaps dealers don’t mind selling short-ranged PHEVs such as the Ford CMax and the BMW i8.

It is interesting to understand the inner workings of the dealership. Generally I think the poor service at most dealerships is more about incompetence and disinterest than any grand scheme. Even with gasmobiles, if you want info on a new or rare product you often get confused looks. I don’t know how many times it has been abundantly clear to me I knew way more about the product than the salesperson did – and that was with mainstream ICE products.

Yep…looks like the whole business model is flawed – the only thing going for it is revenue: it’s the only way to buy a new car, and the ICEVs and PHEVs require maintenance = $$$.

Unless, of course, you’re Tesla Motors, who inexplicably charges more than a handful of oil changes for an annual “service” for a vehicle that should not need anywhere near that much service.

As the owner of a MS85 and three Mitsubishi i-MiEVs, I resented TeslaMondo’s comment about the i-MiEV. With the Tesla reserved for only long trips (I did a 12,000-mile trip around the US earlier this year), the i-MiEVs fulfill all family’s travel needs around the greater SF Bay Area, except for the rare time more than four people need to be carried. With a back-seat down flat-floor storage double that of a Leaf’s, a turning radius bested only by the Smart car and London taxi, super easy ingress/egress, CHAdeMO standard, plenty of elbow-room, good outside visibility, speed governed to 81mph, and the usual comfort and safety features of a modern car, the i-MiEV represents, by far, the best practical EV value for an everyday driver. Mitsubishi’s marketing of this great little car has been non-existent, and the local dealer still keeps sending me coupons for oil changes and tune-ups.

Yes, much snobbery amoungst the writers and others here…

The I-Miev is a well – designed, low cost, practical, economical EV for those who can tolerate the limited battery range.

No one ever complains that a Tesla costs alot, but complain that the upcoming BOLT, with the same sized battery, and most certainly more efficient drive train, of which you can buy 2 bolts for one S, – costs too much!

People judge value by price compared to perceived worth… not just price as a standalone figure. If the Bolt had even half the luxury touches of the Model S, then I seriously doubt you’d see many people saying it’s overpriced.

JoeS, since you own the S85, and the iMiEV, how would you compare the driving of the iMiEV to other short range EV’s, if I was shopping for a used one?

Both it and the early LEAF comes with just 3.3 kW AC charging, same as the smart ED, but has anyone come up with a way to put in two of them to get us 6.6 kW charging yet? (Which should be OK, since it can do CHAdeMO fast charging!)

I like the style variations available in the smart ED, and that it has about 10% more range than an iMiEV, and seems more sporty in performance than the i, but it has 2 less seats and no fast charging option in Canada or the US!

Between the iMiEV or the smart ED, for just the wife and I, no kids, which would you choose? Or, would you recommend a used LEAF?

Robert, the i-MiEV wins hands-down as a utilitarian vehicle, as the range differences between the used 2011 Leaf, the SmartED, and the i-MiEV are insignificant in daily driving. I normally drive the i-MiEV in “station-wagon” mode; i.e., with the back seats down, and it’s incredible how much stuff can be put into that tall 50cu-ft aft section. Look carefully and you can pick up a used i-MiEV with CHAdeMO (and don’t forget to make sure the Remote is included) in the $6K-$7K range.

You Go Joe! For kid shuttling, grocery-getting, and commuter dueling, the i-MiEV excels. Eco driving mode lets you smoothly ooze through stop-and-go traffic, while the Neutral setting disables regen and one may coast down as long as you like, and there’s plenty of electric torque to beat any gasser into an opening or across an intersection. As a two-seat station wagon, that’s more cargo volume than a Ford Escape or Kia Soul, plus a perfectly flat floor that cargo slides in and out of, having no well or hump to contend with.

Two years ago my father and I went to a Nissan dealership in eastern (that is, highly conservative) North Carolina near my parents’ home. We had gone there specifically to get a look at the LEAF and to talk technical specifications. I thought it would be a glorious adventure. And indeed, the salesperson who greeted us was most amiable and informed — but only about the Versas, Sentras and other gasoline-powered models available there. No LEAF was even on the grounds, and the supposed EV guy was gone for the day. Moreover, instead of hearing anything even remotely positive about Nissan’s electric car, we were treated to several obliquely condescending anecdotes. All in all, a most disillusioning day.

I was in my local Nissan dealership yesterday morning for scheduled maintenance on my Leaf. Being the Friday before Labor Day weekend, it was very busy in the service department and I was there for a little over 3 hours. About an hour into my wait I decided to check out what Leafs were available on the lot. Zero, Nada. I wandered the lot first for about 15-20 minutes with no luck before beginning a methodical search. I covered every inch of the dealership, including behind the dumpsters and found nothing. This is a Nissan ‘EV Certified’ dealership. I finally interrupted a passing salesman’s donut & coffee to ask “do you still carry the Leaf here?”. He just shrugged his shoulders and kept walking. To me this speaks volumes about why there aren’t more EVs on the road.

To be fair, this isn’t a good time to be looking for Leafs on dealer lots. According to the latest InsideEVs Monthly Plug-in Sales Scorecard article: “With a vastly superior LEAF set to debut in the not-so-distant future, it appears Nissan is actively managing existing inventory lower in the US.”