Industry News & Trends

We Don’t Need Car Dealerships (?) #Tesla

Jeff Kershner
Posted onAug 5, 2013 at 7:35 PM

Dear Mr. Local Dealer,

No one likes you.

Sincerely, Tesla Motors

If Tesla Motors had their way you’d be out of a job and tech-savvy shoppers would be buying their next Model S off the Internet. Sounds like a good plan, doesn’t it?

Not so fast, you say?

According to a recent article in Popular Mechanics, Tesla is moving in and you’re moving out – which, also prompted the question: Do We Really Need Car Dealerships Anymore?

One dealer in New York argues dealerships are local businesses, providing jobs to people who live and work in the same community. The dealer continues to ask Tesla Motors, who else is better to sell a car to someone than a local?

Tesla Motors, on the other hand, says they’re leading the future of car buying. Who wouldn’t want to shop for a car online and complete the entire transaction via never-seeing-your-face? Recent millennial shopping data suggests they’d be on board with never stepping foot on a lot.

So, let me hear your argument. Are you pro for future changes in car buying to adapt to new shopping habits, or are you a true believer that the local car dealership, the brand that sponsors your son’s soccer team, is here to stay. Forever.

Sound off in the comments! 

..or follow this hot thread over in the DealerRefresh forums – Near Death Experience? Tesla vs Auto Dealerships

Jeff Kershner
Founder of DealerRefresh - 20+ Years of dealership Sales, Management, Training, Marketing and Leadership.
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    wplayford
  • August 6, 2013
This does set a precedent for those states who require vehicle delivery to take place at a franchised dealership. Several states, however, don't have such a requirement. What precludes buyers from taking their Tesla delivery in those states?
Based on my experience, you can have the exact vehicle, with the exact options, delivered to the customer's door, at the absolute lowest price, and still lose the deal. The answer was brutally simple. The majority of customers have a hardwired notion of how they should buy a vehicle. Five generations have bought their Fords the same way three generations have bought a Toyota. They buy from dealerships.
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    Mat Koenig_KonigCo
  • August 8, 2013
I agree with you Mr. Playford. It sounds great to buy a car and have it delivered a la amazon.com fashion but let's face it, the majority of people are spending $20k or more on a new car and will want to touch and feel that product prior to paying.
Plus, consumers need service too.
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    adamthrasher
  • August 8, 2013
I think the main argument here is a consistent buyer experience. Tesla can control the buyer experience if all their stores are factory owned. It's the Apple store experience for buying a car. People are getting tired of poor dealership experiences and are looking for a better way to purchase a vehicle. Look at the number of buying services out there that have recently popped up that tell the public that their way is a better way to buy a car. Many franchise dealers have a fantastic buying experience, but it's the bad ones out there that give the rest of them a bad name. People are tired of the games. Tesla's model does away with the games.
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    Mat Koenig_KonigCo
  • August 8, 2013
I totally agree with you that the Apple scenario ifs what they are shooting for. Logistically there would be a need for service points though. If that ifs the case, each service point could stock demonstration models...but that would require trained people to present the features and I'd that is the case....they may as well just have the dealership :)
It is easy to say 'let's all but cars online' but there are a lot of areas that will not benefit the consumer that people don't discuss. The only real consumer benefit is the ability to order online.
Beyond that, they lose out in all of the great benefits that come from working with their local dealer. That's my w¢
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didn't ford try this a decade ago only to have it crash and burn (rhetorical question - answer is YES). I think that's great on paper as long as you are selling ONLY new cars that are in high demand. but once you have to start moving used cars and working like you're hungry, the idea will lose its appeal.
This is a $100k car, and people buying them are used to having their butts wiped. To make it work like a ritz carlton, you have to have a ton of cash flowing, and I doubt they have the profit margin to set it up on only $7k per car of gross profit on top of their manufacturer profit. It seems unlikely to be successful because boutique brands usually thrive by piggy-backing on a premium dealer group that is already catering to that crowd. Not even the great wayne Huizenga had visions of revamping the car business and it didn't go quite as planned.
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