Now, more than four years after the first Tesla store opened in Santa Monica, CA, traditional dealers are realizing that the EV startup might be around for a while and they aren't happy about Tesla's retail strategy. Over the past century, dealer groups have influenced state legislatures to strengthen franchise laws that make it nearly impossible for automakers to compete directly with established dealers.
Tesla had an out because it had no existing dealers to compete with, but now dealers are concerned that other automakers might follow Tesla's path and eventually undermine the franchise system.
Frankly, I'm not sure that's such a bad thing. As the business environment changes, automakers like other companies need the flexibility to shift strategies.As we saw during the 2008-9 meltdown, having too many dealers makes it a lot tougher for automakers to make money but franchise laws make it near impossible to shrink the retail footprint to match sales.
What do you think?
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The idea of paying for lots of new cars to sit on a lot, getting what is there rather than exactly what you want, and paying pushy salespeople to annoy customers isn't my idea of a model that needs preserving.
I think most new cars should be sold this way, and local dealers should be just service and used car sales. I am sure there are some people that just want to walk in and pick up a car, so there will be specialty dealers to accommodate them, but I think that should be the exception not the rule.
The idea of paying for lots of new cars to sit on a lot, getting what is there rather than exactly what you want, and paying pushy salespeople to annoy customers isn't my idea of a model that needs preserving.
I think most new cars should be sold this way, and local dealers should be just service and used car sales. I am sure there are some people that just want to walk in and pick up a car, so there will be specialty dealers to accommodate them, but I think that should be the exception not the rule.
It's (only slightly) off-topic, but here is today's article talking about Tesla, Fisker and new EV strategies: "Fisker + Chrysler = IPO". I apologize for the interruption, but I thought you'd find it of interest: http://www.thestreet.com/story/11730233/1/fisker-chrysler-ipo.html
It's (only slightly) off-topic, but here is today's article talking about Tesla, Fisker and new EV strategies: "Fisker + Chrysler = IPO". I apologize for the interruption, but I thought you'd find it of interest: http://www.thestreet.com/story/11730233/1/fisker-chrysler-ipo.html
+Anton Wahlman Fisker has to fix the quality problems before they can contemplate an IPO. The car looks nice, but frankly just hasn't delivered in performance, reliability, or efficiency what was claimed.
+Anton Wahlman Fisker has to fix the quality problems before they can contemplate an IPO. The car looks nice, but frankly just hasn't delivered in performance, reliability, or efficiency what was claimed.
I was flabbergasted when +Ray Wert first told me that auto manufacturers couldn't sell their own vehicles here but were required to go through third party dealerships. How did that ever get established as the norm to begin with?
I too would love to see a massive industry shakeup. While I don't think +Tesla Motors will be able to do it on their own, hopefully they'll be the spark to inspire others to light a fire under the industry's ass.
I was flabbergasted when +Ray Wert first told me that auto manufacturers couldn't sell their own vehicles here but were required to go through third party dealerships. How did that ever get established as the norm to begin with?
I too would love to see a massive industry shakeup. While I don't think +Tesla Motors will be able to do it on their own, hopefully they'll be the spark to inspire others to light a fire under the industry's ass.
Melina: The government has decided that it's illegal.
Melina: The government has decided that it's illegal.
+Melina M, it wasn't always illegal for carmakers to sell direct and in fact isn't totally illegal now. The franchise system took root in the early days of the industry, because it made sense. Dealers provided automakers with cash flow because they paid for cars when they were delivered, not when they were sold to consumers. It was also heard for automakers to set up show all across the country.
http://www.autonews.com/article/20060925/SUB/60919024/1377
The problem is that along the way, automakers gave out too many franchises. It was fine at the time, but as the environment changed, the way cars were sold and serviced needed to change as well.
Unfortunately, likely any other entrenched business system, the dealers used their local influence get rules put in place to keep competitors including the automakers themselves out, hence the system we have today that is too inflexible.
Because Tesla had no existing dealer network, they were able to establish company stores in a number of locations but now dealers are fighting back.
+Melina M, it wasn't always illegal for carmakers to sell direct and in fact isn't totally illegal now. The franchise system took root in the early days of the industry, because it made sense. Dealers provided automakers with cash flow because they paid for cars when they were delivered, not when they were sold to consumers. It was also heard for automakers to set up show all across the country.
http://www.autonews.com/article/20060925/SUB/60919024/1377
The problem is that along the way, automakers gave out too many franchises. It was fine at the time, but as the environment changed, the way cars were sold and serviced needed to change as well.
Unfortunately, likely any other entrenched business system, the dealers used their local influence get rules put in place to keep competitors including the automakers themselves out, hence the system we have today that is too inflexible.
Because Tesla had no existing dealer network, they were able to establish company stores in a number of locations but now dealers are fighting back.
So Apple and Microsoft are allowed to build stores everywhere, bypassing their "dealers" — but what if Apple and Microsoft decided to start selling cars instead of computers? Gee, society would totally crumble.
So Apple and Microsoft are allowed to build stores everywhere, bypassing their "dealers" — but what if Apple and Microsoft decided to start selling cars instead of computers? Gee, society would totally crumble.
+Anton Wahlman I didn't say it was right. I think automakers should be given more flexibility to manage their dealer networks and even try to sell directly. They won't always succeed and just as in the past independent dealers have some advantages
+Anton Wahlman I didn't say it was right. I think automakers should be given more flexibility to manage their dealer networks and even try to sell directly. They won't always succeed and just as in the past independent dealers have some advantages
isn't Audi copying the Tesla store model?