The Tesla backlash (1 Viewer)

[Tapxe]

The bogus Tesla backlash: What if the Internet saves the middle class? - Salon.com

The immediate context for this intriguing argument is Tesla’s ongoing fight, across the United States, with established car dealerships. Tesla wants to sell cars directly from its website, thereby cutting out the middleman.


The middlemen are not amused, and they are leaning on their political connections to squelch the Tesla challenge. In North Carolina, reports Coppage, “the state Senate’s Commerce Committee recently unanimously voted to approve a bill, backed by politically powerful auto dealers, that would prohibit direct sale of automobiles over the Internet.” It is also already against the law in nearly every state, for manufacturers to directly sell their own automobiles, online or off.


You don’t have to look hard to find press coverage of the fight that is distinctly unsympathetic to the dealerships. They’re dinosaurs who have outlived their time, depending on their connections to preserve quasi-local monopolies that keep car prices higher than they should be in a perfectly competitive free market! They’re a classic example of unnecessary “friction” in the system. Consumers used to getting what they want, when they want it, with just a couple of clicks, are naturally dumbfounded at the notion that cars are somehow off-limits.

Interesting issue. On the one hand, I think the innovative approach to selling directly is a great thing for the customer. Conversely, it basically turns all dealerships into used car dealerships and/or service centers. My biggest concern would be the number of jobs lost from the economy.

Anyone familiar with the inner workings of the dealership industry that can shed some light on this?

 

[staphory]

The bogus Tesla backlash: What if the Internet saves the middle class? - Salon.com


Interesting issue. On the one hand, I think the innovative approach to selling directly is a great thing for the customer. Conversely, it basically turns all dealerships into used car dealerships and/or service centers. My biggest concern would be the number of jobs lost from the economy.

Anyone familiar with the inner workings of the dealership industry that can shed some light on this?

Turning into service centers isn't a bad thing. That's where most dealerships make money. The dealerships that are local to me have a very high turnover of sales staff so I don't think those jobs are valued by most. In any case, very few want to buy any particular model sight unseen and most want to drive before they buy. I think most manufacturers will have plenty of showrooms so I don't see a big loss of jobs.

 

[Tapxe]

Good point about wanting to drive one. I'd not considered that, but obviously I'd never buy a car without testing it. I guess the showroom could become a 'testing ground' for some who'd then turn around and buy online.

I did notice the last car I bought that service did seem to be paramount.

 

[Zack Lee]

Staphory is right, I would say that only about 1/3 of the Salesman that dealerships have are career guys and even fewer will stay with one company for years. And dealerships definitely make their money on the back end (service) If you have good mechanics they can do jobs in half the billable hours and double or better the number of jobs you push through all while billing the time that it typically takes for the job. Not that sales does not have boom months - you just can't count on it like you can service.

Dealerships don't own their inventory anyway. They are financed, often by a sub-company of the manufacturer (the same companies in the retail finance side NMAC, Chrysler Credit, Primus - Fords company) They come out and do Audits monthly to make sure that you have not sold cars and not payed them off. If you get out of trust with them, they will place a representative at your company that holds the titles and the dealer must pay the finance company on the spot to get the title.

I thought this thread was going to be about a cancelled tour. 5 Man Acoustic Jam was awesome.

 

[Yoweigh]

I really hate it when entrenched interests manipulate the government to prop up a business model that's becoming a thing of the past. It's happening with telephone companies and the recording industry, too.

 

[superchuck500]

I really hate it when entrenched interests manipulate the government to prop up a business model that's becoming a thing of the past. It's happening with telephone companies and the recording industry, too.

It happens all around us. A more mundane example is the brick and mortar restaurant business fighting the proliferation of food trucks and other street food. And they're often successful because they're cozy with the local lawmakers and councilpersons.

Make a good product and people will buy it. I don't understand what's so hard about that concept.

 

[FLIPPY]

Who buys cars without a test drive first....?

 

[Domefan504]

Oh man I thought this was TESLA come back tour thread.



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[geauxboy]

It happens all around us. A more mundane example is the brick and mortar restaurant business fighting the proliferation of food trucks and other street food. And they're often successful because they're cozy with the local lawmakers and councilpersons.

Make a good product and people will buy it. I don't understand what's so hard about that concept.

I don't get it either. Starbucks fought the coffee carts that would setup in from of their stores. Starbucks was still packed and the coffee carts had a line. What's the big deal? If you have a good product, then there isn't nearly as much to worry about and it's just being selfish to try to expel the cart service because you don't want competition.

 

[Jeff Miller]

I have not bought a NEW car from a dealer since 1991. And its unlikely i'll ever buy one again, the mark up for "new" is just ridiculous.

Was at the VW dealer 2 months ago. causally glanced at the new VW Beetle...they were over $30,000, for basically a 2 or 3 seat car (the newest model is smaller then the previous one)

I ended up buying a Toyota Sienna. Brand new the Sienna's are $30,000 or more. I found one 4 years old with 70,000 miles on it in excellent condition for a offer of $13,000.

no trade in, no financing.

the whole sales dealer process is complete run around, and dealers just don't take anything seriously until you just get up and walk out on them.

 

[Jeff Miller]

Staphory is right, I would say that only about 1/3 of the Salesman that dealerships have are career guys and even fewer will stay with one company for years. And dealerships definitely make their money on the back end (service) If you have good mechanics they can do jobs in half the billable hours and double or better the number of jobs you push through all while billing the time that it typically takes for the job. Not that sales does not have boom months - you just can't count on it like you can service.

Dealerships don't own their inventory anyway. They are financed, often by a sub-company of the manufacturer (the same companies in the retail finance side NMAC, Chrysler Credit, Primus - Fords company) They come out and do Audits monthly to make sure that you have not sold cars and not payed them off. If you get out of trust with them, they will place a representative at your company that holds the titles and the dealer must pay the finance company on the spot to get the title.

I thought this thread was going to be about a cancelled tour. 5 Man Acoustic Jam was awesome.

really, i assumed the inventory on the lot was on consignment from the manufacturer.

Oh, and i avoid getting any type of service at a dealer if at all possible. My GF had to get her jetta its 40K miles service to keep her warrenty, she basically paid $400 for 2 new tires and a oil change...that's a bit of a rip off in my opinion.

 

[guidomerkinsrules]

I don't get it either. Starbucks fought the coffee carts that would setup in from of their stores. Starbucks was still packed and the coffee carts had a line. What's the big deal? If you have a good product, then there isn't nearly as much to worry about and it's just being selfish to try to expel the cart service because you don't want competition.

the big deal is that businesses want to establish a beachhead with quality and service - then once they're entrenched they get to cut WAY back on quality and service to maximize profits - oh and tax loopholes -- lots and lots of loophopes

 

[Zack Lee]

really, i assumed the inventory on the lot was on consignment from the manufacturer.

when the vehicle hits the dealers lot, the manufacturer places a draft to the dealers Acceptance Corp. They are often but not always owned by that same manufacturer. Whoever the dealer is using for this "floor plan" is also likely to accept a lot of contracts from this dealer for leases and purchases. The dealer pays interest (pretty low) but the manufacturer provides the dealership with "dealer Assistance" which will often cover about 3 months of interest. That is why they don't like inventory sitting on the lot long.

Oh, and i avoid getting any type of service at a dealer if at all possible. My GF had to get her jetta its 40K miles service to keep her warrenty, she basically paid $400 for 2 new tires and a oil change...that's a bit of a rip off in my opinion.

it is absolutely a rip off.

 

[SaintStephen]

Staphory is right, I would say that only about 1/3 of the Salesman that dealerships have are career guys and even fewer will stay with one company for years. And dealerships definitely make their money on the back end (service) If you have good mechanics they can do jobs in half the billable hours and double or better the number of jobs you push through all while billing the time that it typically takes for the job. Not that sales does not have boom months - you just can't count on it like you can service.

Dealerships don't own their inventory anyway. They are financed, often by a sub-company of the manufacturer (the same companies in the retail finance side NMAC, Chrysler Credit, Primus - Fords company) They come out and do Audits monthly to make sure that you have not sold cars and not payed them off. If you get out of trust with them, they will place a representative at your company that holds the titles and the dealer must pay the finance company on the spot to get the title.

I thought this thread was going to be about a cancelled tour. 5 Man Acoustic Jam was awesome.

I am a manager and it depends on the manufacturer and if you meet your sales objectives. A lot of $$$ rides on the sales dept meeting their manufacturer objectives...