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It's academic: Consumers don't need dealerships

  • Automobile dealerships no longer provide value for consumers, concludes a research paper by INSEAD professor Karan Girotra.
  • "Car dealers and more generally intermediaries represent an extra layer of companies in the supply chain that clearly increases costs to customers," writes the prof.
  • The industry has evolved such that a consumer could search and research a car online, test-drive at a product gallery, and service a purchased vehicle at a reputable repair shop without needing the backstop of a manufacturer-certified dealership, concludes Girotra.
  • Related stocks: GM, F, TM, FIATY, HMC, NSANY, TSLA, VLKAY, DDAIF, HYMLF, BAMXY, KIMTF, MMTOF, PEUGF, RNSDF, TTM.
Comments (116)
  • wigit5
    , contributor
    Comments (3955) | Send Message
     
    Yeah, I never really understood the dealership model post internet boom... Still need service stations but the dealerships (outside of used dealers) is pretty redundant.
    26 Mar, 11:21 AM Reply Like
  • WisPokerGuy
    , contributor
    Comments (778) | Send Message
     
    Tesla seems to want to cut out the middle man in the car buying process and the middle men don't like it. That pretty humorous because every major auto manufacturer in the country has tried to streamline the auto-buying process through the internet without much success. The process of choosing your cars options on-line and then just ordering the car and picking it up at a dealer has been a colossal failure. I guess if GM, Ford and Chrysler can't get the process right they don't want anyone to succeed. Seriously, does anyone REALLY think the car salesman add much value to this process? They're dinosaurs and should probably also become extinct. Few tears will be shed.
    26 Mar, 11:56 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5363) | Send Message
     
    Yes, but how many jobs will be lost if we get rid of dealers. The process of changing from the dealership model should be gradual to not jolt the economy. I think that is on politicians' minds.
    26 Mar, 08:09 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (778) | Send Message
     
    How many dealerships do you think Tesla will eliminate in the next couple of years? In the next 5? In the next 10? Tesla sells like 10,000 cars a year. Get real!

     

    Trust me. The only thing on politicians minds are where there next campaign contribution check is going to come from. And right now, especially in NJ, that is the association of auto dealers.
    27 Mar, 01:48 AM Reply Like
  • Akimbe
    , contributor
    Comments (55) | Send Message
     
    Dig ditches and then just fill them up, huh? Who needs added value.

     

    Anyway most of a dealership is the service department anyway.

     

    But that's besides the point. Even tesla sees the value in a retail presence... They just want to own the retail presence like for example apple does. The current auto dealer setup is perverse in that it rewards bad dealers who through malice or incompetence drive up service costs and negatively impact the value of the auto maker's brand.
    27 Mar, 02:34 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5363) | Send Message
     
    It is the domino effect. If (TSLA) can sell cars online, all other automakers should be allowed to sell online. Can't discriminate other automakers. (TSLA) can't be given special privileges. That is not free market. That is favoritism.
    27 Mar, 10:36 AM Reply Like
  • Marek
    , contributor
    Comments (618) | Send Message
     
    It's not the manufacturers' fault, the states' laws have been structured to force sales through the dealers, get it? That's been the anti-competition bottleneck arranged by the dealers, through their state lobbying groups, for many many decades. Powerful lobby backed by heavy advertising dollars (you ever notice that about $750 is always tucked into the cost as a delivery fee that the buyer must always pay? And all those TV, radio, internet, and newspaper ads, day after day, week after week? That's real ad revenue...).

     

    Big protectionist power, that. Tons of corporate property taxes paid by the dealerships too, and payroll. It's a very big community investment. States don't change that, its part of the inherent power structure, and not there by accident.

     

    And so all that is what becomes those politicians' powerful lobby and campaign money.
    27 Mar, 12:40 PM Reply Like
  • Marek
    , contributor
    Comments (618) | Send Message
     
    Show me a "free" market anywhere and I'll show you the LSD you have been high on for the last thousand years. Really. How naive can you be?
    27 Mar, 12:46 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (778) | Send Message
     
    Outstanding comment @Marek!!! LOL
    27 Mar, 02:07 PM Reply Like
  • snapoli
    , contributor
    Comment (1) | Send Message
     
    So what is the problem with giving all automakers the ability to sell cars online?
    28 Mar, 09:51 AM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    State franchising and tax laws prohibit it. People do internet shopping to avoid taxes now, and the states hate it.
    28 Mar, 10:28 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5363) | Send Message
     
    Well, soon all online sales will be taxed. And seriously, why are you avoiding paying taxes? What's different from avoiding paying taxes and offshoring? Is it right? Is it ethical? Don't tell me because it is not against the law it is right.
    28 Mar, 04:35 PM Reply Like
  • aaron ho
    , contributor
    Comments (2) | Send Message
     
    Think about other perspective. if we get rid of dealers, yes those salesman will lose job, but will create whole different industry job for online buddy. one die another is created.
    30 Mar, 03:05 AM Reply Like
  • aaron ho
    , contributor
    Comments (2) | Send Message
     
    free market? what a world you live in?
    30 Mar, 03:05 AM Reply Like
  • captiankirkoptions
    , contributor
    Comments (192) | Send Message
     
    This has been true for years. Political pull is the only thing keeping dealerships around.
    26 Mar, 11:22 AM Reply Like
  • Joe Lunchbox
    , contributor
    Comments (354) | Send Message
     
    Dealers are needed for warranty work on the cars/trucks. Although their outrageous labor costs make dealers unsuitable for normal maintenance.
    26 Mar, 02:46 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (5363) | Send Message
     
    Fine. But shopping at a dealer for a car is a waste of time. Just find it online.
    26 Mar, 08:11 PM Reply Like
  • IPOChaser
    , contributor
    Comments (52) | Send Message
     
    I agree and disagree. Yes, there should be an option for purchasing a new car online without having to go to a dealer, however, at the same time a car is a hefty enough purchase that a good salesman is needed many times to give the nudge to some for a more expensive line within a model or choosing between similar makes (Toyota vs Honda). There's no reason to get rid of 100% of dealerships and going to 100% online. Make it like shopping for used cars. You can purchase online or go to a dealership.
    26 Mar, 11:27 AM Reply Like
  • haaggus
    , contributor
    Comments (65) | Send Message
     
    Why should people buy the more expensive line of car? How does that add value to the economy? Your comment shows how little value car salesmen add to the market. They suck value out of it.
    28 Mar, 05:56 PM Reply Like
  • Ron Reed
    , contributor
    Comments (280) | Send Message
     
    The general accepted theory is that dealerships need the protection due to high outlay of cost for the inventory. As a political tool they have it covered as, in many communities, the dealerships as a group are among the largest in tax base. Much like the call for need of license for barber shops and nail salons I don't think they are there to protect the consumers only to protect the business.
    26 Mar, 11:28 AM Reply Like
  • Marek
    , contributor
    Comments (618) | Send Message
     
    Licensing is never to protect the consumer, really. Consumer protection is a minor afterthought, thrown on as minimal appeasement, when it is provided for at all. That's business. Any business. And as that business grows larger or older, ever the more so.
    27 Mar, 12:48 PM Reply Like
  • Ludo5312
    , contributor
    Comments (80) | Send Message
     
    This idea has been around for some time as is the idea that consumers simply would rent/lease the vehicles that would then be recycled/re-used/upgra...
    Protectionism is already eroding, but this idea could easily eliminate a 10% market inefficiency.
    26 Mar, 11:29 AM Reply Like
  • rcpatrick5443
    , contributor
    Comments (678) | Send Message
     
    I think that Girotra makes some good points that perhaps could justify at least the consumer's option to buy directly from the manufacturer while allowing dealerships to continue to offer their traditional service and sales. This article comes at an intriguing time as Tesla is being blocked in at least one state from selling its cars without their going through a dealership.
    26 Mar, 11:30 AM Reply Like
  • musiccomposer
    , contributor
    Comments (979) | Send Message
     
    Sorry, but I like dealerships. Pictures are not enough when it comes to buying a car. Unfortunately, we now live in a world where it is no longer possible to see every product in action. For example, I recently bought an expensive barbecue grill without having the ability to fire it up and see how it works. All I could do was look at pictures and read about it
    26 Mar, 11:31 AM Reply Like
  • EarlyMorningTrader
    , contributor
    Comments (65) | Send Message
     
    Yes, but, in those states that allow it, anyone can go to a Tesla showroom, look at the car, sit in it and drive a demonstrator. And you don't need a franchised dealership to do that. Just a showroom and non-commission employees to assist you.
    26 Mar, 12:14 PM Reply Like
  • Ben Bowen
    , contributor
    Comment (1) | Send Message
     
    I think the issue is manufacturers that see a benefit in having dealerships can continue to sell their cars through them, but companies like Tesla that feel there is a efficiency advantage in selling directly to the consumer should have that option. Putting up legal barriers to prevent that model does nothing but stifle innovation.
    26 Mar, 12:58 PM Reply Like
  • Frank Greenhalgh
    , contributor
    Comments (1268) | Send Message
     
    When you only have one car to sell, a dealership isn't necessary, but when you have twenty like BMW or MERCEDES etc. it is required as customers want to choose by seeing and testing the cars.
    26 Mar, 11:32 AM Reply Like
  • IPOChaser
    , contributor
    Comments (52) | Send Message
     
    Yes, but why restrict new car sales EXCLUSIVELY to dealerships. If I know that I want a new Toyota Camry then let me purchase it online and direct.
    26 Mar, 11:36 AM Reply Like
  • BoomChikaBoom
    , contributor
    Comments (88) | Send Message
     
    Hi IPOChaser.

     

    "... at the same time a car is a hefty enough purchase that a good salesman is needed many times to give the nudge to some for a more expensive line within a model or choosing between similar makes (Toyota vs Honda)"

     

    I'd ask: to whose advantage? Shouldn't the consumer be making an informed decision? It seems to me the salesman's vested interest is in maximizing his personal income by upsizing the customer. Not to mention all the sleazy sales tactics used over the years. If a salesman is trying to help the consumer decide between similar makes then the salesperson can only be objective if they sell both makes. Otherwise they're going to be totally self-serving.

     

    Personally I'd be more interested in buying from a car store the same as if I was buying any other product.
    26 Mar, 11:37 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    LOL, this academic research coming to you courtesy of generous grant from $TSLA... :)

     

    Any serious car buyer should still test drive the vehicle(s) before purchasing. Who's gonna provide that service...

     

    PS: To be clear, I do not know what this prof's financing/backers are. So just having fun here...
    26 Mar, 11:37 AM Reply Like
  • PVYMCH
    , contributor
    Comments (42) | Send Message
     
    Call for a appointment you can test drive a Tesla at their STORE- set up financing & order or do it all ONLINE.
    Tesla associates DO NOT work on comission.
    26 Mar, 12:21 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3239) | Send Message
     
    Tesla owns its own showrooms (stores or galleries) and service facilities. And prospective buyers can sign up for test drives before purchasing the car. The issue isn't one of the customer being deprived in any way. The question is does it make sense any longer for these field operations to be independently owned businesses? The answer in the case of a low maintenance car like the Tesla is a resounding no.
    26 Mar, 12:39 PM Reply Like
  • Discreet_Suffolk
    , contributor
    Comments (6) | Send Message
     
    You can test drive a car at any GALERY shop. I like it because you do not have SALES people throwing you a bus card asking for your number. PLUS, TESLA has driving events. that is where I test drove my TESLA.....

     

    The problem is all the Political and MONEY in the side pockets will be removed from our wonderful corrupt politicians.

     

    It is a corrupt world and you are drinking the cool-aid to much.
    26 Mar, 12:59 PM Reply Like
  • JFain
    , contributor
    Comments (14) | Send Message
     
    Good insight Seppo. Any time this type of academic research/study article comes out, it's good to inquire into who prompted it, why, and, most importantly, who funded it. I couldn't find any answers from the article itself.
    26 Mar, 01:55 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    I worked in the academia for over a decade, so although a huge advocate of the scientific method, I am also pretty skeptical at the same time. We are all humans in the end, driven by the same motives... :)

     

    This is his faculty bio:
    http://bit.ly/1mvc7Sk

     

    His CV mentions several smallish grants, but no explicit money from Tesla:
    http://bit.ly/1mvc7Sm
    26 Mar, 02:08 PM Reply Like
  • proberge
    , contributor
    Comments (8) | Send Message
     
    Tesla stores provide test drives
    26 Mar, 11:28 PM Reply Like
  • PVYMCH
    , contributor
    Comments (42) | Send Message
     
    I must have purchased at least 20 new cars in my lifetime so far.
    I always know what I want & each new car buying experience is worse than the one before -like getting multiple root canals in one day.
    I think the Tesla sales model is GREAT.
    Auto Nation takes your trade & drives you over to Tesla to pick up your pre ordered new MODEL S.
    It may even increase total Sales as most are a afraid of getting RIPPED OFF by the dealerships & their "FIX A TROUBLE----LEAVE A TROUBLE" Service Depts.
    26 Mar, 11:46 AM Reply Like
  • Retired2thDoc
    , contributor
    Comments (90) | Send Message
     
    PVYMCH.. "like getting multiple root canals in one day." Only one thing worse...
    Doing multiple root canals in a day
    Back to the discussion...
    26 Mar, 03:47 PM Reply Like
  • Joe Lunchbox
    , contributor
    Comments (354) | Send Message
     
    >I must have purchased at least 20 new cars in my lifetime so far.
    I always know what I want & each new car buying experience is worse than the one before -like getting multiple root canals in one day.<

     

    I don't know if I've ever bought a new car/truck and felt like I got a bargain.

     

    Car salesmen and politicians. Pillars of the community.
    27 Mar, 03:28 PM Reply Like
  • rvshaw
    , contributor
    Comments (90) | Send Message
     
    Whether dealerships are a necessity or not is certainly up for debate. But dealerships do themselves no favor by being an unpleasant place to go. Negotiating a purchase is painful and very time-consuming.
    26 Mar, 11:56 AM Reply Like
  • boogn1sh
    , contributor
    Comments (2) | Send Message
     
    I agree with the above. However, "modern" dealerships (like the one I work for) do NOT work on commission. Just because your local Chevy or Chrysler dealership is operated by crooks, does not mean that all dealerships are the same.

     

    If you want to know what buying a car in the future looks like, contact me.

     

    A modern dealership should incentivize their staff, but it should not be based on how much the consumer pays, or the dealership makes. It should be based on performance and customer satisfaction.

     

    I feel sorry for those of you still dealing with dealerships from the last century.... Don't worry, that old model of selling cars is slowly going away, but the independently operated dealerships are not.
    26 Mar, 01:14 PM Reply Like
  • starcorral
    , contributor
    Comments (333) | Send Message
     
    I just saw the Reuter's report comparing the Cadillan ELR to the Tesla S. Sales reports make it clear: 99 ELRs have been sold this year; the Tesla S performs on par with Cadillacs most gax guzzling 556 hp (12mpg) CTS -V, but is a nicer ride with 1/6 to 1/8 the energy cost. The Tesla is selling faster than they can be made.

     

    I will begin worrying when firebombs, computer viruses, kinapping and death threats, and attacks on Tesla owners begin. I have sold most of my GM and I'm loaded with F and TSLA. The fight against real progress is always an act of fear and protectionism - with no exception.

     

    Tesla will determine it's own best interests based on providing the kind of service that builds brand loyalty.

     

    I just bought a loaded Honda Accord that has devilish power, 24+ street mileage and 30+ highway mpg at 78mph. We'll be driving to Salt Lake from Tulsa this year - something the Tesla S can't effectively do. But around town or even a long driving day, the Tesla will do remarkably well; sorry Caddy - you fall way short.

     

    I avoid dealer service whenever possible by having carefully chosen my service shop. Dealers arguments have no merit whatsoever other than protection for themselves. Besides, if they do well, that will be good and all. But if Musk does good, he may send men to Mars during my lifetime.
    26 Mar, 11:57 AM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3239) | Send Message
     
    By the end of this year you should be able to get from SLC to Tulsa using superchargers.
    26 Mar, 12:34 PM Reply Like
  • rennatus
    , contributor
    Comments (34) | Send Message
     
    Dealership, Gallery, the auto industry will morph into a combination of the two.
    It's understandable Tesla folks want to discount all dealers as schisters, as it seems to be the new way of debating-"YOUR OLD WAY SUCKS, MY NEW WAY IS BEST". Well, if you think local small repair shops can do a better job than dealers you may be barking up a tree that can't hold the weight.
    A repair shop probably won't have the financial strength to hold inventory-keeping in mind they don't know which make they will be servicing from day-to-day, which means all repairs may be at least a two day affair, and they won't hold an inventory of "dealer"(ie: specialty/expensive/pr... parts that dealers currently do. As a matter of fact the dealers who remain as repair shops will still be the parts suppliers for private garages-and if they lose sales/service those parts will be more expensive to make up the loss.
    My guess is the sales/service model of dealers will adapt to a system of on-line and dealership purchase options-with a dealer still being the "gallery" and pick-up point for new car buyers. That way they can accomodate both, and still have the service shop-----car owners already have the ability to go to a private garage but many still go to dealers because they feel more comfortable, plus dealers offer loaners, etc.(especially the high-end cars), that a private garage can't afford to do. There are reputable private garages, but the question is can they/do they want to grow to take the volume of dealer work, and maintain their quality/personal service avantages? Maybe a national/regional chain of repair shops will develop, beyond the traditional tire service/sales centers?
    There seems to be an abundance of folks in cyber space who are quick to sh#t on the way things were done in the past for their "new way". An almost "hateful" attitude against the way their parents/grandparents lived and worked. That is an unhealthy and mean spirited attitude.
    Life and we work evolves, managing and working thru that evolution need not contain a constant disdain for how we lived 5, 10, 20 years ago.
    26 Mar, 12:07 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3239) | Send Message
     
    It's not Tesla that is calling car dealers shysters, it's the dealers' own customers. Yes, the old way sucks when there is a better way. I miss all the bookstores that Amazon put out of business. I miss the music stores that iTunes out out of business. I won't miss all the car dealerships that Tesla will put out of business.
    26 Mar, 12:30 PM Reply Like
  • Khyber Pass
    , contributor
    Comments (219) | Send Message
     
    I'll put my small repair shop guy up against my local Subaru dealer shop any day of the year and come out ahead. I have been ripped off by dealer shops for the last time. I might have to wait for 'just in time' parts, but they are usually here in less than a day.
    Call me hateful and mean-spirited if you want, but I need to look out for myself--cause my local Subaru dealer ain't gonna do that….I guarantee it.
    26 Mar, 01:52 PM Reply Like
  • DanoX
    , contributor
    Comments (2586) | Send Message
     
    Most people don't go to those local rip off repair shops, the dealer has the parts and the talent to fix your car within four hours, you may not like price (who does), but will be fixed and you do have recourse if it isn't, if you go to a dealer.

     

    I like Tesla and if I get one in the future, I'm going to Tesla to get it fixed, not some local shop on the corner, in order to built substantially more cars per year Tesla is going to need partnerships with other companies to sell 500,000 cars per year, and Tesla is running out of time one or two of the bigger companies will wakeup and see the light.
    26 Mar, 02:46 PM Reply Like
  • Marek
    , contributor
    Comments (618) | Send Message
     
    Dealerships do not repair, they do not know how; instead, dealerships replace. It's a complete racket.
    26 Mar, 03:35 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (778) | Send Message
     
    @DanoX --- I don't know what area of the country you live in but speaking for myself, as soon at the warrantee runs out on my new car, I never see the inside of a dealership repair again. I'm mean if I want to bend over for someone I'll wait to see inside of the prison showers. LOL Expertise? I've yet to see anything special on the GM, Chrysler or Audi cars I've owned throughout my lifetime.
    26 Mar, 05:11 PM Reply Like
  • surferbroadband
    , contributor
    Comments (954) | Send Message
     
    That is right get rid of dealerships. When the internet opened up a lot of jobs were eliminated and a bunch of others were created.

     

    Sleazeballs trying to hold on to something that is no longer relevant.
    26 Mar, 12:07 PM Reply Like
  • DanoX
    , contributor
    Comments (2586) | Send Message
     
    Local service is still needed on a car and on other products, even more so on a electric car, local stores/service is needed see (Apple retail stores).
    26 Mar, 02:51 PM Reply Like
  • Frank Greenhalgh
    , contributor
    Comments (1268) | Send Message
     
    You might be able to send men to mars, but not be able to send them back. That idea of establishing a colony on Mars really makes me question some of Musk's ideas. It is barely possible to get to Mars (6 months?) and if you arrive no way To return. The whole idea is crazy. There is no atmosphere on Mars we would have to live in spacesuits.
    Meanwhile the Gigafactory still has no home state and no Panasonic. The clock is running.
    26 Mar, 12:11 PM Reply Like
  • sugarsail1
    , contributor
    Comments (60) | Send Message
     
    Musk is a dreamer first, a self-promoter second, and a pragmatist third. Scientifically illiterate technophiles will idolize him and think he is ahead of his time. He isn't old enough to have had his huge ego checked yet. Paypal is still his greatest contribution to mankind, probably always will be.
    26 Mar, 12:55 PM Reply Like
  • treasure
    , contributor
    Comments (9) | Send Message
     
    This car doesn't need a service dealership, it has no parts!
    26 Mar, 12:14 PM Reply Like
  • EarlyMorningTrader
    , contributor
    Comments (65) | Send Message
     
    Something to think about: Have you ever heard of anyone wanting their child to be a car salesman when they grew up?
    26 Mar, 12:21 PM Reply Like
  • daveruns2win
    , contributor
    Comments (13) | Send Message
     
    The controversy alone has kept the Tesla brand in front of the news for many months. You can't buy this much advertising. Car dealers should keep up the pressure as every time they mention this, Tesla sells another 100 cars. Tesla already has great brand recognition for a company that has never run an advertisement. These stories rarely mention any other car brands, and if they do, it makes Tesla look like Robin Hood trying to steal the kings wealth. We can argue all day about the value of car dealers and Tesla's objectives, but we know a few things for certain. Car dealers don't understand public relations, they are not smart enough to avoid issues that they can't win, and they should never ever play chess with Elon Musk.
    26 Mar, 12:35 PM Reply Like
  • philhtur
    , contributor
    Comments (26) | Send Message
     
    I think it should be up to consumer choice. If I want a dealer, then I'll go. If not, I'll buy online.

     

    The dealers are not the only interested parties in this story. So are the car manufacturers: GM often stuffs its dealerships with inventory so that its quarterly sales are artificially high. This happened in the last quarter making their financial results look better than they really were. If I had more guts I'd short GM.
    26 Mar, 12:40 PM Reply Like
  • I need a bailout
    , contributor
    Comments (1228) | Send Message
     
    Tesla is planning to have their own employees in all their service centres and that looks like a lot of overhead that the other car companies don't have. Not to mention the building & operating costs & mobile ranger vehicle costs. They advertise "valet service", "mobile service rangers" at a buck a mile which they claim is less than actual cost, and a show room experience. Wow that is a huge amount of overhead that other makers don't have and these are not profit centres ... according to Musk ... they might even be losing money? This will definitely compress Tesla margins but perhaps the cost will just fall under admin costs or something? Tesla is now over a billion dollars in negative retained earnings due to all the annual loses and there is a long term debt problem which has recently climbed to $600 million dollars. Hard to pay back the debt when not making any money.
    26 Mar, 12:51 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1795) | Send Message
     
    Let the manufacturer and the customer decide if they want dealerships or not.

     

    It should not be mandated via a law that we as customers have to use a middleman for purchase. Kind of backwards. As long as the customer is fetting the services that they need to purchase the car and as long as it is not a headache to the manufacturer it should be fine.

     

    I have bought both a Tesla and other cars during my life time. I will say purchasing the Tesla was much easier and much less time consuming than spending all day at a dealership. Heck I had most of the paperwork signed during vacation, call to a bank-loan, then check to Tesla, easy.
    26 Mar, 12:54 PM Reply Like
  • Marek
    , contributor
    Comments (618) | Send Message
     
    "Let the..."??? The laws are already in place.
    26 Mar, 03:39 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1795) | Send Message
     
    The law was written to protect the dealerships from the manufacturers about a century ago.

     

    If you look at the law in TX and NJ, all Tesla can not do is talk about price and give test drives in those states. It's assinine.

     

    All the sales functions via the internet are happening in CA. No different than other states.

     

    It should be the consumers whom decide, and the OEMs now. Those laws served the purpose.
    26 Mar, 05:21 PM Reply Like
  • sugarsail1
    , contributor
    Comments (60) | Send Message
     
    wait a "product gallery"??? Isn't that just a euphemism for a dealership? I have no love for car dealers, they have a reputation for being shmucks, but if you want factory certified warranty covered service and to test drive/buy a product are you going to drive all the way to the factory to buy/service your car? No you have to go to some kind of local dealership...hogwash.
    26 Mar, 12:57 PM Reply Like
  • multisync
    , contributor
    Comment (1) | Send Message
     
    Car Dealerships will go the way of the Travel Agencies. The majority will be overcome to the effectiveness and efficiency of the internet, just like the majority of airline tickets are purchased today. Some of the airlines like Southwest only sell through their own web sites, clearly this is the model TSLA would like to follow. The Dealerships that fail to innovate and provide real value to the consumer will be overtaken by the eventual obscurity of thier overpriced business model.
    26 Mar, 12:58 PM Reply Like
  • Marek
    , contributor
    Comments (618) | Send Message
     
    They control their state legislatures and have done so going back many decades. The laws are already in place. PLUS: they among, or actually are, their local newspapers' and TV stations' largest ad spenders. I know that for a fact from a friend who is the online ad space director for my local regional paper/online (Gannett-owned) paper.
    26 Mar, 03:42 PM Reply Like
  • mikehealey
    , contributor
    Comments (14) | Send Message
     
    professor Karan Girotra opinion is just that ,an opinion, by somebody that really knows nothing about the car business.

     

    The manufacturers for years have tried to run the car business without the independent dealers. Each test case failed badly , lost a ton of money , market share and customer satisfaction.

     

    Look at the Ford Motor Company test cases for operating Ford Franchise dealerships as Manufacturer owned , direct to the Public. The last time they tried this was about 10 to 12 years ago. The dealerships they purchased from dealers , then operated themselves ,were all sold back to independent dealers . When sold back to the dealers , everything turned around in a matter of months not years.

     

    It sounds like professor Karan Girotra had a bad experience at a local dealership and decided to take out her frustrations on all dealers
    26 Mar, 12:58 PM Reply Like
  • stainlesssteel
    , contributor
    Comments (171) | Send Message
     
    @mikehealey 26 Mar, 12:58 PM

     

    "The manufacturers for years have tried to run the car business without the independent dealers. Each test case failed badly , lost a ton of money , market share and customer satisfaction...Look at the Ford Motor Company...the last time they tried this was about 10 to 12 years ago. "

     

    Illogic: Ford's 1997-2001 failure was due to dealers' rent-seeking based rewriting of laws to snuff out direct sales every way possible, and Ford's mismanagement, not due to any flaw in the direct sales model:

     

    This Man...Is The Reason Why You Can’t Buy A Tesla Model S In Texas
    http://bit.ly/1j79jYQ

     

    "It sounds like professor Karan Girotra had a bad experience at a local dealership and decided to take out her frustrations..."

     

    FYI: Professor Girotra is male.
    http://bit.ly/1j79lzV
    27 Mar, 03:32 AM Reply Like
  • frankbergandi
    , contributor
    Comments (2) | Send Message
     
    The only positives a dealer brings today is ready inventory and possibly an advocate in warranty battles.
    26 Mar, 12:58 PM Reply Like
  • User 16305382
    , contributor
    Comment (1) | Send Message
     
    its another idea that will eliminate jobs. all these bright ideas will sometime in the near future have 99% of us unable to earn a decent living and be subservient to the 1%. isn't anyone old enough to remember how this once great nation was built? when good paying jobs were plentiful and hard work could support a good living for any one without a degree. today graduates cant find jobs even after spending $100,000.00 to educate themselves. The tech giants keep inventing really useless things ,that when you really think about these things we all did very well without. all this technology would certainly be put to better use in the medical and pharmaceutical field to cure disease. SAD.
    26 Mar, 01:00 PM Reply Like
  • true.north
    , contributor
    Comments (288) | Send Message
     
    Stop all human progress. We must guarantee everyone 100k per year jobs.

     

    Maybe we should have stopped cars because all those horsehoe makers would lose their jobs. We should have stopped computers because all those typists would lose their jobs. Such runs the logic of your post.

     

    In reality, there won't be any job losses. The jobs will simply change. Dealership staff will work for corporate dealers instead of independent dealers. Small garages will still be doing brakes and tires and bodywork on electric cars. Now gas station attendants and fat car dealership owners might lose out. But the average worker could well be better off. Corporate dealers are more likely to give benefits over Billy Bob's Chevrolet.
    28 Mar, 08:39 PM Reply Like
  • I need a bailout
    , contributor
    Comments (1228) | Send Message
     
    I like how you think. The middlemen have been removed in many business environments. Example Walmart buys direct from a manufacturer instead of a distributor. The difficulty with the Tesla model is profitability. They don't have any profits yet after 10 years and it sounds like the service centres are not planning to make a profit. This could compress margins ... not sure.
    28 Mar, 11:50 PM Reply Like
  • Keith_69
    , contributor
    Comments (175) | Send Message
     
    People don't seem to understand, dealerships, mean jobs. Jobs in the states where the cars are sold. They usually have service centers folks, parts department folks, sales folks, finance folks, general maintenance workers, detailers.....It also enables business men and women to open a car sales business.
    26 Mar, 01:01 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1795) | Send Message
     
    Keith,
    Actually Tesla will still have service centers and stores in those states.

     

    With the parts folks, sales, finance, etc, etc. some may be absorbed by banks as car finance speciaists.

     

    Tesla also has detailers- the detailers at the Tesla center in King of Prussia; they do car show level of detailing.

     

    As for the car causing job loss; that is no reason to stop progress. Ice boxes, house stables, kerosene lanterns- when all were replaced, it resulted in job losses, but new industries cropped up. It is the nature of technology. I'm certain when cars came out buggy whip manufacturers were complaining that these new cars will cost jobs too.
    26 Mar, 06:07 PM Reply Like
  • true.north
    , contributor
    Comments (288) | Send Message
     
    The jobs won't disappear. Instead of working for Billy Bob's Chevrolet, those employees will work for the real Chevrolet. Billy Bob will be the only one who is unemployed.
    28 Mar, 08:36 PM Reply Like
  • wiseone123
    , contributor
    Comments (180) | Send Message
     
    The author's comments are correct, but one suggestion is lacking: Let WalMart and Target, instead of the dealers, sell the cars. The big box retailers sell every other kind of personal property and are famous for putting downward pressure on suppliers. All of the vehicles from all of the manufacturers are WAY TOO EXPENSIVE and a large portion of the buying public are forced to finance their vehicles adding more debt to their credit card debt and home mortgages. When was the last time anyone saw manufacturers lower their prices except to clear out legacy vehicles or discontinued models? I believe Henry Ford was the last to do this when the Model T price was lowered to allow most people to purchase a car. To contemplate that a loaded Focus, Cruze, or Corolla can cost over $30,000 is a cruel joke. The dealers work closely with the manufacturers to maximize profits for both parties and kill the consumer.
    26 Mar, 01:03 PM Reply Like
  • boogn1sh
    , contributor
    Comments (2) | Send Message
     
    Two big issues that everyone is missing:

     

    1. Used vehicles. Who are you going to trade your vehicle to if there is no dealership? Manufacturers have no interest in being used car dealers. Without dealerships, are you simply going to sell your used car on CL before you buy a new one? Good luck with that. The manufacturer does not build or sell "used cars", they only make money building and selling new cars. Dealerships take the risk of trading for used cars, reconditioning them, then re-marketing them. Manufacturers can't be profitable doing this.

     

    2. Warranty work. It represents an expensive to manufacturers and they have an interest to do as little warranty work as possible. Warranty work is a profit center for dealerships. They WANT to make sure your car is fixed, the manufacturer not so much. Dealerships go to bat everyday on behalf of the consumer to get the manufacturer to pay the dealership to fix problems. Should we just trust the manufacturer to do the right thing? Look at how bad domestic manufacturers treat warranty work already. Without dealerships, consumers would not be protected at all.

     

    Disclosures: I work for a dealership. A very good one that protects our customers everyday. As the Internet Manager, I sell cars to people that I have never met and have never touched the vehicle they are buying. With a superior product, it works. Even with our superior products, they still break. When they do, we fight for the consumer to get the problem fixed, at no expense to them.
    26 Mar, 01:03 PM Reply Like
  • Khyber Pass
    , contributor
    Comments (219) | Send Message
     
    And you are located where? What brand do you sell?
    26 Mar, 01:57 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1795) | Send Message
     
    Your first arguement holds no water.
    Tesla has a 3rd party dealer come and if needed buys your old car, then you write the check to Tesla for the new car. No big deal.
    I find selling private party is actually more beneficial.

     

    Your second arguement also holds no water. Warranty work. First off, when was the last time a dealer replaced an engine under warranty and did not get paid for it by the OEM? Let us take real life examples, would you agree that GM dealerships knew about the ignition issue prior to the recall?
    Certain dealerships did. What did they do? Told the owners to not have as much weight on the keychains.
    If it is under warranty- legally they MUST pay for the work.

     

    Another case of dealerships NOT honoring OEM warranties. Dealerships may have had a leg to stand on a decade ago, BUT we had Fisker recently- they failed and the dealerships abandoned many of the owners amd left them to fend for themselves or charges the owners for warranty related issues.
    26 Mar, 02:07 PM Reply Like
  • smaislin
    , contributor
    Comment (1) | Send Message
     
    When buying a high-end expensive luxury vehicle, especially European, it is good to know that you have a certified service department that will do what is needed to keep the vehicle and its wealth of electronics and complex mechanical systems operating according to specifications. Today, that is generally through dealerships, especially during warranty periods. They have the educated mechanics and wealth of tools and test equipment to ensure that things are done properly. I will certainly admit that even the dealership service departments fail from time to time. Since they know that future business depends upon it, they are interested in making things right. I would be perfectly happy to purchase a vehicle in another way, but I like the idea that there is a local presence that stands behind the vehicle when and if something goes wrong. Vehicles are only getting more and more complex, mechanically, electronically, and from a software perspective.
    26 Mar, 01:13 PM Reply Like
  • DanoX
    , contributor
    Comments (2586) | Send Message
     
    A lot of short term thinkers don't seem to care until it's gone, an all electric car is going to need more care and service on some levels than the old school car.
    26 Mar, 02:56 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1795) | Send Message
     
    And what exactly do you mean by "more" care?

     

    No oil changes
    No transmission
    No spark plugs
    Regen braking means less brake pad usage
    No pistons
    No starter
    Less heat exposure
    Less moving parts.

     

    Which mechanism requires MORE care than a normal car?
    Sure it has tires, batteries and a climate control, as do other cars.
    26 Mar, 06:11 PM Reply Like
  • stainlesssteel
    , contributor
    Comments (171) | Send Message
     
    @smaislin 26 Mar, 01:13 PM

     

    "When buying a high-end expensive luxury vehicle...good to know that you have a certified service department...Today, that is generally through dealerships, especially during warranty periods. They have the educated mechanics and wealth of tools and test equipment...I like the idea that there is a local presence that stands behind the vehicle..."

     

    Illogic--straw man: Tesla Service Centers provide exactly this function, without any need for a franchised dealer.

     

    Tesla Service Centers:
    http://bit.ly/18GSBsp
    27 Mar, 02:16 AM Reply Like
  • bri1816
    , contributor
    Comments (5) | Send Message
     
    Leave it to a Prof to predict the end of car dealerships, Dealerships will consolidate to just a few for each geographic area. Example, a major metro area may have just 2 or 3 GM dealershps for a metro and smaller cities may have one for a five county area.

     

    I dont want some anti social nerd telling me I can cyber test drive my new car, does the road haver cyber pot holes and can I feel the cyber seats on my ass.

     

    I dont want a repair shop working on a complicated electrical issue or major engine repair, who will do the warranty work, Jiffy Lube? Oh God No.

     

    We already have our faces planted on our tv's & dumb ass phones, our kids cant communicate with words because they dont know how to. Please tell the professor that when her car breaks down in a bad area of town she will need to call the cyber tow truck.The cyber tow truck will take it to the cyber mechanic. Hopefully the cyber police will be in the area to protect her form the cyber gangs in the area.
    26 Mar, 01:14 PM Reply Like
  • Wise Timmy
    , contributor
    Comments (265) | Send Message
     
    I think the manufacturers would love to get rid of the dealership model if they could. Long term, I wouldn't want to own a dealership but I would suspect, that there will always be dealers so long as there are consumers who prefer to buy from them.

     

    I don't buy the we need dealers because they provide jobs argument. That's like saying we need high health care costs to give doctors high paying jobs. Or worse, we need big government because where else will your crazy and Beatrice work than the County clerk's office.
    26 Mar, 01:45 PM Reply Like
  • Topcat
    , contributor
    Comments (412) | Send Message
     
    I love dealerships :)...many people will pay list price or close to it at one, which allows me to buy my new cars below dealer cost, giving them just a couple of hundred profit for a quick no hassle deal for me. Buy the last day of the month, last day of the quarter, and offer them (their cost-dealer hold back + $200) and they always take it.
    26 Mar, 01:50 PM Reply Like
  • Bossco
    , contributor
    Comments (35) | Send Message
     
    My DNA will not allow me to buy a vehicle without having experienced it firsthand. Even from the most utilitarian perspective, one shouldn't treat such an important & expensive purchase as a simple commodity. IMHO having an appropriately excellent local dealership is essential in maximizing the quality of vehicle ownership.
    26 Mar, 02:14 PM Reply Like
  • Topcat
    , contributor
    Comments (412) | Send Message
     
    Hey, people buy used cars from across the country, and land they never even see.
    27 Mar, 10:50 AM Reply Like
  • hughesrd
    , contributor
    Comments (115) | Send Message
     
    Have you heard of Tesla Rangers who come to your car to fix it? I guess not.

     

    I can hear your lament about other high tech cars needing dealerships. After fifty years of continuous college, I bought myself a new LS430 Lexus graduation present 13.5 years ago by loaning 1/3 of my house to the bank. I couldn't find a tire place willing to align the wheels, so the dealers was my only choice. They checked out at least five different adjustments in front and back. I've never had to have my rear wheels aligned! Also, I've had great trouble with Volvo, Mercedes, and Honda dealerships. Even the Lexus dealer gave me three different loaners the day I was to pick it up after the starter wouldn't work. Apparently a new starter required dismantling the engine cooling system. The tech didn't bleed it!

     

    I was really urinated off when Lexus decided to give the same dealer a store in a city neighboring Sacramento. Before that, the nearest Lexus dealer was 80 to 100 miles distant! A bit of competition among dealers is often needed.
    26 Mar, 02:21 PM Reply Like
  • DanoX
    , contributor
    Comments (2586) | Send Message
     
    A Tesla Ranger means nothing Tesla in time is going, to need extensive retail/service locations across the country if they want to make sell/service up to 500,000 cars per year, and they may need additional partnerships with one or two other companies to make that happen.
    26 Mar, 03:03 PM Reply Like
  • sailorguy1
    , contributor
    Comments (13) | Send Message
     
    CAR DEALERS DO NOT WANT INTERNET ORDERS
    I just went on line and looked at 3 different ICE vehicles. I told everyone when I would be buying and exactly what I wanted. I got back 37 different emails and 6 phone calls ( emails and calls are still coming in). When I inquired about my emails not one of the respondents actually saw my email and what I wanted. They then all proceeded to try and sell me what they had available and wanted to know when I wanted a test drive. To me this is dealerships not working with online ordering. I simply wanted a price with certain options and was not able to complete getting what I wanted online. You would think Toyota, Honda, and Mazda would figure out how to make internet purchases possible.
    Maybe if the companies tried limiting the choices and made better cars using mostly the same parts we could get on a little easier in buying a car.
    I'm glad at least one car company has figured out how to do this.
    26 Mar, 02:36 PM Reply Like
  • Jim W
    , contributor
    Comments (9) | Send Message
     
    What we do without our "friend" the salesman running back and forth to the "boss" to try and save us "nice folk" a few extra bucks. Who wouldn`t want to have a session the "finance guy"?.
    26 Mar, 03:11 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    How do you negotiate the price of that e.g. Tesla vehicle? Or do you just pay the MSRP or whatever the website is offering...
    26 Mar, 03:24 PM Reply Like
  • kevinconway
    , contributor
    Comments (1739) | Send Message
     
    Selling vehicles is an incidental as far as running a dealership. They make little money on the sale. Parts and Service is where the money is made and having the dealership do the servicing is part of the deal. Can also make a lot on used vehicles. So that part likely needs to stay intact.

     

    For years, as a very busy executive, when I needed a new car lease, I would call my provider, tell them what I wanted (often just from being in friends cars) and the first time I would see the car would be the day I picked it up. Fast and clean. Easy to do the same on line today.
    26 Mar, 04:11 PM Reply Like
  • lovesdos
    , contributor
    Comments (48) | Send Message
     
    you have a manufacturer like gm, a dealer and the final buyer and the supply chain is too long, grow up, just sayin
    26 Mar, 04:11 PM Reply Like
  • kevinconway
    , contributor
    Comments (1739) | Send Message
     
    If dealership sales were eliminated...who would buy all the watches, gold chains, braclets and rings??? that would be one major hit for those businesses. LOL.
    26 Mar, 04:13 PM Reply Like
  • tka700
    , contributor
    Comments (30) | Send Message
     
    It's rumored this dealership-Tesla crisis was instigated/orchestrated by a whale who's been short the stock, BIG time!
    26 Mar, 04:27 PM Reply Like
  • steve2334
    , contributor
    Comments (85) | Send Message
     
    The author implies that there are sufficient reputable repair shops to service the autos. With the ever increasing complexity of today's electronics, good luck with finding a repair shop that can afford to send its mechanics to the lengthy schooling and continuing education required, while shelling out 10s of thousands of dollars for equipment and rental of the space required to cover the increased business. Another useless study by an academic with no clue.
    26 Mar, 04:57 PM Reply Like
  • Doc's Trading
    , contributor
    Comments (623) | Send Message
     
    See my latest technical analysis under <<<TSLA Motors Roundup>>
    26 Mar, 06:07 PM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    State franchising laws require automobiles to be sold by licensed retail dealerships. Tax collections on those sales are no small part of that.

     

    State Treasurers cringe and grind their teeth at unregulated internet sales with uncollected and unpaid sales taxes.
    26 Mar, 08:00 PM Reply Like
  • User 20427641
    , contributor
    Comment (1) | Send Message
     
    I am not sure you understand how much money car dealerships make or how many state legislators the owners of the car dealerships own. Car dealerships and their lobbyists, on a state and local level, are much like oil companies and Wall Street Banks on a national level. They own the politicians, and the politicos do what they are told, just as the people in Washington do what they are told. It might be academic, but it's not going to change any time soon.
    26 Mar, 08:22 PM Reply Like
  • Joe Lunchbox
    , contributor
    Comments (354) | Send Message
     
    These car manufacturers need to get with Amazon so I can order a new car with free shippping. I might just keep my Prime membership for that, even with the $20 increase.
    26 Mar, 11:12 PM Reply Like
  • Budavar
    , contributor
    Comments (1387) | Send Message
     
    GM = above discussion is a sly diversion from GM's existential threat coming from cover ups, casualties + law suits?
    26 Mar, 11:16 PM Reply Like
  • badmustang
    , contributor
    Comments (5) | Send Message
     
    Mr. Girotra, as an entrepreneurial advocate and a Harvard scholar, I'm sure that when you make your new car purchase, you'll want to share stories of your good luck getting warranty repairs at a "reputable repair shop" outside of the OEM manufacturers dealer network.

     

    Please describe to us in detail, how the auto franchise works in the micro aspect of a dealer. I would love to hear your prospective on how you view the servicing feature to customers. Also, what other products have you purchased that needed repair and you sought a reputable repair shop to do the work outside of that manufacturer's network....

     

    VERY interesting concept. From Harvard.
    26 Mar, 11:33 PM Reply Like
  • badmustang
    , contributor
    Comments (5) | Send Message
     
    Great observation coming from a self proclaimed advocate of entrepreneurship, Mr. Girotra..

     

    When you get your vehicle wholesale, and it breaks down either in or out of warranty, let us know how you repaired it. It would be fun to hear about.

     

    Keep up the great work at Harvard School for Dummies
    27 Mar, 02:23 AM Reply Like
  • David Muncier
    , contributor
    Comments (541) | Send Message
     
    Many of you guys don't get it. There are Tesla galleries for seeing, touching and driving the cars, and Tesla service centers for repairs, they are just factory-owned. And given the size, new technology and volume of Tesla, that all makes sense.

     

    My guess is that they will eventually need franchised dealers when they hit a 500K units/yr or so critical mass, but until then, the laws protecting franchised dealers also effectively stymie new auto market entrants.
    28 Mar, 11:05 AM Reply Like
  • I need a bailout
    , contributor
    Comments (1228) | Send Message
     
    All these non-profit galleries and service centres to sell one model of car results in a lot of overhead that the other car makers don't have. You would think that after losing over $1 billion dollars so far (approx. $40,000 per vehicle produced to-date, Tesla would want to reign in the spending?
    28 Mar, 11:20 AM Reply Like
  • Wise Timmy
    , contributor
    Comments (265) | Send Message
     
    I can't see Tesla ever getting to 500k units. But then I've never driven one. Maybe once I do, I'll just have to have it. Now the new Aluminum F-150? I haven't driven that yet either, but I got to have it... Can't wait in fact.
    28 Mar, 01:05 PM Reply Like
  • true.north
    , contributor
    Comments (288) | Send Message
     
    I guess you think the Apple Store doesn't make money either and Apple should simply sell through Best Buy.
    28 Mar, 08:35 PM Reply Like
  • David Muncier
    , contributor
    Comments (541) | Send Message
     
    2 models (don't forget Roadsters), 3 starting toward the end of this year. I think it's a tough tradeoff since franchised dealers also chew up a bunch of cash that is added to price of the car. Tesla simply keeps the markup and uses it for the dealerships. Dealerships really only make sense when you have enough product being sold to require an extensive sales and distribution network. Today, Tesla can reach within 50 miles of 90% of their potential buyers using only 5% of the number of "dealerships" that a Ford, GM or Toyota might use.
    28 Mar, 12:41 PM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    Tesla stopped making Roadsters a couple years ago. Only Model S now, and Model X is coming. What a shame they could not use Model T. Maybe Ford will license the name for a few million, plus royalty fees.
    28 Mar, 12:52 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    Would that be the first time anyone makes money on Tesla, that being Ford licensing "Model T" to Tesla? :)

     

    Like MSFT making hundreds of millions if not billions from Android sales in IP royalties...
    28 Mar, 12:59 PM Reply Like
  • dsruggles
    , contributor
    Comments (14) | Send Message
     
    Dealerships chew up a lot of cash that is added to the price of the car? Could you be more specific?
    29 Mar, 01:42 PM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    Actually Dealers buy cars and trucks at wholesale prices from the manufacturers for resale at the retail level. Manufacturers provide the MSRP (Manufacturer's Suggested Retail Price) on the price tag (Window Sticker). Dealers negotiate the final sale price with the Customer, and smart Customers can find out what the wholesale price was to try to negotiate the final price downward. That is how it works.

     

    It isn't all that different at Walmart and other retail stores. They buy from suppliers and manufacturers at or around wholesale price, sell at retail, and have "price drops" and "sales" to try to bring in customers. And some retail stores have price matching, so customers can sometimes "negotiate" the price down on that new GE microwave oven. Note that the customer did NOT buy it directly from GE, but from the "dealer".
    29 Mar, 04:19 PM Reply Like
  • David Muncier
    , contributor
    Comments (541) | Send Message
     
    Yup,
    Manufacturers need multi-level distribution, to offer services and support, when they sell hundreds of thousands to billions of units per year, over broad geographies. Not needed so much when you only need to sell tens of thousands of luxury goods in a hundred or so metropolitan areas. Tesla will need franchised dealers someday as they grow but laws that inflict them on consumers and Tesla, are definitely not for customer protection.
    30 Mar, 05:29 PM Reply Like
  • true.north
    , contributor
    Comments (288) | Send Message
     
    Such ignorant comments on here. Tesla aside, such bans are nonsensical

     

    The dealership model is simply broken. To start with it makes no sense to co-locate sales and service. Sales should be located in high-traffic areas where you can get the most visibility. ie. malls. Service should be located in some cheap suburban industrial park where you can get lots of space for cheap. You shouldn't be building dealerships the size of small apartment complexes on suburban main streets with low walk-in traffic and high cost for servicing space.

     

    Next, dealerships offer no consistency of service or pricing or speed in this day and age of the internet. Negotiating to buy a commodity is moronic. And a car is pretty much a commodity. You should be able to order it up on the internet and have it dropped ship to your driveway. Tesla does this right. The rest are doing it wrong and trying to defend doing it wrong. Beyond that is the whole, "let me take your offer to my manager" BS and the hours of negotiation to get a new car and the "discounts" if you pick a colour on the lot. This is not good service. This is forcing a customer to accept a sub-optimal solution so that the dealer can move merchandise.

     

    All this is exactly why dealers are doomed to fail. But it's no big deal. All their employees will be so much happier working for corporate dealers than Billy Bob's Chevrolet.
    28 Mar, 08:33 PM Reply Like
  • dsruggles
    , contributor
    Comments (14) | Send Message
     
    Maybe Musk offered the Giga Factory to OHIO? :)

     

    This just in:

     

    http://on.wsj.com/1hKeMke
    29 Mar, 01:42 PM Reply Like
  • lovesdos
    , contributor
    Comments (48) | Send Message
     
    you may hate dealers but what is the alternative, you go to the factory to buy a car, dealers may be doing a terrible job but we must have an intermediary between big auto mfg and the customers. telsa may be able to eliminate dealers but they will never mfg very many cars. try to find a rolls dealer, in fact where I live find a bmw dealer. dr. ms. girotra shows a poor understanding of the function of marketing intermediaries
    30 Mar, 01:19 AM Reply Like
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