Musk Blames Car Dealers For Lackluster EV Sales
Tesla’s Elon Musk found someone to blame for the lackluster sales of EVs, and the death of some EV makers: Car dealers, and their National Automobile Dealers Association NADA.
“The auto dealers association is definitely creating some problems for us, making it harder to get things done,” Musk said at Tesla’s shareholder meeting with Reuters taking notes. Tesla wants to sell its cars directly to consumers, which is against the law in most states. Attempts to have the law changed “met stiff resistance from dealer groups around the country,” Reuters says. Musk keeps trying.
Musk has said car dealers are bad advocates for electric cars because they rely mostly on gas-powered vehicles. Musk told shareholders that the traditional dealer model “didn’t work for Fisker, didn’t work for Coda. In the last 90 years, when did it work?”
NADA spokesman David Hyatt fired back:
“Industry experts say Fisker failed because it rushed its product to market before engineering problems were resolved. Coda did not receive government loans and was under-capitalized.”
“Thank goodness there are independent dealers left to try to help the customer. Manufacturers and brands may come and go, but the dealers are there for the long term.”
Car dealers are a very formidable lobby group. Fighting windmills would stand better chances.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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I think Musk was specifically complaining about the power of the multi-location dealership groups -- a handful of very large operations that have the resources to protect themselves. Two of the top seven of these groups, Sonic and Hendrick, are located in North Carolina where Tesla is prevented from selling cars. The biggest chain, AutoNation, has a deal with Tesla to buy cars customers want to trade in, so I'm not sure what they think. Could be a marriage of convenience.
Car dealers are, for the most part, completely unnecessary. In this day and age we simply do not need the current model to buy/sell cars. At least new cars. We should be able to buy directly from the manufacturer and the manufacturer (like Tesla) could have demo stations for you to sit in and drive the car. No high pressure sales tactics. No markups. No pressure at the finance table to buy all the BS aftermarket protection packages and extended warranties. No games and lies. Refreshing. Make it happen.
Every automaker would like to go direct to the customer and bypass franchise dealers. Ford tried to set up some factory owned dealerships some years ago and got shot down by NADA in a similar fashion that Tesla is now. The reason is the same for all automakers - they want the dealer profit margin themselves and/or the opportunity to profitably lower prices. Manufacturers also would like more control over the sales and servicing process, which is almost universally disliked by customers, but which manufacturers have limited means to force independent franchised dealers to improve. For electric vehicles, the dealer margin can also be a further hurdle because the margins on ICE cars are likely higher - so if I can make 9% on an ICE sale or 4% of an electric car sale - which one is the dealer going to push on the customer?
Aw 'come on, guys. New car dealers are fun to do business with. Just go to the interweb and look up how much they paid for the car you want including any current rebates. Subtract another 3 to 5% to get close to the real number. Now you got 'em by the balls in any negotiation. Leave 'em a $100 'profit' and walk if they don't take it. Maintain a genial, businesslike demeanor. I have had salesmen follow me across a parking lot on a rainy day w/o an umbrella. Great fun. If you run out of places to go, start all over and offer a little extra. Car dealers generally won't hold any earlier unpleasantness against you. They are almost always kind and forgiving souls. Oh yeah. Don't forget to check the interweb, Yelp for example, to see which dealers have a reputation for giving adequate or better after sale and under warranty service. Deal only with them.