Question Of The Day: What's So Great About Tesla?

Derek Kreindler
by Derek Kreindler
In honor of Elon Musk’s latest pronouncements, here’s a little thought exercise for hump day. I want you to make the case for Tesla, as a company.Seems easy, right. But there’s a catch.
  1. You can not talk about what good cars they are.
  2. You cannot use the word “disruptive” or any form of it.
Let’s see what you’ve got.
Derek Kreindler
Derek Kreindler

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  • Ruggles Ruggles on Mar 19, 2015

    RE: "You are right and wrong in turns here. Dealers do benefit manufacturers and are here to stay. Otoh dealer franchise laws serve to protect poorly performing dealers or dealers with deep disagreements with manufacturer policy from manufacturer competition." Your definition of "poor performing" might be different from others'. There has to be an objective way to measure performance when you're talking about someone's major investment. It can't just be whimsical or you'll get laughed out of court. RE: "Neither direct to consumer or third party franchise is inherently more beneficial to consumers, the difference lies in the execution." One is easier to execute than the other. RE: "Do away with forced franchising and the brands will immediately move on their worst business partners." What do you mean "forced franchising?" Are you trying to say OEMs are forced to franchise? Have you studied the history of this. They weren't forced. They seized an opportunity and have taken advantage of local dealer's capital and expertise. This was never forced on them. Even Tesla hasn't been forced to franchise. Look how many retail points they have with no franchised dealers. RE: "Other dealers would quickly improve." Improve, how? What are your objective standards? What are the OEMs? The objective standards applied by the legacy OEMs include MSR, CSI, Image (facility) and service capability (special tools, equipment, parts inventory, AND financial strength. They have no use for dealers who make their customers happy while losing market share and going broke doing it. That's how most rookies run car stores. They sell the easy customers, make very little money doing it, over appraise the trades to keep the customers happy and to make skinny deals, and do a poor job of getting paid for service and parts.

  • Ruggles Ruggles on Mar 19, 2015

    RE: Any brand would love to sell direct in markets where dealers are underperforming or not toeing the line as a group." Define under performing and not toeing the line. The OEMs know how inept they are at retail. In the case of true "under performing" dealerships they try to find a performing operator to but it out. The LAST thing OEMs want is to retail vehicle themselves. RE: "It's all about self preservation of the individual. Imagine how badly a brand could savage a cities dealer network with their own store. Price, experience and visual appeal could all be massively improved and once the dealers have been brought to heel, they'd sell their flagship to a large franchise network with a robust agreement/understanding on how to conduct future business. That's my take at least." Sales and Service agreements already exist. A company store, selling to retail consumers for less than they sell vehicle wholesale to their dealers will find them drug into court in a heartbeat. In this business OEMs aren't allowed to undersell their dealers direct to consumers, and that's exactly what the Sales and Service agreements deal with. If an OEM had a history like that, how would they find business people to invest in their dealerships? There is competition among OEMs for the best dealers. And the best dealers by an OEMs measure are probably different from your own measure.

  • Ruggles Ruggles on Mar 19, 2015

    @ HDC - RE: "Oh? If I may be so inquisitive... what do you do now? Did you retire from your previous line of work?" I made a conscious decision about 20 years ago to never again invest personal money in a new car store. If someone gave me one today, I'd have it sold tomorrow. But I do consulting work for dealers and the auto finance trade as well as write columns for trade pubs, moderate panels at conferences, sit on panels at industry conference, pet my cats, and travel around with my wife. In my spare time I sometimes function as "click bait." :) Its like moot court for me. So when I'm in front of a live audience, as I occasionally am, I'm not having the discussion for the first time, or the second, or the third. After I began my regular gig in Japan, I was able to pursue things that interested me as opposed to having to pursue things that made the most amount of money. BTW, how's my buddy for whom Clint Eastwood once baby sat?

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    • Ruggles Ruggles on Mar 20, 2015

      @highdesertcat TYVM. Some do. It seems some don't. But I'm good with that. I appreciate the opportunity to exercise. It would be boring if everyone agreed. In the business world we used to say, if two of us agree on everything, one of us is probably unnecessary. When I said, "I don't do that any more," I was referring to the fact that I haven't owned or run any retail automotive stores since 1992. I have been in the trenches with dealers, sales people, lessors, and business managers on a daily basis since.

  • Ruggles Ruggles on Mar 23, 2015

    R$E: "Many people want to buy a car the same way they buy a TV or toaster." This is a fact. But there aren't enough of them to make the business model viable. Dealers who attempt this model find that consumers take their posted price to a competitive dealership and use it to but from the competitor. Hence, consumers kill what they say they want. Go figure. RE: "No haggles. Up front and clear cut prices. There's is nothing inherently wrong with either method." Except one works and the other doesn't.

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