1984 Honda Accord and 2018 Tesla Model 3: Selling Cars You Cannot See
Electric automaker Tesla Motors has collected more than 400,000 deposits from customers for its 2018 Model 3 sedan, despite having little more than rough renderings of the car to show prospects. This is a remarkable achievement that speaks to its groundbreaking products and the cult-like following of Tesla CEO Elon Musk.
People standing in line to put down deposits and then be willing to wait for a hot car is not without precedent. I sold Honda automobiles during the 1980s and the similarities to today’s Teslamania is striking.
Memo to Musk: If you can indeed increase your production five-fold in two years, I am sure you will move 400,000 Model 3s, but most of them won’t go to today’s deposit holders.
Allow me to explain. The scene was Benson Honda in San Antonio. The year was 1984 …
Much like the current, electric-powered Tesla Model S, the 1980s Honda Accord was so far ahead of the competition as to be laughable. No other compact sedan of its time could compete with its combination of value, reliability, driveability and cachet. The American cars of 1984 were the crappy GM J-cars: the Firenza, Skyhawk, Monza and Cimarron. Ford offered the Escort. The other Japanese offerings like the Mazda 626 and Toyota Camry were gaining ground, but only Hondas were consistently sold on a waiting-list-only basis.
The Honda hype in those days was Tesla-like. In 1985, all three Honda models — the Accord, Civic and Prelude — made Car & Driver’s 10Best Cars list. We had terrific national advertising and even better word of mouth. We were the first import automaker to build cars in America. Honda’s Ohio Accord plant opened in 1982.
I worked for Tom Benson, one of the first “mega-dealers’ in the country with around 20 automobile stores in South Texas and New Orleans. He has since sold off most of his dealerships, keeping his Honda and Mercedes-Benz franchises. Benson still owns the New Orleans Saints NFL football team.
People buying Honda cars in those days were young, upscale, educated and probably the first group to know more about the products than the average Honda salesperson. A national magazine called them “Super Consumers.”
The average home price in San Antonio at the time was around $75,000 and there was no state income tax. Our average commission was between $300 and $600 per car. We closed on Sundays. You are probably thinking we thus attracted the best and brightest salespeople in town.
With regret, allow me to present the five salesmen chosen to sell the 60 Hondas we were allocated each month to those intelligent Honda buyers. Their names have been changed.
Kevin: Recent retired military, keeper of the waiting lists, he used the same pitch with every customer: “Every rich Jew in San Antonio owns the same two cars: a 1964 Mustang and a Honda Accord. And you know why? It’s because they know the value of a dollar.” His spiel actually seemed to sell cars.
Fred: A short, greasy, former top NHRA drag racer who always dressed in grey, from suit to socks to tie. A classic order-taker, Fred made $30,000/year and never stood up as far as we could tell. His pitch: “You wanna buy a Honda? Sit down. Somebody bring me the waiting list!”
John: Over 30 years of peddling cars to lying customers had turned him into our resident curmudgeon. He was hard of hearing. His pitch: “YOU KNOW THESE LITTLE CARS ARE ON A WAITING LIST, DON’T YOU? YOU CAN’T JUST WALK IN AND BUY ONE!” He once walked through a plate-glass window at the Ford store down the street.
Rafael: Quiet, earnest, and did not socialize with the rest of us. He was our most tenacious salesperson. Rafael would spend hours with clients. He would have them lay on the floor with him to look at the Accord’s double-wishbone suspension. He would climb in the trunk to illustrated its roominess. Customers loved him.
Myself: Plucked from the used car lot due to our increased allocations of new Hondas. I was the only salesperson to mirror the demographics of our customers: 30 years old and college educated. I knew and loved the products and listened more than I spoke.
We were a cocky bunch. We made fun of the salespeople at our attached Mazda store as their 626 and GLC only sold to customers unwilling to wait for a Honda. The did have the hot selling RX-7, but they had to endure Tom Benson’s daughter Renee taking several for her own use, totaling at least one of them. (She was in the news in 2015 as she sued her father in a dispute over her mother’s trust, which included controlling interest in the Saints. He in turn canceled her $75,000 per month allowance. I would later learn that dealer’s kids were rich because they all possessed PhD degrees: Papa Has a Dealership.)
Our dealership was charging an average of $500 over MSRP for new Hondas, which meant that any calls we got from Houston or Austin customers meant an automatic sale as retailers in those markets were truly ripping peoples’ heads off with additional dealer markups of $2,000. We collected $100 deposits from people to put them on a one- to three-month waiting list for a new Honda.
Cynics called us order-takers and friends marveled at our “easy” jobs. Nothing could be further from the truth. Selling a Honda with nothing to demo or sometimes even nothing to show required imagination. Rafael and I each made twice the income of some of our salespeople because we knew the cars inside and out. We sold the cars, thus our orders would stick.
We would find an Accord in for service to show and amazingly that never backfired, no one asked, “why is it in for service?” I highly suspected that the stealthy Rafael actually went on demo rides in those cars with prospects, a major no-no. We knew where an employee parked her new Prelude. When a load of cars arrived we would call prospects and have them come in to take a look.
One of the realities of being an automobile salesperson is that some people automatically hate you, no matter how nice you treat them. With no cars in stock to sell, some people despised Honda dealers’ sales staff even more. “So you don’t want to sell me an Accord today, huh? I will just buy something else then,” was a typical clever line.
About 30 percent of customers would drop off the list and not buy a Honda. The percentage of “dropouts” were directly proportional to the amount of time the salesman spent with the clients on presenting the vehicle. Rafeal and I each had minimal cancellation rates while our lazier staffers would lose more than half.
Now consider those Tesla’s clients being held in abeyance. With a two to four-year waiting list, it’s safe to say that many will cancel their orders due to changing life circumstances or because they bought another car. As for the rest, how many were truly sold on the Model 3 before leaving a deposit? How many were influenced by peer pressure or hype?
It would be interesting to track those people who put deposits down at a Tesla store to find out which salespeople hold on to customers all the way through delivery. I predict that only around 150,000 of those 400,000 original buyers will be driving a Tesla, though each Model 3 produced will certainly be pre-sold.
This assumes that no significant competitive product appears in the next few years. If so, and since that car would be available through a franchised dealer network, the day Daimler dumped Chrysler, it was the best moment of my automotive career.
Steve Lynch is the author of Arrogance and Accords: The Inside Story of the Honda Scandal.
[Images from Honda, Tesla Motors]
Tekdemon on Aug 27, 2016
I'm going straight up tell you that you're wrong about the people who put down the deposits for the Model 3. They're not the same crowd that was uncomfortable buying an Accord without seeing it, many of the people on line were folks who had ALREADY waited several years to buy their Model S's and Model X's, we're talking about a group of people who are comfortable gambling their deposits while waiting to see what the final car looks like. If, after seeing the real deal they don't like it, they'll cancel it but it's unlikely for most of the people who've placed deposits to cancel before seeing the final Model 3. Most of the people putting down these deposits knowing that it'll be years before they get the car tend to be relatively well off folks. Pretty much everyone was a well off professional on the line I waited on except for ONE younger fellow who sounded like he was saving up every penny to afford it. If the Model 3 comes out in it's final form and it's terrible then yes, there will be cancellations galore. But those deposits will mostly stay for now, even though there won't be a car to see for years because the people putting down those deposits are the kind of people who are comfortable with not seeing the final product for years and who have more than enough money to not worry about their deposit.
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