Tesla Will End Car Dealerships - Here's Why

Tesla has already proven that electric cars are the future, they are faster, more efficient and have zero emissions. Today, traditional automakers are embracing that fact, which is what Elon Musk wanted all along, so if someone ever makes an electric car better than Tesla and that one. It's so much better than ours that we can't tell our cars apart and we're going bankrupt. I still think that's a good thing for the world, electrification aside. Tesla is forcing a lot of changes on the industry with innovations like over-the-air Autopilot updates and overall better Eevee designs, but t

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's still one more thing Tesla needs to do: It needs to disrupt the traditional dealership sales model.

It's an incredibly difficult task, but Tesla is the only car company that can do it. For decades, outdated franchise laws have prevented automakers from selling. cars directly to consumers with the fear that they

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drive existing dealers out of business by not having franchised dealers. These laws do not apply to Tesla, but dealer associations have convinced many states to ban or limit Tesla stores in any way, this would be like Apple being banned. from opening the Apple Store in the early 2000s because retailers like Best Buy were already selling Macs Tesla refused to give in and sell franchises and that's why you can build and order a car online directly from a manufacturer for the first time and others brands get something As simple as pricing is a daunting task on the manufacturer's website, you can list car prices but to get an official price you have to ask for a quote as they can't sell cars they can only give you a retail price suggested and remind you that the actual price

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vary when you request a quote, provide your personal details and then select the dealership you would like to be harassed by, that is, contacted and then wait.

I received this in a Twenty Twenty Corolla inquiry. Hi Sean, I want to help you. with your recent inquiry about the vehicle but you didn't provide a number, if we can spend a few minutes on the phone I might be able to provide you with the best overall service, but the little information I can save you time and effort, that's ironic, please provide it. a good number or call me. I promise to be brief, thank you. That's how it is. I built a car. I requested a quote and did not get a price because I did not give my phone number, which was not a requirement. on the form anyway, since the actual price varies, as the manufacturer says, you must request a quote for each car and trim level you are interested in or you must negotiate with the dealer in person

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, we are in 2019 or with customers At the same dealership you will pay very different prices for the same car depending on your negotiating skills.

A dealership could make thousands of dollars off of someone unfamiliar with the process, even if it's a single mom who's barely scraping by. Let's not forget that many dealers claim to treat you. As a family, now imagine purchasing an iPhone Tenace at an Apple store only to find out that someone paid $150 less for the same phone a few hours later at the same store. Now imagine there is no return policy, that's the world of car

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with ten times more So how does Tesla disrupt the dealership model without having any dealership? Tesla just needs to grow.

Companies like Toyota and Honda have become masters of manufacturing and have learned to save every penny possible since they have no control over the inefficiencies in their businesses. An opportunity to improve gross margins or further reduce costs is lost in the dealer network. Car

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are wildly inefficient. Each dealership pays for its own customer management system on the website and even pays for its own advertising, which is often in competition with the next closest dealership of the same brand. Don't forget that the manufacturer also pays for advertising to the dealers and also loads their lots with excess inventory so that they can have the right car at the right time, for example, Norm Reeves Honda in Los Angeles has 1700 cars in inventory since Inventory is financed at most dealerships at an average.

At a cost of twenty-five thousand dollars per car, that's forty-two point five million dollars in inventory, which could cost them up to three thousand dollars in interest charges each day. If we look at Auto Nation, which has over 300 stores in the US, we can see. How many gross margin opportunities are manufacturers missing out on in 2018? Auto Nation averaged a gross profit of $1,660 per new car sale and an additional $1,789 by increasing items like finance rates, extended warranties, Weill insurance, rust protection. and all the other junk they sell, that's a gross profit of over 9%, which gives an average selling price of about thirty-seven thousand eight hundred dollars, that's just on the retail side.

Service is where dealers really make their profits due to franchise laws, no matter how good they are. manufacturers are in the business of making cars and cutting costs, the dealers' gross margin is something they will never be able to take advantage of, since most manufacturers' gross margin ranges between fifteen and nineteen percent, which is a huge missed opportunity for them with Tesla's direct-to-consumer sales model. can take advantage of that gross margin and use more efficient processes to increase profits or make its cars more affordable, while electric cars remain more expensive to produce than combustion cars once Tesla can reduce its production costs to competing with cars like the Accord and rav4 will be able to use its efficient sales process to be more competitive with the prices of its cars, at which point traditional automakers will be forced to rethink the way their cars are sold and thanks to Tesla this could be the end of that. old school dealership sales model