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 car manufacturers are now accepting that fact, which is what Elon Musk always wanted, so if someone ever makes a better electric car than then Tesla and that's much better than ours that we can't tell our cars and we went bankrupt I still think that's a good thing for the world besides electrification Tesla is forcing a lot of changes in the industry with innovations like wireless autopilot updates and overall better Eevee designs but t

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's still one more thing to Tesla must do: You must disrupt the traditional dealership sales model, that's an incredibly difficult task, but Tesla is the only car company that can do it.

For decades, outdated franchise laws have prevented car manufacturers from selling. cars directly to consumers in fear they would bankrupt existing

dealerships

by not having franchise

dealerships

that these laws don't apply to Tesla, but dealer associations have convinced many states to ban or limit stores Tesla either way, this would be like Apple being banned from opening the Apple Store in the early 2000s because Macs were already being sold by retailers like Best Buy. Tesla refused to cede and sell franchises and that's why you can build and ordering a car online direct from a manufacturer for the first time with other brands getting something as simple as a price is a daunting task on the manufacturer website you can build cars with prices but to get an official price you have to ask for a quote as you don't may sell cars, they can only give you a suggested retail price and remind you that the actual price

will

vary when requesting a quote. n please provide your personal details and then select the dealer you want to be harassed i mean contacted by and then wait i got this on a twenty twenty corolla inquiry hi sean i want to help you with your recent vehicle inquiry but you didn't provide a number if i can spend a few minutes on the phone.

I could give you the best overall service, but what little information I can save you time and effort is ironic. Please provide a good number or call me. I promise to be brief. the point thanks that's right I built a car I asked for a quote and didn't get a price because I didn't give my phone number which wasn't a requirement on the form anyway as the actual price varies as the manufacturer says what do you need. to request a quote for each car and trim level you are interested in or need to negotiate with the dealer in person

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we are in 2019 or customers at the same dealer

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pay vastly different prices for the same car based on their negotiation skills, a dealer could make thousands on someone unfamiliar with the process even if you are a single mom barely getting by let's not forget many dealers claim they treat you like family now imagine buying an iPhone Tenace on an app you Store only to find out 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 dealerships costing ten times that so how do you Tesla Disrupts Dealership Model Without Dealerships Tesla just needs to grow companies like Toyota and Honda have co They have become master crafters and have learned to save every penny they can; however, since they have no control over the deficiencies in their dealer network, the opportunity to improve gross margins or reduce costs is lost Car dealerships are incredibly inefficient Each dealer pays for their own customer management system in the website and even pay for their own advertising which often competes with the next closest dealership of the same brand Don't forget the manufacturer also pays for dealership advertising also load their lots with excess inventory so they can have the Right Car at Right Time For example, Norma Reeves Honda in Los Angeles has 1,700 cars in inventory since inventory is financed at most dealerships at an average cost of $25,000 per car, which is $42. eat five million dollars in inventory that could cost them as much as three thousand dollars in interest each.

If we look at Auto Nations, which has more than 300 stores in the US, we can see how much of a gross margin opportunity manufacturers are missing out on in 2018. Auto Nations averaged $1,660 gross profit on every new car sale and an additional seventeen. one hundred and eighty nine dollars marking up items like finance interest rates, extended warranties, Weill insurance, rust protection and all the other junk they sell, that's a gross profit of over 9% giving an average sales price around thirty-seven thousand eight hundred dollars, that's just the retail secondary service is where the dealerships really make their profit because of the franchise laws, no matter how good the manufacturers are at building cars and cutting costs, the dealer gross margin is something they can never take advantage of since most manufacturers gross margin is around fifteen to nineteen percent it is a huge missed opportunity for them with Tesla's direct to consumer sales model that can take advantage of that gross margin and use more efficient processes to increase profits or make your cars more affordable, while Electric cars are still more expensive to produce than combustion cars.

Once Tesla can lower its production costs to compete with cars like the Accord and Rav4, then it will be able to use its efficient sales process to be more competitive with cars. prices of their cars at that point, traditional automakers will be forced to rethink the way their cars are sold, and thanks to Tesla, this could be the end of old-school dealership sales. model