11 ms·

How Tesla is Circumventing Dealerships

295 points by bmahmood 14y ago

lazyjones 14y ago
Here in Austria, we already have some special "online only" deals by major car manufacturers. I'd assume that it's becoming popular elsewhere as well (example: http://www.hyundai-shop.at/ http://www.hyundai-shop.at/) and that car dealers aren't particularly happy about it. Perhaps the huge discount (around 25%) is the usual dealer's cut ...
- justincormack 14y ago
  I think that is less than the dealers cut, which has usually been 50%.
tocomment 14y ago
How do test drives work in this model?
- djt 14y ago
  you go into one of their showrooms or you drive a friends car.
  - brown9-2 14y ago
    I think this is a fair question - it's hard to see how you could take a Tesla for a test drive if the showroom is located in the middle of an indoor shopping mall. Would they keep a small fleet on-hand in the mall's parking lot?
- WiseWeasel 14y ago
  With a considerable amount of imagination. At least they allow us to get our grubby hands on them, if briefly.
- URSpider94 14y ago
  Given that the waiting list for a car is somewhat over a year at this point, Tesla have mounted a nationwide tour of test-drive cars. However, I'm pretty sure that you either have to own a Roadster already, or have put down a deposit on a Model S, in order to get a test drive slot.
- brc 14y ago
  Any high-demand cars are usually not available for test drives, unless you know the dealer or someone with one. It's not unheard of for people to have to purchase a car sight unseen, never driven. Dealers may give you an 'out' - as in final delivery is subject to a satisfactory test drive - but few people are going to knock back a car they've been waiting months for.
  - cincinnatus 14y ago
    Indeed I purchased a Mercedes ML in 1997 having not even seen one on the road yet, it was not out yet and 1998 was the first model year. Got one of the first thousand off the assembly line with mixed results (used to call it the 'beta'). I will likely be buying a Tesla X without ever seeing one.
    - brc 14y ago
      "mixed results" boy, you're being kind. They released way too early on that model - new model, new factory, first consumer SUV for the brand. You might have been lucky but they did have a lot of problems. Ironically now they make an excellent used buy - like evolution, all of the buggy ones have been crushed, and the ones that remain are the solid examples. But their terrible reputation means they don't cost much at all. Incidentally, my boss at the time bought one as well, and weirdly enough he let me drive it on the first day he owned it. There is no freaking way I'd let an employee drive my brand new car, but he seemed to think it was cool. Still weirded out by that to this day.
      - cincinnatus 14y ago
        Yea I kind of which now I had kept the 98. It was working quite well by the time I gave it up, but there were safety related upgrades on the new build that caused me to switch.
Shivetya 14y ago
The money line is the statement where they believe there are no laws preventing them from selling cars in all fifty states. There are no laws "currently" is a better phrase. Should Tesla become a serious maker of cars; having one model and a goal of only 35k a year keeps them at the size of Porsche; then they are going to attract attention. That they have received Federal money and their cars are subject to incentives by the federal government and states will put pressure on legislatures to extract "something" from them. To put their sales goals into perspective, a luxury brand like Lexus can sell over 20k a month. The top five sell a hundred thousand plus cars per month. Chart of August sales is at http://www.autoblog.com/2012/09/04/august-2012-big-jumps-edition/ http://www.autoblog.com/2012/09/04/august-2012-big-jumps-edi...
- btilly 14y ago
  As long as it is interstate commerce and Tesla maintains no business presence in a state, that state government can't regulate.
  - hexis 14y ago
    "maintains no business presence in a state" Amazon's recently experiences with sales tax collection shows that a motivated government will keep its eye out for "business presence" and then regulate when it becomes politically useful. Freedom's just another word for something too small to bother regulating.
    - protomyth 14y ago
      Tesla doesn't have affiliates so they are not subject to the same problems Amazon had. On another note, states already have rules dealing with buying a car in another state, so it is settled law.
    - rprasad 14y ago
      Jurisdiction for state taxation is not a matter of business presence, it is a matter of having sufficient nexus. This is and always has been the deciding factor. When Amazon was "just" an online "catalog", it could take advantage of cases like Quill Corp, which held that a catalog with no physical presence in a state and which sold few goods into that state did not have sufficient nexus to establish the state's jurisdiction to tax. However, Amazon is the single largest retailer by volume in nearly every state in America, topped only by Walmart. It sells a substantial volume of goods into every single state. Legal commentators, including numerous former SCOTUS law clerks, have noted that if Amazon were to challenge state sales taxation today, it would lose because the justification set forth in Quill does not apply. And that's with a significantly more conservative/libertarian SCOTUS than in Quill.
encoderer 14y ago
That's interesting. I've had the fantastic experience of buying directly from an automaker as part of their European Delivery program. Basically, you fly over there, show up at the factory, you get treated like a dignitary, they show you "baby pictures" of your car being built, and then you drive off with it and get to cruise around Europe for 30 days. When you're done, you drop the car off at one of a half dozen ports and fly home. Your car arrives a few weeks later. You get about 10-15% discount and it's a very cool experience. A friend did this for Porsche and while the car was great he said the experience was a little lacking. That they do such lower volume they didn't have the program as perfected and it was more about just showing up and taking possession of the car. Anyway, that's obviously not what Tesla is doing -- but they should. They should definitely have a California Delivery program. They probably already do.
- TylerE 14y ago
  They wouldn't get the same tax dodge though. European delivery works out because you don't pay new car tax if you buy the car in Europe, drive it enough so it's no longer new (~100 miles or so) and ship it home. This exemption was originally put in place because a bunch of GIs wanted to bring home the sporty little cars they drove in England during WWII.
  - cantankerous 14y ago
    That's a really astute observation. I've heard of people doing this before, but didn't realize that the whole auto-vacation was about a tax dodge. Really interesting.
    - joezydeco 14y ago
      The BMW fan wiki suggests that's not a tax/tariff dodge as much as the fact that BMW doesn't pay the incentive payment to dealers for euro delivery cars: http://www.bimmerfest.com/wiki/index.php/ED_Summary#Why_is_European_Delivery_Cheaper_than_US_Delivery.3F http://www.bimmerfest.com/wiki/index.php/ED_Summary#Why_is_E...
  - _delirium 14y ago
programminggeek 14y ago
This is probably the only way that longer term the company can afford to sell electric cars at a reasonable price. The tech is obviously expensive, but if you layer on the 10% sales commission and dealer fees, etc. it will jack up the price on these already expensive vehicles by 25%. Imagine how much better the Chevy Volt would sell if it were 25% cheaper...
djt 14y ago
This is excellent, i helped a friend go shopping for a car 2 weeks ago and it was terrible. All the stereotypes of what car salesmen are like were out on parade. I also know a guy that sells cars and he managed to get a customer to pay $2.5K over the price for a NEW car for the USED car... Same model and accessories. I'm glad that theyre pioneering this as I think it's going to be a viable business model
- chaostheory 14y ago
  Agreed. My personal experience at a dealer for both buying a car and a servicing it are horrible. Hopefully more manufacturers start shifting to this model.
dkhenry 14y ago
Well someone rang the obvious bell on this one """ "People don't necessarily enjoy that whole transaction," Blankenship says. "If we can be in front of people on a day-to-day basis when they're not thinking about buying a car…after a while, they'll drop back in again, in an environment where there's no pressure. """
vbl 14y ago
I know this sounds nuts, but I have a business idea that might be suitable for discussion in this thread. The idea is to do away with the dealership for anything not related to the actual transaction (they handle financing efficiently, etc.) Instead, the system relies on individual agents who have parking lots of different cars within a category and across brands. If I were a mid-size specialist, I'd be very family-minded and feature the Accord, Altima, Impreza, etc. This would allow a customer to make one stop to cross-shop, and they get highly specialized counsel without any (obvious) incentive to sell hard on a certain brand. The agent then hands off the buyer to the dealer with a fair price negotiated (using various online tools) and the buyer just closes the deal. The agent gets a cut of the sale Cars.com style. Granted, it's not a highly scalable business, but it could be a worthy self-employment idea (with the upfront capital to do it, or loaner cars from dealerships), and the customer experience is vastly superior.
- ChuckMcM 14y ago
  You've described the salient points of an auto broker.
  - MartinCron 14y ago
    I once used an auto broker to help me purchase a very specific used car and it was probably the best used car buying experience I've ever had. Zero drama. Very civilized. Maybe I could have saved a little bit of money by finding the car myself and being a hardball negotiator, but there's a value in keeping the part of your soul that dies when you interact with a car salesman.
- halefx 14y ago
  https://www.truecar.com/ https://www.truecar.com/
pnathan 14y ago
> It's a key part of Tesla's overall business: Instead of building cars and selling them to dealers who hawk them to shoppers, Tesla wants to build only cars customers order — eliminating part of the auto industry's massive overhead costs in inventory. This is a key idea on the modern manufacturing floor. It is pretty much a straight Toyota Way play. I'm guessing they are using a different name than 'kanban' though. :-)
- brc 14y ago
  Every single BMW car that is built, is built to order. You can literally have no two BMWs the same. The ones on dealer lots have been ordered by the dealers, who have an idea on what combinations sell well. I visited the factory in Munich and you can see a big line of doors, seats, carpets, etc feeding up to the assembly line. Each is computer controlled, and when the intended vehicle gets to the seat install station, the correct seat (style, fabric, RHD/LHD) meets the correct car. When the doors arrive, they've got the right interior bits already in them, and all the wiring loom bits match up with what is already in the car, even if the prior 20 cars have all had different options (color, trim, options, etc). Meanwhile, at the back of the factory, JIT delivery trucks are delivering the next set of seats/steering wheels/seatbelts etc - all barcoded, all ready to be loaded onto the assembly lines in the correct order. It's truly eye-opening to watch a highly automated factory like this in operation. When a dealer in the USA presses the 'order' button - suppliers, factory, workers - everything lines up and out pops a fully finished, completely unique car.
jpswade 14y ago
This is all very well until there's no dealerships that can service your vehicle or stock the parts.
- manaskarekar 14y ago
  Where there is a market, there will be someone to make money out of it.
- waterside81 14y ago
  I've looked into this with regards to Tesla (I'm on the fence about if I want to buy one or not). I'm in Toronto, they're opening up a dealership in a mall ("Yorkdale" for the locals) and they have one service centre in each major city they operate in (Vancouver, Montreal, Toronto). The sales person told me they plan on opening more. You pay $600 once a year for maintenance & service. Additionally, your car is constantly phoning home to alert Tesla HQ if something looks awry.
- VLM 14y ago
  "there's no dealerships that can service your vehicle" Around here the stealerships all claim to service anything you can push pull or drag in regardless of brand. GM service dept loves to service your Ford or Toyota, etc. There's no lifetime employment / company man effect, the greasemonkey at Ford probably worked at the GM or Toyota dealership last year anyway. Finally, its an electric car, what are they going to do, change the oil and spark plugs?
- RandallBrown 14y ago
  The Tesla dealership near me (Seattle) turned into a service center. There's also a Tesla store in a mall nearby where I imagine you can set up the test drives and such.
- _fn 14y ago
  At where I live car dealership only sells used car. If you want to buy a new car, you go to the manufacturer's dealership. Almost all of them are 3S shop: Sales, Service, Sparepart. Allowing the manufacturer to sell their own cars works really well here.
incision 14y ago
Sounds great. FYI - Never, ever simply walk into a dealership for anything but a test drive. You can avoid a lot of the car buying bullshit by getting your own financing and dealing strictly with an "Internet Sales" department.
- geogra4 14y ago
  Mind posting a link to a place with an 'Internet Sales' department?
  - jsight 14y ago
    Every dealership that I've talked to for the past 5 years or so has had one (albeit, typically the "department" is one person at the dealers around here).
  - 001sky 14y ago
    https://bankofamerica.truecar.com/main.html https://bankofamerica.truecar.com/main.html This. you can price, including out of state, etc. for in-demand models w/ price markups or inventory issues, this can be an eye opener. they e-mail you an invoice. that locks in a price. the prices are pretty decent, and benchmarked to invoice.
    - ScottWhigham 14y ago
      That link isn't working for me - "The Bank of America page you are trying to reach is not available. We apologize for the inconvenience..." Have another link?
      - 001sky 14y ago
        http://www.bankofamerica.com/carbuyingcenter http://www.bankofamerica.com/carbuyingcenter
      - aaron42net 14y ago
        That site will require that you are a Bank of America customer, though the link is unfortunately broken. If you are an AMEX, USAA, PenFed, or Consumer Reports customer instead, check out their respective car buying sites. They are variations on the same program. Alternatively, https://www.truecar.com/ https://www.truecar.com/ can be used by anyone, is mostly using the same data and dealer network, but the prices might be slightly higher. (Disclaimer: I'm a TrueCar employee.)
grandalf 14y ago
Getting a car dealership franchise in the US is like winning the lottery. There are so many barriers to entry that the dealer is pretty much guaranteed to earn $500K to $1M per year if he/she has halfway decent management skills. Further, the credit crunch a few years ago would have wiped out enough of the US Auto industry to put a lot more dealers out of business. The rebate bill that was passed was a massive handout to US auto dealers. All those people making $500K to $1m per year owning dealerships are essentially on welfare. If more of the industry has been allowed to restructure after the credit crunch, Tesla would not have to worry as much about a legal battle. The public would rightly view Tesla as offering an innovative approach that will benefit consumers. The worst part of it is that the reason the automotive OEMs tried to sell directly a few years ago was to put an end to predatory practices (dishonesty, etc.) by auto dealers. There is no reason car dealerships should quote a price and engage in haggling, etc. Many customers (particularly the elderly and the poor) are the direct victims of these practices, and they are supported by the Federal laws that prop up auto dealers.
- akjj 14y ago
  The US auto industry _was_ restructured by the government and dealerships _were_ closed. The first link I found with numbers for both said that Chrysler closed 789 out of 3200 of its dealers and GM closed 2600 out of 6246 [1]. [1] http://www.nakedcapitalism.com/2009/05/how-is-chrysler-close-dealerships-not.html http://www.nakedcapitalism.com/2009/05/how-is-chrysler-close...
  - grandalf 14y ago
    Compare that to how many would have closed without the massive handout. Chrysler was able to force some to close by holding over the dealer organizations' heads the threat that the government would not do the bailout and all Chrysler dealers would go away. Unlike a market-based failure, the government-led restructuring was surely not done fairly and likely some reputable and honest owners were penalized for not being more politically connected.
    - saithier 14y ago
patrickk 14y ago
Is there any process for bring American-made cars into Europe tax-free? Also, I've heard that you can get quite a deal on Japanese imported cars into Europe if you know what you're doing. They've some strict regulations which adds to the cost of owning a secondhand car, meaning that they look to sell off cars quicker than other countries. But there is another factor here that determines what you’re buying in the secondhand car market: the notorious “shaken.” This consists of all the bits of bureaucracy you need to keep your car on the road — weight tax, vehicle inspection and compulsory insurance (car tax and more comprehensive insurance coverage are separate). If you buy a new car, you have three years until you need to jump through the hoops and start forking over cash. After that, you have to do it every two years, and it can easily cost you over 100,000 yen each time. The end result of this is that people tend to sell their cars when the “shaken” runs out. Dealers will usually arrange “shaken” so that potential buyers have two years to go — a big selling point in the secondhand market. The upshot of all this is that used cars will usually be available when they are 3, 5, 7, 9, or 11 years old. So the first thing you want to check is the length of “shaken” left. http://www.japantoday.com/category/lifestyle/view/buying-a-used-car-in-japan-what-to-keep-in-mind http://www.japantoday.com/category/lifestyle/view/buying-a-u... Anyone have experience of importing Japanese cars to Europe?
- pja 14y ago
  A relative did this with an MX-5 a few years ago. They went via a company who managed the whole process, so they didn't have to deal with all the legal issues themselves. They seem to have been very happy with it. £400 / year just to keep a car on the road seems steep! But if it includes insurance cover, then it's not really very different to the UK market which has similar requirements (annual tax, annual inspection, minimum insurance level). In the UK, you generally pay these yourself regardless of the age of the car (except for the annual inspection which kicks in after three years, but only costs £40). Interesting how the psychology of suddenly being faced with the 'new' annual cost (which of course you've effectively prepaid for the first few years as part of the purchase price of the car) nudges people into getting rid of their cars instead of keeping them running.
eli 14y ago
They've had a showroom like this in DC for some time. I walk past it all the time. I don't think I've ever seen a customer in there.
lnanek2 14y ago
It seems like they'd be in a whole lot more stores, and in front of a whole lot more eyes, if they just worked with dealerships. It is a lot like how many phones and other devices have attempted to get sold online without a lot of success compared to something that is actually placed in Verizon and other carriers' stores and sold to millions. Will they "lose" a ton of money if they let these middlemen play? Sure, but they will sell a lot more too.
at-fates-hands 14y ago
This business model allows Tesla to be incredibly agile in a slow moving marketplace. With the current auto market, there is a lull between what consumers want and the production facility. Remember when Ford was cranking out SUV's and then the economy tanked, gas prices went through the roof and nobody wanted SUV's anymore? Ford's plants were still producing SUV's and shipping them to dealers who didn't want them and couldn't sell them. They were taking a huge loss on every one of those Explorer's they produced. Tesla's model allows them to change much faster to the needs of the consumer, without wasting a lot of production costs and overhead. I think the time is right for a huge disruption in this industry.
001sky 14y ago
This article lacks one important piece of context: The Roadster has a base price of US$109,000 in the United States, GB£86,950 in the United Kingdom, A$191,888 in Australia, and €84,000 in continental Europe.[5] Yes, the showroom in Chelsea is "Cool". But its like any other Art gallery, with hot underpaid 23 year olds staring blankly at iMacs. Ie, its just another White Cube. With a car parked inside.
- URSpider94 14y ago
  Tesla do no sell the Roadster any more. The car they are currently offering is the Model S, which starts at around $50k, and ratchets up to right around $100k with all the trimmings. Sure, there will be a lot of window-shoppers, but at those prices, they're within reach of many buyers, certainly enough to sell 35,000 cars per year.
  - 001sky 14y ago
    Also, the Lotus based Roadster is/was very cool. I have no opinion on the new model, I havn't seen it. But vibe of the whole setup is [was] more 'Gagosian' than Apple store. The McClaren F1 was sold the same way, in London. The cool part, and the reason I walked in, was they had a work-bay w/Snap-On tools integrated into the space. You don't see that every day. That made it kind of cool. =D [1] http://en.wikipedia.org/wiki/McLaren_F1 http://en.wikipedia.org/wiki/McLaren_F1
- whatusername 14y ago
  So the Australian Price works out to just over $195,000 USD. Go team AU!
  - mirsadm 14y ago
    "Shipping Cost" "Smaller market" "Australians are use to getting ripped off so it makes it easy"
    - whatusername 14y ago
BryanB55 14y ago
As an auto enthusiasts I absolutely love this idea. I recently purchased a new speciality car last year (2012 Jeep SRT8) and I must of said at least 10 times during the process that I wish there was a way to circumvent the dealer. Dealing with car dealers is one of the most fundamentally broken experiences I have ever witnessed. Ready to drop $65k on a new vehicle I walk into a dealer and the first thing that happens is the sales man walks me to a desk, pulls out a piece of paper and starts asking questions and writing "whats your name?, how much do you want to spend per month?, what is credit like?, we can offer you really great financing." I had to interrupt him to explain that I just wanted to have a normal conversation first to even see if he could get the car. Turns out they couldn't. After many other slimy conversations with car dealers (and being hassled in the parking lot before I even walked in the door) I finally found a dealer that was willing to special order the car I wanted at the price I wanted. I waited 4 months for the car and 2 weeks before it was ready to arrive a the dealer they called to tell me they didn't want to sell it to me for that price anymore and they were going to sell it for $10,000 over MSRP. Long story short, I had to threaten legal action just to be able to buy the car that I had put a deposit on and waited for 4 months for. This is not the first terrible experience I have had with buying cars. The "car sales man" attitude is fundamentally wrong. About 80% of the sales people that I talked to at dealerships did not even know about the car I wanted to buy, mentioned the wrong engine or did not even know it existed. I'm waiting for the day that I can just click "buy now" online and purchase a car with Zappos-like customer support at one fair, up front, low price without all the bullshit in between.
- andrewl 14y ago
  Agreed. And check out Edmunds' account of what goes on behind the scenes in a car dealership by a writer who went undercover as a salesman: http://www.edmunds.com/car-buying/confessions-of-a-car-salesman.html http://www.edmunds.com/car-buying/confessions-of-a-car-sales...
  - johnyzee 14y ago
    As a sign of the disruption to come, even the sales people in that article (which is from 2001) were moaning about savvy "internet buyers" who show up at the dealership knowing exactly which car they want and how much they should be paying for it.
rdl 14y ago
I love everything Tesla is doing except the price of the vehicles, which will come down in time with better battery tech and higher production volumes. I've never gotten any value from a car dealer, and being able to do on-site support for vehicles might actually be more efficient on the service front, too (with Tesla locations in major markets like the Bay Area). They could just pay for a rental car (like anyone buying a $100k Model S doesn't have another car...) during the wait to send a team to Wyoming. I wish Elon Musk would go into some kind of medicine/healthcare startup next, after fixing cars and space.
- Nevaeh 14y ago
  As someone who lost a few loved ones to cancer, I wished the same thing. It'd be awesome if Elon tried to innovate healthcare. But unfortunately, it is very unlikely according to what Elon said in an interview: Source: http://www.gq.com/news-politics/newsmakers/200901/elon-musk-paypal-solar-power-electric-cars-space-travel http://www.gq.com/news-politics/newsmakers/200901/elon-musk-... ---------------------------------------------------- Elon: "It's important enough to be on the scale of life itself, and therefore goes beyond the parochial concerns of humanity," Musk says of our interplanetary destiny. "We're all focused on our little things that are of concern to humanity itself. People think of curing AIDS or cancer as being very important, and they are—within the context of humanity. But curing all forms of cancer would improve the average life span by only two to three years. That's it." "In other words, while eradicating disease is a worthy pursuit, and would extend the lives of individual human beings, my life's work is extending the life span of life itself." ---------------------------------------------------- Interesting to hear that coming from someone who has 5 kids. http://www.forbes.com/pictures/mkm45fjlie/elon-musk-10/#gallerycontent http://www.forbes.com/pictures/mkm45fjlie/elon-musk-10/#gall... By the way, Elon did talk about some projects he would like to do if he had the time. http://www.youtube.com/watch?v=5FESP1h7IZM http://www.youtube.com/watch?v=5FESP1h7IZM
  - cincinnatus 14y ago
    What is 'interesting' about it? Having 5 kids fits perfectly with his stated philosophy of improving our odds overall.
KeepTalking 14y ago
About a year ago the new GM (post bail out) had talked about a partnership via ebay. The basic premise being dealers can bid for your business. Not much has been spoken since and I have never seen GM market the this concept actively. I found a bunch of links that talk about that: http://www.theatlantic.com/business/archive/2009/08/why-selling-gm-cars-on-ebay-is-good-for-the-auto-industry/23004/ http://www.theatlantic.com/business/archive/2009/08/why-sell... I have a hunch a large part of retail sales in the post amazon economy( or after best buy) will transition to this model. Large brands set up stores in malls where you can touch and feel your product. You can then go online and deal with the paper work/ordering. it also surprises me the legality of forcing you to sell via dealerships has not been challenged.
adrianbg 14y ago
Does anyone know what economic conditions cause a market to transition from being car/house-like (no fixed price, annoying sales process) to what is normal for cheaper products in first world countries (more-or-less fixed prices, less aggressive selling)? Is it related to products'scarcity? From my own experience I know that even products that normally have fixed prices in the first world (cell phones, bikes, anything really) are sold more like cars in a lot of developing countries where bartering is the norm. You might find them available for drastically different prices even in the same locale and it is frequently necessary to waste time and energy keeping track of the going price for a particular product that you are considering buying.
- solsenNet 14y ago
  my guess about the car industry is it had to do with the interaction between diverse customer preferences (car colors, options) and the realities of car production (large batches, economies of scale). basically, the economies of scale cause the production of large batches of cars that then all needed to be sold (even that last white one on the lot).
- cincinnatus 14y ago
  Maximal value extraction is probably the answer. If more profit can be made in a given market/product combination through direct selling then this will be the model, if a commodity approach extracts more value then it will prevail. There should be a natural progression from the former to the latter as a market matures and buyer sophistication increases. In the case of cars the purchase is infrequent and specialized enough that the market has been slow to mature in buyer sophistication. Of course the buyers are uneven in their knowledge, so in the phone market you have a range. Similarly in cars there is now an opportunity with a small number of highly informed and opinionated consumers who find Tesla attractive. (disclosure: I'm a happy shareholder)
beefman 14y ago
For those who don't know, Blankenship was a key architect of Apple retail http://www.teslamotors.com/about/press/releases/tesla-hires-apple-gap-veteran-revolutionize-car-buying-experience http://www.teslamotors.com/about/press/releases/tesla-hires-...
sonnekki 14y ago
I had a great experience buying my first car, a new-used car, from Enterprise Car Sales, a branch of the car rental company. We were able to have a good conversation, and I found that they are a "different" kind of car dealer because they have fixed, no haggle prices for all of their cars. They are, however, still a car dealer as customers are not able to buy the car online, but they are able to pay to ship the car to the nearest Enterprise dealer. Like every other dealer however, there is a surprising amount of paperwork. It wasn't entirely painless, but it was the closest to a pleasant experience as I was comfortable with. I was not comfortable negotiating how much I lose with a normal dealer. I wish I could buy a Tesla vehicle now, but I don't have the money to do so, and I don't want to be in debt for a long time.
- WiseWeasel 14y ago
  Seeing how hard I am on rental cars, I would never buy a used rental car.
  - MartinCron 14y ago
    This could go both ways, though, as I would expect that at least the cars are reasonably well serviced.
- magoon 14y ago
  > I found that they are a "different" kind of car dealer because they have fixed, no haggle prices for all of their cars. I love this sales tactic -- tell the customer that your sticker prices are set in stone as if it's some sort of benefit.
  - TimGebhardt 14y ago
    But there is a big benefit: you know what the price of the item is. If you don't like it, don't buy it. Think about Apple gear: your gear-head computer friends scoff and say "I'd never pay the Apple tax, they're not worth the extra price". More transparent pricing is always better for the consumer. It forces the market to price their items more competitively. Now imagine if everyone got their Apple at a different price based on the mood that the Genius Bar guy was in that morning.
vladoh 14y ago
BMW also plans to sell the BMW i3 and i8 online: http://green.autoblog.com/2012/07/30/bmw-will-sell-first-cars-online-and-theyre-electric/ http://green.autoblog.com/2012/07/30/bmw-will-sell-first-car...
Zak 14y ago
I wish Tesla luck in this. Laws mandating franchise car dealerships seem to be fairly bad for consumers, and I can't think of any compelling government interest in maintaining them. Maybe seeing a better model at work will help them to go away.
dman 14y ago
Heres something that worked for me recently - walked into the dealership 15 minutes before closing time on the last day of the month after confirming on their website that they had the color / accessories combination I was looking at. I had a fairly good idea of what I wanted to pay, and they were eager to close the deal and to go home, the whole deal including the test drive was done in under 30 minutes.

295 points by bmahmood 14y ago

Here in Austria, we already have some special "online only" deals by major car manufacturers. I'd assume that it's becoming popular elsewhere as well (example: http://www.hyundai-shop.at/ http://www.hyundai-shop.at/) and that car dealers aren't particularly happy about it. Perhaps the huge discount (around 25%) is the usual dealer's cut ...

justincormack 14y ago
I think that is less than the dealers cut, which has usually been 50%.

tocomment 14y ago

How do test drives work in this model?

djt 14y ago
you go into one of their showrooms or you drive a friends car.
- brown9-2 14y ago
  I think this is a fair question - it's hard to see how you could take a Tesla for a test drive if the showroom is located in the middle of an indoor shopping mall. Would they keep a small fleet on-hand in the mall's parking lot?
WiseWeasel 14y ago
With a considerable amount of imagination. At least they allow us to get our grubby hands on them, if briefly.
URSpider94 14y ago
Given that the waiting list for a car is somewhat over a year at this point, Tesla have mounted a nationwide tour of test-drive cars. However, I'm pretty sure that you either have to own a Roadster already, or have put down a deposit on a Model S, in order to get a test drive slot.
brc 14y ago
Any high-demand cars are usually not available for test drives, unless you know the dealer or someone with one. It's not unheard of for people to have to purchase a car sight unseen, never driven. Dealers may give you an 'out' - as in final delivery is subject to a satisfactory test drive - but few people are going to knock back a car they've been waiting months for.
- cincinnatus 14y ago
  Indeed I purchased a Mercedes ML in 1997 having not even seen one on the road yet, it was not out yet and 1998 was the first model year. Got one of the first thousand off the assembly line with mixed results (used to call it the 'beta'). I will likely be buying a Tesla X without ever seeing one.
  - brc 14y ago
    "mixed results" boy, you're being kind. They released way too early on that model - new model, new factory, first consumer SUV for the brand. You might have been lucky but they did have a lot of problems. Ironically now they make an excellent used buy - like evolution, all of the buggy ones have been crushed, and the ones that remain are the solid examples. But their terrible reputation means they don't cost much at all. Incidentally, my boss at the time bought one as well, and weirdly enough he let me drive it on the first day he owned it. There is no freaking way I'd let an employee drive my brand new car, but he seemed to think it was cool. Still weirded out by that to this day.
    - cincinnatus 14y ago
      Yea I kind of which now I had kept the 98. It was working quite well by the time I gave it up, but there were safety related upgrades on the new build that caused me to switch.

Shivetya 14y ago

The money line is the statement where they believe there are no laws preventing them from selling cars in all fifty states. There are no laws "currently" is a better phrase. Should Tesla become a serious maker of cars; having one model and a goal of only 35k a year keeps them at the size of Porsche; then they are going to attract attention. That they have received Federal money and their cars are subject to incentives by the federal government and states will put pressure on legislatures to extract "something" from them. To put their sales goals into perspective, a luxury brand like Lexus can sell over 20k a month. The top five sell a hundred thousand plus cars per month. Chart of August sales is at http://www.autoblog.com/2012/09/04/august-2012-big-jumps-edition/ http://www.autoblog.com/2012/09/04/august-2012-big-jumps-edi...

btilly 14y ago
As long as it is interstate commerce and Tesla maintains no business presence in a state, that state government can't regulate.
- hexis 14y ago
  "maintains no business presence in a state" Amazon's recently experiences with sales tax collection shows that a motivated government will keep its eye out for "business presence" and then regulate when it becomes politically useful. Freedom's just another word for something too small to bother regulating.
  - protomyth 14y ago
    Tesla doesn't have affiliates so they are not subject to the same problems Amazon had. On another note, states already have rules dealing with buying a car in another state, so it is settled law.
  - rprasad 14y ago
    Jurisdiction for state taxation is not a matter of business presence, it is a matter of having sufficient nexus. This is and always has been the deciding factor. When Amazon was "just" an online "catalog", it could take advantage of cases like Quill Corp, which held that a catalog with no physical presence in a state and which sold few goods into that state did not have sufficient nexus to establish the state's jurisdiction to tax. However, Amazon is the single largest retailer by volume in nearly every state in America, topped only by Walmart. It sells a substantial volume of goods into every single state. Legal commentators, including numerous former SCOTUS law clerks, have noted that if Amazon were to challenge state sales taxation today, it would lose because the justification set forth in Quill does not apply. And that's with a significantly more conservative/libertarian SCOTUS than in Quill.

encoderer 14y ago

That's interesting. I've had the fantastic experience of buying directly from an automaker as part of their European Delivery program. Basically, you fly over there, show up at the factory, you get treated like a dignitary, they show you "baby pictures" of your car being built, and then you drive off with it and get to cruise around Europe for 30 days. When you're done, you drop the car off at one of a half dozen ports and fly home. Your car arrives a few weeks later. You get about 10-15% discount and it's a very cool experience. A friend did this for Porsche and while the car was great he said the experience was a little lacking. That they do such lower volume they didn't have the program as perfected and it was more about just showing up and taking possession of the car. Anyway, that's obviously not what Tesla is doing -- but they should. They should definitely have a California Delivery program. They probably already do.

TylerE 14y ago
They wouldn't get the same tax dodge though. European delivery works out because you don't pay new car tax if you buy the car in Europe, drive it enough so it's no longer new (~100 miles or so) and ship it home. This exemption was originally put in place because a bunch of GIs wanted to bring home the sporty little cars they drove in England during WWII.
- cantankerous 14y ago
  That's a really astute observation. I've heard of people doing this before, but didn't realize that the whole auto-vacation was about a tax dodge. Really interesting.
  - joezydeco 14y ago
    The BMW fan wiki suggests that's not a tax/tariff dodge as much as the fact that BMW doesn't pay the incentive payment to dealers for euro delivery cars: http://www.bimmerfest.com/wiki/index.php/ED_Summary#Why_is_European_Delivery_Cheaper_than_US_Delivery.3F http://www.bimmerfest.com/wiki/index.php/ED_Summary#Why_is_E...
- _delirium 14y ago

programminggeek 14y ago

This is probably the only way that longer term the company can afford to sell electric cars at a reasonable price. The tech is obviously expensive, but if you layer on the 10% sales commission and dealer fees, etc. it will jack up the price on these already expensive vehicles by 25%. Imagine how much better the Chevy Volt would sell if it were 25% cheaper...

djt 14y ago

This is excellent, i helped a friend go shopping for a car 2 weeks ago and it was terrible. All the stereotypes of what car salesmen are like were out on parade. I also know a guy that sells cars and he managed to get a customer to pay $2.5K over the price for a NEW car for the USED car... Same model and accessories. I'm glad that theyre pioneering this as I think it's going to be a viable business model

chaostheory 14y ago
Agreed. My personal experience at a dealer for both buying a car and a servicing it are horrible. Hopefully more manufacturers start shifting to this model.

dkhenry 14y ago

Well someone rang the obvious bell on this one """ "People don't necessarily enjoy that whole transaction," Blankenship says. "If we can be in front of people on a day-to-day basis when they're not thinking about buying a car…after a while, they'll drop back in again, in an environment where there's no pressure. """

vbl 14y ago

I know this sounds nuts, but I have a business idea that might be suitable for discussion in this thread. The idea is to do away with the dealership for anything not related to the actual transaction (they handle financing efficiently, etc.) Instead, the system relies on individual agents who have parking lots of different cars within a category and across brands. If I were a mid-size specialist, I'd be very family-minded and feature the Accord, Altima, Impreza, etc. This would allow a customer to make one stop to cross-shop, and they get highly specialized counsel without any (obvious) incentive to sell hard on a certain brand. The agent then hands off the buyer to the dealer with a fair price negotiated (using various online tools) and the buyer just closes the deal. The agent gets a cut of the sale Cars.com style. Granted, it's not a highly scalable business, but it could be a worthy self-employment idea (with the upfront capital to do it, or loaner cars from dealerships), and the customer experience is vastly superior.

ChuckMcM 14y ago
You've described the salient points of an auto broker.
- MartinCron 14y ago
  I once used an auto broker to help me purchase a very specific used car and it was probably the best used car buying experience I've ever had. Zero drama. Very civilized. Maybe I could have saved a little bit of money by finding the car myself and being a hardball negotiator, but there's a value in keeping the part of your soul that dies when you interact with a car salesman.
halefx 14y ago
https://www.truecar.com/ https://www.truecar.com/

pnathan 14y ago

> It's a key part of Tesla's overall business: Instead of building cars and selling them to dealers who hawk them to shoppers, Tesla wants to build only cars customers order — eliminating part of the auto industry's massive overhead costs in inventory. This is a key idea on the modern manufacturing floor. It is pretty much a straight Toyota Way play. I'm guessing they are using a different name than 'kanban' though. :-)

brc 14y ago
Every single BMW car that is built, is built to order. You can literally have no two BMWs the same. The ones on dealer lots have been ordered by the dealers, who have an idea on what combinations sell well. I visited the factory in Munich and you can see a big line of doors, seats, carpets, etc feeding up to the assembly line. Each is computer controlled, and when the intended vehicle gets to the seat install station, the correct seat (style, fabric, RHD/LHD) meets the correct car. When the doors arrive, they've got the right interior bits already in them, and all the wiring loom bits match up with what is already in the car, even if the prior 20 cars have all had different options (color, trim, options, etc). Meanwhile, at the back of the factory, JIT delivery trucks are delivering the next set of seats/steering wheels/seatbelts etc - all barcoded, all ready to be loaded onto the assembly lines in the correct order. It's truly eye-opening to watch a highly automated factory like this in operation. When a dealer in the USA presses the 'order' button - suppliers, factory, workers - everything lines up and out pops a fully finished, completely unique car.

jpswade 14y ago

This is all very well until there's no dealerships that can service your vehicle or stock the parts.

manaskarekar 14y ago
Where there is a market, there will be someone to make money out of it.
waterside81 14y ago
I've looked into this with regards to Tesla (I'm on the fence about if I want to buy one or not). I'm in Toronto, they're opening up a dealership in a mall ("Yorkdale" for the locals) and they have one service centre in each major city they operate in (Vancouver, Montreal, Toronto). The sales person told me they plan on opening more. You pay $600 once a year for maintenance & service. Additionally, your car is constantly phoning home to alert Tesla HQ if something looks awry.
VLM 14y ago
"there's no dealerships that can service your vehicle" Around here the stealerships all claim to service anything you can push pull or drag in regardless of brand. GM service dept loves to service your Ford or Toyota, etc. There's no lifetime employment / company man effect, the greasemonkey at Ford probably worked at the GM or Toyota dealership last year anyway. Finally, its an electric car, what are they going to do, change the oil and spark plugs?
RandallBrown 14y ago
The Tesla dealership near me (Seattle) turned into a service center. There's also a Tesla store in a mall nearby where I imagine you can set up the test drives and such.
_fn 14y ago
At where I live car dealership only sells used car. If you want to buy a new car, you go to the manufacturer's dealership. Almost all of them are 3S shop: Sales, Service, Sparepart. Allowing the manufacturer to sell their own cars works really well here.

incision 14y ago

Sounds great. FYI - Never, ever simply walk into a dealership for anything but a test drive. You can avoid a lot of the car buying bullshit by getting your own financing and dealing strictly with an "Internet Sales" department.

geogra4 14y ago
Mind posting a link to a place with an 'Internet Sales' department?
- jsight 14y ago
  Every dealership that I've talked to for the past 5 years or so has had one (albeit, typically the "department" is one person at the dealers around here).
- 001sky 14y ago
  https://bankofamerica.truecar.com/main.html https://bankofamerica.truecar.com/main.html This. you can price, including out of state, etc. for in-demand models w/ price markups or inventory issues, this can be an eye opener. they e-mail you an invoice. that locks in a price. the prices are pretty decent, and benchmarked to invoice.
  - ScottWhigham 14y ago
    That link isn't working for me - "The Bank of America page you are trying to reach is not available. We apologize for the inconvenience..." Have another link?
    - 001sky 14y ago
      http://www.bankofamerica.com/carbuyingcenter http://www.bankofamerica.com/carbuyingcenter
    - aaron42net 14y ago
      That site will require that you are a Bank of America customer, though the link is unfortunately broken. If you are an AMEX, USAA, PenFed, or Consumer Reports customer instead, check out their respective car buying sites. They are variations on the same program. Alternatively, https://www.truecar.com/ https://www.truecar.com/ can be used by anyone, is mostly using the same data and dealer network, but the prices might be slightly higher. (Disclaimer: I'm a TrueCar employee.)

grandalf 14y ago

Getting a car dealership franchise in the US is like winning the lottery. There are so many barriers to entry that the dealer is pretty much guaranteed to earn $500K to $1M per year if he/she has halfway decent management skills. Further, the credit crunch a few years ago would have wiped out enough of the US Auto industry to put a lot more dealers out of business. The rebate bill that was passed was a massive handout to US auto dealers. All those people making $500K to $1m per year owning dealerships are essentially on welfare. If more of the industry has been allowed to restructure after the credit crunch, Tesla would not have to worry as much about a legal battle. The public would rightly view Tesla as offering an innovative approach that will benefit consumers. The worst part of it is that the reason the automotive OEMs tried to sell directly a few years ago was to put an end to predatory practices (dishonesty, etc.) by auto dealers. There is no reason car dealerships should quote a price and engage in haggling, etc. Many customers (particularly the elderly and the poor) are the direct victims of these practices, and they are supported by the Federal laws that prop up auto dealers.

akjj 14y ago
The US auto industry _was_ restructured by the government and dealerships _were_ closed. The first link I found with numbers for both said that Chrysler closed 789 out of 3200 of its dealers and GM closed 2600 out of 6246 [1]. [1] http://www.nakedcapitalism.com/2009/05/how-is-chrysler-close-dealerships-not.html http://www.nakedcapitalism.com/2009/05/how-is-chrysler-close...
- grandalf 14y ago
  Compare that to how many would have closed without the massive handout. Chrysler was able to force some to close by holding over the dealer organizations' heads the threat that the government would not do the bailout and all Chrysler dealers would go away. Unlike a market-based failure, the government-led restructuring was surely not done fairly and likely some reputable and honest owners were penalized for not being more politically connected.
  - saithier 14y ago

patrickk 14y ago

Is there any process for bring American-made cars into Europe tax-free? Also, I've heard that you can get quite a deal on Japanese imported cars into Europe if you know what you're doing. They've some strict regulations which adds to the cost of owning a secondhand car, meaning that they look to sell off cars quicker than other countries. But there is another factor here that determines what you’re buying in the secondhand car market: the notorious “shaken.” This consists of all the bits of bureaucracy you need to keep your car on the road — weight tax, vehicle inspection and compulsory insurance (car tax and more comprehensive insurance coverage are separate). If you buy a new car, you have three years until you need to jump through the hoops and start forking over cash. After that, you have to do it every two years, and it can easily cost you over 100,000 yen each time. The end result of this is that people tend to sell their cars when the “shaken” runs out. Dealers will usually arrange “shaken” so that potential buyers have two years to go — a big selling point in the secondhand market. The upshot of all this is that used cars will usually be available when they are 3, 5, 7, 9, or 11 years old. So the first thing you want to check is the length of “shaken” left. http://www.japantoday.com/category/lifestyle/view/buying-a-used-car-in-japan-what-to-keep-in-mind http://www.japantoday.com/category/lifestyle/view/buying-a-u... Anyone have experience of importing Japanese cars to Europe?

pja 14y ago
A relative did this with an MX-5 a few years ago. They went via a company who managed the whole process, so they didn't have to deal with all the legal issues themselves. They seem to have been very happy with it. £400 / year just to keep a car on the road seems steep! But if it includes insurance cover, then it's not really very different to the UK market which has similar requirements (annual tax, annual inspection, minimum insurance level). In the UK, you generally pay these yourself regardless of the age of the car (except for the annual inspection which kicks in after three years, but only costs £40). Interesting how the psychology of suddenly being faced with the 'new' annual cost (which of course you've effectively prepaid for the first few years as part of the purchase price of the car) nudges people into getting rid of their cars instead of keeping them running.

eli 14y ago

They've had a showroom like this in DC for some time. I walk past it all the time. I don't think I've ever seen a customer in there.

lnanek2 14y ago

It seems like they'd be in a whole lot more stores, and in front of a whole lot more eyes, if they just worked with dealerships. It is a lot like how many phones and other devices have attempted to get sold online without a lot of success compared to something that is actually placed in Verizon and other carriers' stores and sold to millions. Will they "lose" a ton of money if they let these middlemen play? Sure, but they will sell a lot more too.

at-fates-hands 14y ago

This business model allows Tesla to be incredibly agile in a slow moving marketplace. With the current auto market, there is a lull between what consumers want and the production facility. Remember when Ford was cranking out SUV's and then the economy tanked, gas prices went through the roof and nobody wanted SUV's anymore? Ford's plants were still producing SUV's and shipping them to dealers who didn't want them and couldn't sell them. They were taking a huge loss on every one of those Explorer's they produced. Tesla's model allows them to change much faster to the needs of the consumer, without wasting a lot of production costs and overhead. I think the time is right for a huge disruption in this industry.

001sky 14y ago

This article lacks one important piece of context: The Roadster has a base price of US$109,000 in the United States, GB£86,950 in the United Kingdom, A$191,888 in Australia, and €84,000 in continental Europe.[5] Yes, the showroom in Chelsea is "Cool". But its like any other Art gallery, with hot underpaid 23 year olds staring blankly at iMacs. Ie, its just another White Cube. With a car parked inside.

URSpider94 14y ago
Tesla do no sell the Roadster any more. The car they are currently offering is the Model S, which starts at around $50k, and ratchets up to right around $100k with all the trimmings. Sure, there will be a lot of window-shoppers, but at those prices, they're within reach of many buyers, certainly enough to sell 35,000 cars per year.
- 001sky 14y ago
  Also, the Lotus based Roadster is/was very cool. I have no opinion on the new model, I havn't seen it. But vibe of the whole setup is [was] more 'Gagosian' than Apple store. The McClaren F1 was sold the same way, in London. The cool part, and the reason I walked in, was they had a work-bay w/Snap-On tools integrated into the space. You don't see that every day. That made it kind of cool. =D [1] http://en.wikipedia.org/wiki/McLaren_F1 http://en.wikipedia.org/wiki/McLaren_F1
whatusername 14y ago
So the Australian Price works out to just over $195,000 USD. Go team AU!
- mirsadm 14y ago
  "Shipping Cost" "Smaller market" "Australians are use to getting ripped off so it makes it easy"
  - whatusername 14y ago

BryanB55 14y ago

As an auto enthusiasts I absolutely love this idea. I recently purchased a new speciality car last year (2012 Jeep SRT8) and I must of said at least 10 times during the process that I wish there was a way to circumvent the dealer. Dealing with car dealers is one of the most fundamentally broken experiences I have ever witnessed. Ready to drop $65k on a new vehicle I walk into a dealer and the first thing that happens is the sales man walks me to a desk, pulls out a piece of paper and starts asking questions and writing "whats your name?, how much do you want to spend per month?, what is credit like?, we can offer you really great financing." I had to interrupt him to explain that I just wanted to have a normal conversation first to even see if he could get the car. Turns out they couldn't. After many other slimy conversations with car dealers (and being hassled in the parking lot before I even walked in the door) I finally found a dealer that was willing to special order the car I wanted at the price I wanted. I waited 4 months for the car and 2 weeks before it was ready to arrive a the dealer they called to tell me they didn't want to sell it to me for that price anymore and they were going to sell it for $10,000 over MSRP. Long story short, I had to threaten legal action just to be able to buy the car that I had put a deposit on and waited for 4 months for. This is not the first terrible experience I have had with buying cars. The "car sales man" attitude is fundamentally wrong. About 80% of the sales people that I talked to at dealerships did not even know about the car I wanted to buy, mentioned the wrong engine or did not even know it existed. I'm waiting for the day that I can just click "buy now" online and purchase a car with Zappos-like customer support at one fair, up front, low price without all the bullshit in between.

andrewl 14y ago
Agreed. And check out Edmunds' account of what goes on behind the scenes in a car dealership by a writer who went undercover as a salesman: http://www.edmunds.com/car-buying/confessions-of-a-car-salesman.html http://www.edmunds.com/car-buying/confessions-of-a-car-sales...
- johnyzee 14y ago
  As a sign of the disruption to come, even the sales people in that article (which is from 2001) were moaning about savvy "internet buyers" who show up at the dealership knowing exactly which car they want and how much they should be paying for it.

rdl 14y ago

I love everything Tesla is doing except the price of the vehicles, which will come down in time with better battery tech and higher production volumes. I've never gotten any value from a car dealer, and being able to do on-site support for vehicles might actually be more efficient on the service front, too (with Tesla locations in major markets like the Bay Area). They could just pay for a rental car (like anyone buying a $100k Model S doesn't have another car...) during the wait to send a team to Wyoming. I wish Elon Musk would go into some kind of medicine/healthcare startup next, after fixing cars and space.

Nevaeh 14y ago
As someone who lost a few loved ones to cancer, I wished the same thing. It'd be awesome if Elon tried to innovate healthcare. But unfortunately, it is very unlikely according to what Elon said in an interview: Source: http://www.gq.com/news-politics/newsmakers/200901/elon-musk-paypal-solar-power-electric-cars-space-travel http://www.gq.com/news-politics/newsmakers/200901/elon-musk-... ---------------------------------------------------- Elon: "It's important enough to be on the scale of life itself, and therefore goes beyond the parochial concerns of humanity," Musk says of our interplanetary destiny. "We're all focused on our little things that are of concern to humanity itself. People think of curing AIDS or cancer as being very important, and they are—within the context of humanity. But curing all forms of cancer would improve the average life span by only two to three years. That's it." "In other words, while eradicating disease is a worthy pursuit, and would extend the lives of individual human beings, my life's work is extending the life span of life itself." ---------------------------------------------------- Interesting to hear that coming from someone who has 5 kids. http://www.forbes.com/pictures/mkm45fjlie/elon-musk-10/#gallerycontent http://www.forbes.com/pictures/mkm45fjlie/elon-musk-10/#gall... By the way, Elon did talk about some projects he would like to do if he had the time. http://www.youtube.com/watch?v=5FESP1h7IZM http://www.youtube.com/watch?v=5FESP1h7IZM
- cincinnatus 14y ago
  What is 'interesting' about it? Having 5 kids fits perfectly with his stated philosophy of improving our odds overall.

KeepTalking 14y ago

About a year ago the new GM (post bail out) had talked about a partnership via ebay. The basic premise being dealers can bid for your business. Not much has been spoken since and I have never seen GM market the this concept actively. I found a bunch of links that talk about that: http://www.theatlantic.com/business/archive/2009/08/why-selling-gm-cars-on-ebay-is-good-for-the-auto-industry/23004/ http://www.theatlantic.com/business/archive/2009/08/why-sell... I have a hunch a large part of retail sales in the post amazon economy( or after best buy) will transition to this model. Large brands set up stores in malls where you can touch and feel your product. You can then go online and deal with the paper work/ordering. it also surprises me the legality of forcing you to sell via dealerships has not been challenged.

adrianbg 14y ago

Does anyone know what economic conditions cause a market to transition from being car/house-like (no fixed price, annoying sales process) to what is normal for cheaper products in first world countries (more-or-less fixed prices, less aggressive selling)? Is it related to products'scarcity? From my own experience I know that even products that normally have fixed prices in the first world (cell phones, bikes, anything really) are sold more like cars in a lot of developing countries where bartering is the norm. You might find them available for drastically different prices even in the same locale and it is frequently necessary to waste time and energy keeping track of the going price for a particular product that you are considering buying.

solsenNet 14y ago
my guess about the car industry is it had to do with the interaction between diverse customer preferences (car colors, options) and the realities of car production (large batches, economies of scale). basically, the economies of scale cause the production of large batches of cars that then all needed to be sold (even that last white one on the lot).
cincinnatus 14y ago
Maximal value extraction is probably the answer. If more profit can be made in a given market/product combination through direct selling then this will be the model, if a commodity approach extracts more value then it will prevail. There should be a natural progression from the former to the latter as a market matures and buyer sophistication increases. In the case of cars the purchase is infrequent and specialized enough that the market has been slow to mature in buyer sophistication. Of course the buyers are uneven in their knowledge, so in the phone market you have a range. Similarly in cars there is now an opportunity with a small number of highly informed and opinionated consumers who find Tesla attractive. (disclosure: I'm a happy shareholder)

beefman 14y ago

For those who don't know, Blankenship was a key architect of Apple retail http://www.teslamotors.com/about/press/releases/tesla-hires-apple-gap-veteran-revolutionize-car-buying-experience http://www.teslamotors.com/about/press/releases/tesla-hires-...

sonnekki 14y ago

I had a great experience buying my first car, a new-used car, from Enterprise Car Sales, a branch of the car rental company. We were able to have a good conversation, and I found that they are a "different" kind of car dealer because they have fixed, no haggle prices for all of their cars. They are, however, still a car dealer as customers are not able to buy the car online, but they are able to pay to ship the car to the nearest Enterprise dealer. Like every other dealer however, there is a surprising amount of paperwork. It wasn't entirely painless, but it was the closest to a pleasant experience as I was comfortable with. I was not comfortable negotiating how much I lose with a normal dealer. I wish I could buy a Tesla vehicle now, but I don't have the money to do so, and I don't want to be in debt for a long time.

WiseWeasel 14y ago
Seeing how hard I am on rental cars, I would never buy a used rental car.
- MartinCron 14y ago
  This could go both ways, though, as I would expect that at least the cars are reasonably well serviced.
magoon 14y ago
> I found that they are a "different" kind of car dealer because they have fixed, no haggle prices for all of their cars. I love this sales tactic -- tell the customer that your sticker prices are set in stone as if it's some sort of benefit.
- TimGebhardt 14y ago
  But there is a big benefit: you know what the price of the item is. If you don't like it, don't buy it. Think about Apple gear: your gear-head computer friends scoff and say "I'd never pay the Apple tax, they're not worth the extra price". More transparent pricing is always better for the consumer. It forces the market to price their items more competitively. Now imagine if everyone got their Apple at a different price based on the mood that the Genius Bar guy was in that morning.

vladoh 14y ago

BMW also plans to sell the BMW i3 and i8 online: http://green.autoblog.com/2012/07/30/bmw-will-sell-first-cars-online-and-theyre-electric/ http://green.autoblog.com/2012/07/30/bmw-will-sell-first-car...

Zak 14y ago

I wish Tesla luck in this. Laws mandating franchise car dealerships seem to be fairly bad for consumers, and I can't think of any compelling government interest in maintaining them. Maybe seeing a better model at work will help them to go away.

dman 14y ago

Heres something that worked for me recently - walked into the dealership 15 minutes before closing time on the last day of the month after confirming on their website that they had the color / accessories combination I was looking at. I had a fairly good idea of what I wanted to pay, and they were eager to close the deal and to go home, the whole deal including the test drive was done in under 30 minutes.