Tesla Can Do More Damage To Dealerships By Franchising

"Tom McParland" (tommcparland)
03/20/2014 at 09:35 • Filed to: Tesla, dealerships, stealerships, articles

People often think it is strange that I support Tesla's sales model. As a car-buying consultant, I am getting paid so people can avoid the typical dealership experience. If the Tesla direct sales strategy were to catch on there would be no need for my services. However, despite my own business I firmly believe that consumers should be able to choose how they purchase a product and businesses should be able to choose how they sell their goods. !!!error: Indecipherable SUB-paragraph formatting!!! I wanted so much for Elon to win because I despise a lobby that pressures politicians to bypass the democratic process in order to enact laws counter to the free-market economy. All of this because the dealerships are afraid their days of ripping buyers off are numbered. I started thinking about all the dealership experiences I have had and I came to a realization….by reinventing the franchise model, Tesla can still change the way cars are sold.

!!! UNKNOWN CONTENT TYPE !!!

The Model S is expensive and has limited numbers, but the Model X and upcoming Model E look to be in striking distance of more consumers. !!!error: Indecipherable SUB-paragraph formatting!!! If he chooses to franchise, here is how it could be done:

!!! UNKNOWN CONTENT TYPE !!!

Institute fixed pricing-

Despite Saturn's failure in the US market, the brand was successful in its revolutionary use of a "no haggle" sales model. GM simply did not allow the franchises to get in discount wars with each other to get customers. Saturn consistently ranked higher than any other non-luxury car brand in J.D. Power and Company's annual surveys of dealership satisfaction. Currently, Scion offers a "pure price" policy where a customer can configure their model online and know the fixed price before arriving at the dealership. I would imagine Tesla can come up with something similar.

Make Tesla stores exclusive and different-

Limit the number of franchises, at first, to only one or two per major metro area. Install supercharger stations so that current customers are stopping by in their travels. Nothing sells cars better than testimony from enthusiastic owners. Maybe partner up with a trendy restaurant and make the dealership a destination, a place where people learn about and experience the brand. Hold events and product demonstrations with home solar companies, have people geek-out on vehicle cutaways to show battery charging and other cool functions. One of Musk's concerns about Teslas at "traditional dealerships" is that dealers have less incentives to sell new technology from a new company and would rather "sell what they know." The solution to this is simple, only allow Tesla dealers to be stand alone locations not connected to any other brand. Which then brings me to...

Make sales staff training top priority-

Tesla already has employees who are passionate and knowledgeable about their products. The Model S is a very desirable car, finding willing investors and staff that are dedicated to promoting the brand shouldn't be a a challenge. One of the reasons the Model S has become so popular is you are not just purchasing a car...you are purchasing a unique piece of technology. The dealers to be able to foster that "Tesla community" mentality. People like being different, utilize this psychological need to have something "better" than the next guy. If you think Prius owners are smug...you are going to hate Model E drivers. Lastly, hire an independent contractor to "secret shop" Telsa stores and make sure they are not acting like "typical salespeople." (shameless plug: Mr. Musk you know where to find me)

Encourage browsing-

How many of you have rolled into Best Buy or an Apple store just to "play around" with the latest gadget? Of course you don't want everyone and their mother just stopping by to joy-ride a 80k Model S, but they could set up a small test track and have sales staff take folks out for a quick spin. People that connect with a product today are more likely to purchase later. The idea is to get people excited and get them talking. For many the iPhone is a "must have" device...make the Tesla the "must have" car.

Don't forget about pre-owned and leases-

Once the Model S, X and E are on the road for some time, there are going to be people trading their Teslas in for other newer models. There are also going to be buyers who want a Tesla but can't afford to buy new. There needs to be a showroom and lot space for all the pre-owned models. Also, as of now Tesla is missing out on the incredibly lucrative luxury lease market. Over half of all luxury cars are leased and the most competitive lease segment is your 3-series/A4/C-class arena. A Model E that leases for the same as a 3-series will be a total game changer for the brand.

Musk often brings up Fisker and Coda as examples of failed electric cars through dealerships. I don't think these comparisons are fair. Fisker's failure was the product of poor management, questionable quality, and the fact that it wasn't a true all electric car. As for Coda, that vehicle was doomed from the start. It was a 40k car that looked and drove like a 15k car. The Model S delivers the same performance and luxury, even more so, than its competitors in the same class. I'm going to go out on a limb and predict Tesla's future cars will be the same way.

Of course instituting franchise dealerships is an expensive and complex proposition for Tesla. Facilities and staff training cost money but one of the main advantages of a Tesla dealer is they do not have the need for expensive service departments, therefore they can focus on other things.

Imagine a car dealership you want to visit, part auto display, part interactive science museum, and what the hell throw in a restaurant (everyone's gotta eat right?). Then you go down the road to the dealership with the inflatable gorilla on the roof trying to hock 60k luxury car next to a 15k compact, you ask a question and the response is "I gotta talk to my manager." Eventually more and more buyers are going to want that "Tesla experience," dealers will have to adapt or perish.

It will take a new brand with no prior dealership baggage to truly revolutionize the car-buying experience. There are already luxury car dealerships that operate with no pressure, no games sales environment. I've worked with several of them, they have seen the writing on the wall and know if they don't adjust to the modern car buyer sales will go elsewhere. This is by no means a perfect theory, and I would really like to see what you have to say in the comments. I think the majority of us want Tesla to succeed; it has been a long time since an American automotive start-up took on the established players successfully. I for one would hate to see Tesla in the same page as Tucker in the history books.

!!!error: Indecipherable SUB-paragraph formatting!!! is a professional car buying consultant, lover of all things automotive and a bit wagon obsessed. You can find more ramblings and plenty of carporn !!!error: Indecipherable SUB-paragraph formatting!!!

DISCUSSION (100)

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > Tom McParland
03/20/2014 at 09:46

Nailed it.

Kinja'd!!!

Brian Silvestro > Tom McParland
03/20/2014 at 09:48

Make sales staff training top priority-

This is the key. This is why people like and go back to dealerships they've dealt with before. They've had a good experience and want to have another one.

dogisbadob > Tom McParland
03/20/2014 at 09:52

Also, they should NOT give any franchises to ANYBODY that already owns a car dealership franchise—NEW people ONLY

Jonathon Klein > Brian Silvestro
03/20/2014 at 09:52

Why make them Sales staff at all? Instead of making them sales hungry egotistical nightmares that everyone already hates, keep doing what they are doing, but just label their stores as franchises and be done with it?

What you could do is put some that already is a Tesla employee as the owner of the franchise and run it exactly how it already runs? The biggest problem with dealers and franchises is that it makes the car buying process terrible. No one wants to go to the dealerships because of the idiots that usually inhabit them. Tesla has it right, all they have to do to continue doing it right is change some nomenclature around and flip everyone the bird!

Tom McParland > dogisbadob
03/20/2014 at 09:54

I considered this, but that is going to be a tough one. With the first few dealers it might be possible but often the "dealer groups" have the money to invest in the infrastructure. As long as the Tesla store remains physically separate and from another brand they should be o.k.

Brian Silvestro > Jonathon Klein
03/20/2014 at 09:57

Flipping everyone the bird is the real key here.

yamahog > Jonathon Klein
03/20/2014 at 10:00

frogberg > Tom McParland
03/20/2014 at 10:02

It's appropriate that you mentioned the Apple store. I worked at one for a while. Most folks outside of the store (i.e. "on the internet") might complain about the prices of the computers there, but that was never the complaint about the store experience. If there was a complaint, it was usually due to poor service. The conclusion being, people don't mind paying a little more (within reason, of course), if they get good service.

Jonathon Klein > Brian Silvestro
03/20/2014 at 10:10

I believe that's the key to all Tesla's problems right now

Sir Halffast > Jonathon Klein
03/20/2014 at 10:21

No-pressure sales is more important than anyone realizes. We were shopping Fiat 500s not long ago, and though we decided not go get one (not get a new car at all, that is), the sales staff was very nice, very accommodating, and totally pressure free. I would absolutely buy from them. Meanwhile, I love my Fit, but I have yet to find a Honda dealer that wasn't looking to sell me a bill of extras in addition to my car, and I hate going to Honda dealerships.

jariten1781 > Tom McParland
03/20/2014 at 10:30

I think they'd already be doing this, but they've got the luxury of time on their side right now. They are under capacity to demand with other markets begging for them to come in. My guess is their long term play will be to fight the legislative and judicial battles then set up a system of flagship Tesla Stores in the major metros with very specifically designed franchises in the middle market cities.

Until their capacity catches demand though, there's no hurry to go through the headache of putting that system in place.

Jonathon Klein > Sir Halffast
03/20/2014 at 10:31

My FR-S was like that too.

My X-type is too a real Jaguar > Tom McParland
03/20/2014 at 10:42

On the Saturn front, that was a brilliant way to buy a car, I bought one in 1995. It was simple, like ordering a pizza, What body style do you want? What Engine do you want? What Color? What Options? OK here is the price, we don't have one in stock but we can have one custom ordered for you in 2 weeks. They always tried to put you into the exact car you wanted first, then if you had to wait too long get the car they would try to sell you one from dealer stock.

Mailbox Cancer > Tom McParland
03/20/2014 at 10:48

I like this. This may be the only way, for now, that Tesla can institute a full-throttle sales model in the states where they've met opposition, but I want Tesla to still maintain nearly total control of how these franchises actually do business, treat customers, advertise, etc.

This only works when Tesla's franchise agreements are written to have severe consequences when the franchise owner steps out of bounds and somehow cheapens the experience. That can't be allowed to happen.

Further, this needs to only happen in the states where Tesla is having trouble with the legislatures. For every other state, keep it company owned. I want Elon to weigh his options and follow his gut, but I don't want him folding under this ridiculous pressure.

cazzyodo > Tom McParland
03/20/2014 at 10:48

I have similar thoughts as you, Tom. Tesla regularly comes up in conversations I have with friends and my girlfriend (strange that they still humor me when I start the conversation...) and one thought was that Tesla would destroy with a franchise system.

They would still change the auto distribution model regardless of what format their vehicles are sold from. One way or another the way consumers research, test and purchase cars will change...that's how we are headed as a society thanks to ever advancing technology. Tesla realizes this and is not necessarily blazing a trail of change so much as predicting the course before it is charted.

And if you hear from Tesla, put in a good word for me. I'm still waiting on hearing back for some positions I put in for. ;)

Daltonic > My X-type is too a real Jaguar
03/20/2014 at 10:50

I bought my first car from Saturn about 11 years ago now, have gone through 3 other dealerships for cars since then and have always left pissed off. Nobody has managed to offer a dealer experience even close to what Saturn offered. The cars were not spectacular, but you simply could not beat the dealer experience. That's the root of where the Cult of Saturn owners started.

Manwich - now Keto-Friendly > Tom McParland
03/20/2014 at 10:52

"If the Tesla direct sales strategy were to catch on there would be no need for my services."

I disagree. Even if there were no dealers for any manufacturer, there would still be a people that would want car advice as well as help with the car buying process from someone who is involved with it all the time.

ADHeckmann > Tom McParland
03/20/2014 at 10:52

can you name a car startup within the past 20 years that has successfully used a franchise model? Can you name a fortune 500 company that has implemented a franchise model that has benefited the company? Can you name a technology startup that uses franchise models? Apple, prada, and chipotle can give you the market cap of 600B plus reasons why franchises are for people who dont care about their customer

jpunk > Tom McParland
03/20/2014 at 10:52

Once the Model S, X and E are on the road for some time

You mean "Model S, E, and X" giggity

ADHeckmann > ADHeckmann
03/20/2014 at 10:52

can you name ANYONE who likes car salesmen

ncasolowork2 > Tom McParland
03/20/2014 at 10:53

Hi Tom. This is Elon. We need to talk.

Tom McParland > ADHeckmann
03/20/2014 at 10:55

All of this is true...but Apple, Prada, and Chipotle were not saddled with outdated laws and a lobby with a lot of money and political influence preventing them from direct sales.

Tom McParland > ncasolowork2
03/20/2014 at 10:56

Part of me wants to send this to Elon...but part of me doesn't.

Doodledude > Tom McParland
03/20/2014 at 10:58

Quick! Send this to Musk pronto! I think all of your ideas are great for promoting the Tesla name and also to change the way "stealerships" work.

blackbodySTi > Tom McParland
03/20/2014 at 10:59

+1 to this.. great ideas

Big Bubba Ray > Tom McParland
03/20/2014 at 10:59

This was a great read. Awesome post as always!

This got me thinking about how the used Tesla market is going to look in the future. Do you think people will be as willing to pick up a used Tesla after its been driven a bunch? Batteries wear out and I'd imagine that second hand buyers would be wary of battery replacement costs if they're shopping for a used electric car.

My thinking is that if a prospective buyer is in the market for a used car, and they see a used Tesla for sale, would they rather choose a car with a gas engine rather than a Tesla that's batteries may need replacing?

dreygata > Brian Silvestro
03/20/2014 at 11:00

The biggest thing for me about staff at dealerships, is for staff to casually great me, ask if there's anything I want, and when I say I'm just looking, leave me alone, but be available if I have a question.

Too often I feel like a piece of carrion with vultures hovering around. I feel this most often when the staff works for commission.

Leo Tauer > Tom McParland
03/20/2014 at 11:02

Isn't this how Tesla showrooms work today? Every point you made is true for the current dealerships. Why franchise them then? I see no reason for this move, other than to avoid legal battles.

My X-type is too a real Jaguar > Daltonic
03/20/2014 at 11:02

When I was shopping for my 1st new car in 1995, I looked at the Dodge dealer, Honda, Toyota, everyone of those places kept trying to sell me a car I could not afford, Saturn took my budget and worked backwards so I could get the best car for my money, which meant I had a car with a power sunroof, cruise control, the small engine in manual windows and locks. When the car was totaled in 1997 due to a Nissan Pathfinder rear ending it, I bought a 1997 from the same dealership again they worked with my budget, and again I ordered a car that was strangely equipped due to my sunroof obsession.

inefficient > Tom McParland
03/20/2014 at 11:04

It's not that the dealership/franchising itself is bad, it's the liabilities due to state franchising laws. Tesla's still on the bubble, and in a bankruptcy, franchisees become claimants.

There's too much liability if things 'go badly' that would complicate selling Tesla as a corporation to potential bidders.

Jimmy Joe Meeker > Tom McParland
03/20/2014 at 11:05

Tesla Motors wants a selective free market. They seek and accept crony capitalism, market subsidy, regulation that favors them, and corporate welfare when it helps them but when it helps someone else, suddenly they cry foul? Same with their legions of followers.

There's a lack of principles here. Either we live in a system where the political process may pick winners and losers, support this company but not that one, or we don't. If we do, then NJ car dealers have every right to use the political process to keep Tesla out. If we don't then Telsa Motors shouldn't have gotten a dime of taxpayer monies, should not receive any tax breaks, and it's products should not result in tax credits for their customers.

Tom McParland > Leo Tauer
03/20/2014 at 11:06

That is the exact reason to franchise, because as of now in many states Tesla cannot reach customers.

DMCVegas > Tom McParland
03/20/2014 at 11:07

In other words, you want to make it an Apple Store for cars.

Not saying that on any underhanded manner, but that's pretty much what you've just summed up. And that's a good thing too. Far too often after a test drive a sales rep wants to rush the customer into the showroom to sit-down and start discussing price and financing. This is bad. Customers should be given enough time to play with the cars technology, explore, and be given more time to fall in love with the vehicle and make it their own. If they don't come back today, that's OK. They WILL come back.

Yeah, we didn't spend very long when we bought our new car last weekend, but it was because I had already done most all of the research prior and knew what I was getting. But playing with the car to keep that high of wonder and discovery a little longer would have been nice.

GRIFF > Tom McParland
03/20/2014 at 11:07

Well said. The contrast you make of what car-buying has become, with its dances, dangers, and hokey ploys, vs an apple-like experience, is stark. I can't think of an industry that is more cut-throat in terms of harshness and loose regulation, both for the buyer and the salesman, except for maybe the drug industry (the illegal kind). What you can get away with as a dealer, and what customers have become in expectation, is barbaric. You almost have to become a "Walter White" of sorts to get what you want on either end.

As a consumer who loves cars but loathes the buying process, I would love a revolution.

Tom McParland > inefficient
03/20/2014 at 11:08

This is a good point...which is why a slow roll-out would be worth it. Keep the "stores" where you can and open select franchises in areas where the demand is large such as northern NJ.

The Old Man from Scene 24 > Tom McParland
03/20/2014 at 11:09

As a car-buying consultant, I am getting paid so people can avoid the typical dealership experience

How do you become a car-buying consultant? This wasn't covered during Career Day back on 9th grade.

Personally, I enjoy sparring with dealers, because I generally know more about their product than they do. Nothing like watching some salesguy squirm as he tries to explain the benefits of nitrogen-filled tires (almost nil here in Atlanta, BTW) or the workings of a CVT.

Tom McParland > DMCVegas
03/20/2014 at 11:10

Pretty much...I mean Tesla already uses the Apple model for the mall stores. I am trying to find a balance between that and a dealership.

ctmike78 > Tom McParland
03/20/2014 at 11:10

Every "franchise" should have a dealer Model S as a demo. Employees should be required to take turns spending 1-2 weeks with it at a clip.

72Riv > Tom McParland
03/20/2014 at 11:10

Why doesn't Elon just "franchise" to himself... he would personally own each of the "dealerships" and they would continue on with their current business model in all other regards. Meet the letter of the law while flaunting the corrupt spirit of it.

Tom McParland > The Old Man from Scene 24
03/20/2014 at 11:11

This post should answer most of your questions

http://oppositelock.jalopnik.com/automatch-answ…

Tom McParland > 72Riv
03/20/2014 at 11:11

Can't do that...law will not allow parent company members to own the dealership.

ZHP Sparky, the 5th > Tom McParland
03/20/2014 at 11:12

I just listened to this podcast on my commute home yesterday, gives some good background about how the current situation with car dealerships came about -

http://www.npr.org/blogs/money/20…

Griffen > Tom McParland
03/20/2014 at 11:13

I sincerely hope that Tesla isn't forced to follow the dealership model, but if they do I think you're on the right track. I'm not 100% certain this is how the dealerships works, and if it isn't I apologize, but its my understanding that dealerships order the inventory they want from the manufacturer. Color, engine, transmission, options, packages, and all that usually ending up with more "optioned out" units than not, to pad the profit margins. I would love to see Tesla disclose a realistic pricing schedule for options and be able to order them individually rather than a package. That being said I would like to see Tesla franchises be all factory order. Keep 4 or 5 units as demos and service loaners, but other than that the customer would order their car exactly for them. I think that would help justify their price point as well as keeping the experience "premium"

The Old Man from Scene 24 > Tom McParland
03/20/2014 at 11:14

Thanks.

ncasolowork2 > Tom McParland
03/20/2014 at 11:14

Send it. You might find yourself in a new line of work. Then call me when you're figuring out what to do in Michigan. I'd like to be involved.

Tom McParland > Griffen
03/20/2014 at 11:16

It can work how you say as some high end dealers operate that way.

AmericanMagpie > Tom McParland
03/20/2014 at 11:17

To me the best thing they can do is to eliminate the idea of sales staff and instead create a new title similar to the Genius Bar at Apple. They need something that will, by name, set them apart. But beyond the name change they need to have defined roles. Greeters at the door, specialists to show you the cars and options and give you a test drive, and then the "designers" to work with you to get you the perfect Tesla with everything you want and nothing you don't. The key to making this work is to give everyone an honest salary with no compensation structure built in. The salary removes their incentive for pushing you into a vehicle because they know they're getting paid regardless and it makes everyone happier and more pleasant to the customer.

72Riv > Tom McParland
03/20/2014 at 11:17

Ah... the corruption runs deep.

StalePhish > Jonathon Klein
03/20/2014 at 11:18

I also hate car dealerships for the most part. Whenever I'm just browsing or want to see a new model in person, I go by in the evening or on a Sunday afternoon when there's less chance of a salesperson being around to flag me down and try to bring me inside. I've had terrible experiences at both a Subaru dealer (bought a used car) and a Mitsubishi dealer (actually deterred me from buying their product completely), but great experiences at two Pontiac dealers because I felt like I was in control and they were just there to do the paperwork.

HiramJahoovafatJr > Tom McParland
03/20/2014 at 11:19

How is being a 'car buying consultant' different from being a 'dealership car salesman', unless you're consulting for free?

Tom McParland > Big Bubba Ray
03/20/2014 at 11:21

Perhaps CPO Teslas can be warrantied for battery swaps

Tom McParland > HiramJahoovafatJr
03/20/2014 at 11:23

I don't work for any dealership. People come to me to help them figure out what car to buy and negotiate with the dealers and get the price price so they don't have to deal with the hassle. Yes I charge for my services. I provide a service that people can do on their own no different than a cleaning service or lawn service. Some folks just don't want to be bothered.

Evan > Tom McParland
03/20/2014 at 11:24

I too have often wondered why someone like Tesla (or maybe Jeep with all the aftermarket parts available) hasn't tried to follow the Harley dealer style for cars & trucks instead of motorcycles. They end up destinations for many Harley owners to come back and to visit different dealers while out and about. Harley dealers for the most part haven't added additional income sources outside of tshirts, parts, service & such, but all the ideas you mentioned would probably behoove them as well.

jeffdhurley1 > Brian Silvestro
03/20/2014 at 11:25

I was with the Saturn company at start up in Texas . We had cars sold out months in advance . We were commission sales but made great money seeing a no games car experience . Then the dealers got greedy ... so they took the used car no games rule and changed it holding back amounts on trades . Then cut our percentage pay ( we were told that our pay was messing up the pay structure percentages for the rest of his dealerships ). then they took out "pack" (sp) holding part of the profit back befoe you got paid then another cut . To make a living you had to become old school as a saleforce and a few short years later the cookie crumbled with sales retention gone out the window and a parade of lot lizards instead of trained consultants. The Saturn was not a great car but the sales experience was what made them a hot commodity . dealer greed took that away . I say let Tesla sell their product direct and SC!@W the stealerships .

Tom McParland > AmericanMagpie
03/20/2014 at 11:25

Absolutely! Great job clarifying those rolls.

Tom McParland > Evan
03/20/2014 at 11:27

Interesting...I don't know much about motorcycles but I think Tesla could really learn something from the Harley model.

Ultrakill > Tom McParland
03/20/2014 at 11:27

I like that you said fixed pricing. That would have to be one of the staples of Tesla as that is a major turnoff when purchasing cars. You go one place, they have $2,000 markup and will not negotiate. They just sit and wait until some sucker comes along. Meanwhile they could have sold 5 of those cars for a reasonable price, and made more profit doing that.

I don't really understand the theory that most dealers practice. Sell less product for more profit per unit, make customers mad, find new customers.

Sell more cars for slightly less profit, keep customers happy, they will tell their friends and also come back next time around.

Mark Schmidt > Tom McParland
03/20/2014 at 11:31

Isn't this Musk trying to maximize his profits.

As well as avoiding the black eye that is the car buying process?

The Gray Adder > Big Bubba Ray
03/20/2014 at 11:31

Then you sell factory-reconditioned used Teslas. Everything cleaned, buffed, spit-shined, inspected, radio settings cleared, dings removed, new tires and brakes, and a fresh set of batteries. Set up a system where this can be done well and efficiently, and demonstrate why it's better to send trade-ins back to the factory instead of whatever it is they do with them, which isn't much.

xenocyclus > Tom McParland
03/20/2014 at 11:31

As a thought exercise, what is keeping Musk - or any other automaker - from incorporating a separate entity with the automaker as minority owner to operate branded dealerships? One where there is clear delineation between entities, both financially and managerially, but where training, IP, and logistics are all pre-negotiated discounted costs?

I'm sure this has been explored, so I'm curious what the negative is.

Tom McParland > Mark Schmidt
03/20/2014 at 11:32

Absolutely, but your profits will eventually plateau if customers can't buy your products. That is not good for investors and not good for the company.

Tom McParland > xenocyclus
03/20/2014 at 11:33

I'm curious of the same thing as well. Perhaps the logistics and legal loopholes would be too difficult.

BRZDriver86 > Tom McParland
03/20/2014 at 11:34

So technically does that make you a middle man to the middle men? Is that a high end car thing? I can't see someone buying a Civic or Corolla paying for extra on top of dealer mark ups.

The Gray Adder > frogberg
03/20/2014 at 11:34

And a good machine. I love mine.

And, true story, my hard drive committed seppuku on me. I took the machine to the Apple store, where they informed me that (1) the warranty had just expired maybe three weeks before, (2) they were going to fix my machine anyway, on the house, and (3) they didn't have any of the 380 GB drives in stock, so they were going to put in a 500 GB and hope I didn't mind. How's that for service? They made a life-long Apple user out of me.

JQJ213- Now With An Extra Cylinder! > Tom McParland
03/20/2014 at 11:34

I have a question for you... I am in a journalism class at my high school and chose to write a story fro our newspaper about this whole Tesla/NJ ordeal. Could I quote you? I love what you said in the article and want to use a line or two.

AmericanMagpie > Tom McParland
03/20/2014 at 11:35

Thanks for the inspiration.

jeffdhurley1 > HiramJahoovafatJr
03/20/2014 at 11:36

back in the Saturn Days it meant sitting down with the visitor to your dealership asking questions ,talking for a bit ,to find out what car would best fill the needs of the potential client . Sometimes we were not the answer and we told the folks so . We then sold the car as a fulfillment of needs agreed upon without a magic price bullet .

Tom McParland > JQJ213- Now With An Extra Cylinder!
03/20/2014 at 11:37

Sure do you need my full name? Drop me an email

AutomatchConsulting@gmail.com

The Gray Adder > AmericanMagpie
03/20/2014 at 11:38

Actually, they get paid to make you happy, not to push product out the door no matter what.

Just Cars for Joe Bryant > Tom McParland
03/20/2014 at 11:39

I like it, don't play by our franchise rules no cars for you.

JQJ213- Now With An Extra Cylinder! > Tom McParland
03/20/2014 at 11:40

Thanks! Just emailed you!

Tom McParland > BRZDriver86
03/20/2014 at 11:40

I just did a deal on a Civic because some people don't want to put the time an effort into getting a deal. My customer wanted a basic transport and needed it quickly. I found him a leftover 2013 Civic EX and got 5 grand off of the sticker. He seemed happy with the $300 he spent on me.

The Gray Adder > The Old Man from Scene 24
03/20/2014 at 11:40

Nitrogen-filled tires. LOL. My tires are filled with 79% nitrogen, 21% oxygen, and an exclusive blend of trace gases.

Big Bubba Ray > The Gray Adder
03/20/2014 at 11:40

Oh wow I didn't know they did all that stuff. Thanks for the answer!

The Gray Adder > Big Bubba Ray
03/20/2014 at 11:43

Well, they could do it if they want "factory-reconditioned" to mean something that people will pay extra for, like Mercedes-Benz at least say they do on TV.

retaoposta > The Gray Adder
03/20/2014 at 11:48

Oooh, I like this! I can't afford a new Model S atm, but a CPO Model S that's damn near factory fresh? Oh hell's yes! Time for a new post on Tesla re-imagining the used-car experience.

AmericanMagpie > The Gray Adder
03/20/2014 at 11:49

Which explains why everyone loves the car salesmen....

Murph > Tom McParland
03/20/2014 at 11:50

Great piece as always, Tom. Saturn did have a some wiggle room on the "fixed prices" if you had a trade in. I've heard two stories, a friend and a relative, who hesitated on Saturns and then, low and behold, the trade in price was moved up, oh, to something like retail. How would you handle all the other fussing around with prices: trade ins, interest rates and lease factors, extended warranty, etc? I would appreciate your thoughts.

Tom McParland > Murph
03/20/2014 at 11:55

All those scenarios are where this gets complicated. To be honest it would have to be handled on a location basis. What a trade is worth in CA might be different than NJ. In terms of interest rates you can either have the dealer partner up with banks or not. Lease factors are often decided by an independent company and then the manufacturer comes up with the incentives. There is clearly a lot more details to be worked out, but I think we have to start somewhere.

Anders Skar > Tom McParland
03/20/2014 at 12:00

Maybe this is different is the US. But my salesman actually didn't try to rip me off and has been a lot of help.

However people buying Tesla are having a lot of problems with employees always making up things and directly lying to them.

I would never buy a car directly from the manufacturer...

shitheelandtoe > Tom McParland
03/20/2014 at 12:03

So I guess my question would be, this is a good idea if you accept the idea of franchised dealerships as an immutable fact of life, but what's in this idea for Tesla? What are they getting in return for giving up a slice of the margin that would otherwise go into R&D, which is very expensive for EVs?

The Apple Store is fine as an analogy, but those are run by Apple, not by independent dealers. They do decrease the margin somewhat, but the profits still stay within Apple.

I'm asking a genuine question, not trying to make a point with a rhetorical question. I appreciate any thoughts in response.

Big Bubba Ray > The Gray Adder
03/20/2014 at 12:11

Oooooh I see what you're saying. I misread your initial comment. Lack of sleep is getting the best of me.

Anyways, it would be a great idea to do something like that. It would definitely put potential buyer's minds at ease if a Tesla is a car they're considering. Having a fresh, basically new Tesla for less than new would be a winner.

Tom McParland > shitheelandtoe
03/20/2014 at 12:13

Tesla direct sales would be the absolute best thing for the company and I am not saying they should abandon that in the areas where it is allowed. But because we have the ass-backwards dealer franchise laws that are not going away anytime soon, Tesla is limited in its ability to reach customers in many states. So in order to get more sales, they have to do something.

seoultrain > My X-type is too a real Jaguar
03/20/2014 at 12:14

Saturn built cars with power sunroofs and manual-crank windows?

corner49 > ADHeckmann
03/20/2014 at 12:18

Saleen. SSC. Bugatti. McLaren. Shelby.

Seems to be plenty of automakers that can manage to comply with federal regs and sell cars.

MOMMA THERE GOES THAT MAN > DMCVegas
03/20/2014 at 12:21

I was thinking the same thing, "so, an Apple business model?" I mean, don't get me wrong, I have the typical "hate Apple, rah rah" attitude many do, but their business operations are just... pristine. It's textbook material of how to entice customers, build rapport, and promote brand loyalty.

FJ80WaitinForaLSV8 > Tom McParland
03/20/2014 at 12:45

I have had this same thought for quite a while. Quit fighting the system and just agree to franchises with strict rules and guidelines and use your political sway to lobby for better/more incentives.

Big Block I-4 > Tom McParland
03/20/2014 at 12:51

I think that some bigger dealer groups would gobble up a Tesla Dealership in no time. Im my neck of the woods, Baltimore-DC. Koons and DarCars would put down cash to build one of these dealers with what I would think be little to no cost from Tesla. Maybe Tesla could be responsible for the service aspect of the cars or something.

Mark Schmidt > Tom McParland
03/20/2014 at 12:54

I agree with you.

But doesn't every company reach a critical mass? Or at least level out in growth. Tesla is probably still in the Early Adopter phase so there is plenty of growth to be had. I understand the need to control your product and customer experience.

I just don't know that this is entirely why Tesla wants to distribute their own cars. I would think a better reason is margin.

FJ80WaitinForaLSV8 > ADHeckmann
03/20/2014 at 12:58

While not in the last 20 years every important brand that has come to the US started with a franchise model and employed it successfully. There really haven't been any serious market entrants since then and dealers certainly weren't the issue for the failed attempts like Coda or Fisker.

gnti > Brian Silvestro
03/20/2014 at 13:00

I'm to the point where I'd only buy a car from the 3 dealerships I already feel comfortable in. No pressure, but attentive and knowledgeable.

The closer Tesla can get to making it an Apple Store experience, the better off they'll be. In fact, they should go out of their way to make it an anti-dealership. The sign out front should say "Tesla Store", and no one inside should ever utter the word "dealer". They should be Tesla geniuses.

Also, avoid traditional dealer-heavy locations if possible. Maybe zoning comes into play though?

Final thought: Electric kart track with Tesla body kits. Maybe even have gas karts for back-to-back comparisons or races.

gnti > Tom McParland
03/20/2014 at 13:03

I have a few friends that are always able to make crazy deals - because they A) know how to negotiate and B) have connections. That's what you do, but for other people. The next time I buy a car (which, admittedly, will be a few years), I'll be looking you up!

gnti > Evan
03/20/2014 at 13:04

Good point. People ride to Harley dealers hundreds of miles away just to get a $20 t-shirt.

Tom McParland > gnti
03/20/2014 at 13:05

I'll be happy to help you can find me here on Oppo/Jalopnik or here

AutomatchConsulting.com

gnti > Tom McParland
03/20/2014 at 13:06

I thought Chrysler owned some of their own dealerships? Or, at least they used to:

http://www.autoblog.com/2011/11/09/chr…

Tom McParland > gnti
03/20/2014 at 13:07

They did then the franchises sued and broke them up.

StevenG > Tom McParland
03/20/2014 at 13:08

Not without some strong controls on how the employees behave. Otherwise you will have the same sales tactics.

StevenG > corner49
03/20/2014 at 13:08

Federal regs do not require dealers. They benefit no one but dealers.

My X-type is too a real Jaguar > seoultrain
03/20/2014 at 13:10

Yup I owned 2 of them, the only sunroof option was a power sunroof, and it could be ordered without power windows.

Tom McParland > StevenG
03/20/2014 at 13:11

Tie employee bonuses to customer satisfaction. You can word those surveys very carefully. Or hire someone to "shop" Tesla stores and report exactly what is going on.