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Why The Dealership Model Doesn't Work for EVs - Add Your Story Here

I have several stories as to why the dealership model doesn't work well for EVs. Please add your story here.

Ford Dealer Tells Me I Don't Want a CMAX Energi:
I am the Electric Vehicle Program Manager for an electric utility. I took my father, who wants to buy a plug-in vehicle, to the local Ford dealer to get information on the CMAX plug-in. Our dealer has decided to not carry plug-in vehicles and had no information on the three that Ford offers. I asked to speak with the "buyer" of vehicles. We asked him about the CMAX Energi (plug-in) and he told us we don't want one. He said we want the hybrid version. I explained that we want to support plug-in vehicles and we'd like to purchase a plug-in CMAX Energi. He re-explained that we don't want one and that we want a hybrid. I told him that my job entails helping people understand why plug-in cars are good for our economy, environment, and energy security. He re-explained that I don't want one. We left.

Nissan Recommends Changing the Brake Fluid Annually on a Leaf:
The Leaf doesn't require much maintenance; for some reason the recommended annual service (at the dealer) is to change the brake fluid. You might ask yourself if you've ever owned a car that says you should change the brake fluid annually. Especially one with regenerative braking (done by the motor). You then might ask yourself where this requirement came from.

Local Chevy Dealer "Only Carries the Required Number of Volts":
I've had several people tell me that the local Chevy dealer doesn't want to sell Volts. They only carry the minimum number required and don't promote the vehicle. They have a very limited stock of Volts and limited options. They will, however, gladly show you the wide selection of Super Crew Cap F-150s.

At Test Drive Event, I Knew More About the Cars Than the Dealer:
We hosted a great test drive event where various people from the community came out to drive Leafs, Volts, Focus Electrics, CMAX Energis, and Fusion Energis. Although the dealers provided their sales specialists, I knew more about the vehicles than they did (how regenerative braking works, how much one kWh costs, how far a vehicle can travel on one kWh, where grid energy comes from in our state, how long the battery warranty is for, what is fast charging?, where are the batteries?, fuel cost differential between gas and electric versions, what is required at home for charging?, L1 vs L2, etc.). They sales reps were wonderful people - but they still don't understand the cars.

Ford sells F-150 trucks not Chevrolet.

Dear Tjohnson...I have a family member that is the sales manager at a Chevy dealership. The volt has been fairly consistent in sales. As a matter of fact, her loaner is now a volt. Some dealership can't seem to get rid of them, and others are constantly swapping them out. They have a great lease program and have consistently sold approx 2000 volts a month. I drove it. Although it's no model S, it's a nice car. and...a great value.

I wish Tesla would lease the Model S.

@jvs11560 - your wish came true... Tesla has a lease program.

@jvs11560: I beg to differ, the Volt is NOT a great value. The $30K or so car actually costs the US taxpayer over $100K for everyone sold (at a loss, of course). No one in their right mind would buy a Volt at its TRUE cost...but such is the government's management of business.

A leaf costs more to build than a Tesla?

Volt. Yeah that's what I meant.

@Panoz
Any car can look super expensive if your amortize R&D over an abbreviated time horizon. Consider the source and then think about it.

Tesla's showroom concept isn't infallible, either. I got a ridiculous amount of bad information from the associates in the showroom.

Fortunately you can find the answer to pretty much anything on the Internet and we don't have to trust the sales representatives any more, no matter what sales model is used.

Folks, why do you think dealers push people away from EVs? The reason is simple... dealers make all of their money on service. EVs have very little to service. Tesla's model of offering service as an "at cost" option, not allowing the service centers to make a profit, would never work for a dealership that makes most of its profit from service. This is the underlying reason why dealerships are loathe to sell EVs and why Tesla is selling direct.

I agree. I have visited the Nissan and Mits dealers here in Spokane, they are uninformed and unenthusiastic about their EVs. Would much rather sell you something else, probably because the profit margins and service requirements are better (for them).

This despite the fact that we have relatively cheap electricity (mostly from hydro and wind) and short commutes. IMO, there needs to be an educational outreach effort made (demo the cars at the big regional shopping malls) but the salespeople can't afford to leave the showroom or they might miss a dinosaur sale.

One of the reason so many car buyers hate dealers, is how they
steer buyers to the car that generates the most revenue for the dealer, and not the best choice for the car buyer. This means the highest-profit vehicles that are also the most unreliable. This generates revenues for both sales and service at the dealership. It doesn't even matter if the car is a lemon and requires lots of warranty service, as the dealer gets to stick it to the manufacturer and still comes out ahead.

Before Tesla, we all accepted that's the way it's done, and painfully lived with it. Even if you're one of the smart ones who research and determine the best car to buy, you likely have plenty of relatives that are just not car savvy and end up with really poor choices.

Tesla's sales model is so refreshing and pleasant, no wonder the dealers are doing everything they can to hurt Tesla and take away our rights to buy what we want how we want.

@ Panoz,

Can you please back that up with data?

tjohnson,

Changing brake fluid is not a bad idea:
Once I saw a minor motorbike accident. His front brake locked while he was driving. Luckily no cars nearby. Brake fluid absorbs moisture from air. Moisture causes rust in the system. This can lock moving parts. This is more likely to happen if brakes are not used much. (That motorbike had been in storage over winter.)

Kleist;
A buy-back guarantee is not the same as a lease program.

@Panoz, while you are wrong about the taxpayer situation, the R&D spent on the Volt of about $1 billion is roughly the mount of money spent by Tesla in the 10 years leading up to the Model S. Tesla is ordering $500 more in machinery to build more cars. So, in terms of investment, more Volts have been sold per $1 billion invested than Tesla vehicles.

The volt design began in 2007 prior to the recession and financial bail out.

The ignorance of salesmen at dealerships for vendors with only one electric car model hardly repudiates the "dealer model" for electric cars.

The fact that most auto dealers are scumbags repudiates the "dealer model" for electric cars.

@Amped: Sure. There are lots of articles, here are a few. Some refute the others, just get popcorn and watch the politics unfold!

$250K per volt: http://jalopnik.com/5870507/report-every-chevy-volt-has-over-250000-in-g...

$250K per volt: http://reason.com/blog/2011/12/21/congratulations-taxpayers-chevy-volt-is

Article on the Volt subsidies: http://www.washingtonpost.com/wp-dyn/content/article/2010/11/12/AR201011...

Article saying $250K only true so far: http://www.politifact.com/ohio/statements/2012/jan/31/jim-jordan/jim-jor...

Article on poor sales figures that affect subsidy numbers: http://www.policymic.com/articles/4982/chevy-volt-on-hold-government-sub...

@tjohnson,

There may be lots of reasons to dislike the dealer model, but none of your examples support that thought.

You example of a bad Ford salesman is just that. What does one idiot salesperson have to do with the dealership model?

Nissan's brake fluid change recommendation has nothing to do with dealers, it is in the manufacturer's service schedule. Brake fluid absorbs water and deteriorates faster than other automotive fluids. We replace all hydraulic fluids on all of our vehicles and farm implements every three years. Most service manuals suggest 24 or 36 months without considering mileage - it is a pure time thing.

Your Volt example is addressed above. Plenty of Chevy dealers do well with the Volt.

Your comment about dealer knowledge is also highly specific to the individual and in my experience, applies to TM too. I have known great car salespeople and terrible ones. That has nothing to do with whether dealers work if not. I have had almost zero correct answers to questions from TM showroom reps, who seem picked more for looks than expertise. The rep who took me on my first test drive in a Model S was taking delivery of her new Honda Fit that same day, and was more jazzed about that than the car we were driving. She answered every single question incorrectly. People are people and they have limits. They can't know everything and almost no one we come into contact with at Tesla can afford to buy one, so I often find myself "helping" them understand details. For example, when I commented to the head of service at a TM Service Center that my car suspension had dropped to normal overnight, causing a hard chassis bump on exiting our driveway, he responded "they aren't supposed to stay elevated." He was of course, wrong and clueless on this, and eventually researched and acknowledged his mistake. That is one example of many that we have experienced, and does not say anything about the dealership model vs the TM customer sales and support model.

Our most recent Porsche, MB and BMW car and motorcycle purchases were excellent experiences, with reps and follow up service every bit as good, and in some cases, less amateur than the Model S experience. Not that we would ever give up the S for an ICE now that we have it, but the ordering and delivery process was, by far, the most difficult, interactively disruptive, and miscued car purchase process that I have ever experienced with any marque. A year in, it may be better, but a year ago, TM couldn't even deliver a car in Maryland of Virginia with plates, and I was pulled over five times, ticketed once, and had to spend a day in court - TM's fault and nothing that has ever happened to us when a real dealer delivered a car. I don't love the dealer model, see it as a dinosaur, but let's not exaggerate the negatives therein, nor ignore the issues that TM has had with its model.

Another point about dealers - sometime in 2014 we are going to start to see demand for used Tesla Model S, both on the sell side and buy side. Traditionally dealers help with this process by having their own used car lots and doing whatever mechanical tuneups to the cars before selling them.

Is Tesla going to wade into the used Model S market? If not, are they going to recertify used Model S? Hmmm.

"Is Tesla going to wade into the used Model S market?"
To some degree they are already in today with the loaner sales. However the real answer we'll get in about 3 years when the first "lease" cars come back - this could be very beneficial and lucrative for the service centers.

@Kleist: I expect they get something going before that. Certainly those cars will be a huge driver, but so will the Model X. A lot of S owners are going to want to switch, and it would be smart for Tesla to try to capitalize on that.

@PD, you said "You example of a bad Ford salesman is just that. What does one idiot salesperson have to do with the dealership model?"

And then you said "Not that we would ever give up the S for an ICE now that we have it, but the ordering and delivery process was, by far, the most difficult, interactively disruptive, and miscued car purchase process that I have ever experienced with any marque. "

Sorry about your bad experience.

My reservation, design, finalization, purchase and delivery was by far the best car buying process I have ever been through...from what I've heard on the forums, it sounds like I'm in the majority. If you take out my design process (in which I hemmed and hawed on options/packages) I think I spent a total of 4 hours. My reservation was put in four years ago, delivered 12/22/12.
:-)

+1 NKYTA

Buying a Model S has been the most painless process ever. It was only a tad more complicated than buying an iPhone. I hate price shopping, wasting time at a dealership negotiating and then getting the upsell from the finance guy, etc. With Tesla you just configure online, reserve, pay for it, it gets delivered to your door. Easy peasy. What's not to like?

There is no financial incentive for a dealer to sell EVs over ICEs. The ICE is going to be much more profitable over the lifetime of the car. Until that gets fixed somehow, I don't see how EV volume will pick up through traditional dealerships.

O

Panoz,

You need to read the articles, not just the headlines:

"This figure also wouldn't pass an MBA accounting course as it assumes that you're only going to sell 6,000 cars. Ever. It's artificially low because some of these subsidies are 20-year grants. If they sell only 6,000 cars a year for 20 years that number comes down to $25,000 per car."

Note that the article was from 2011. Chevy has sold over 60,000 Volt's so far.

I have never met a car salesman that has either added value to the process of buying a car or knew anything more about the car than me. It's about time a company had the common sense to remove these worthless thieves from the equation.

They are a parasitic species that aims to rape you and steal your wallet. I'm happy that I will never ever buy another car from a dealer.

I've bought 10 cars the old fashioned way (going to a dealership and enduring that day-long root canal) and 1 the Tesla way (on-line). Tesla's took 15 minutes and was fun and painless. It’s understandable that dealerships are scared to death of the Tesla sales model. But instead of fighting it (and looking silly) they should adapt.

@PD -- I agree with your larger point -- none of the OP's stories are particularly relevant to his or her actual point. However, to your comment about the brake fluid issue: I doubt very much that Nissan recommends *annual* brake fluid replacement. The story probably refers to a "dealer recommendation". It is very common for dealers to publish self-serving service "recommendations" that go far beyond what the manufacturer actually recommends. These recommendations should simply be ignored.

@AmpedRealtor -- If you like a "no negotiation" approach to car buying, you local ICE dealer would be delighted to accommodate: Just write a check for the sticker price and you will be out of there in no time. What's not to like?

Say what you will about the dealer network vs Tesla's approach, but at the end of the day, writing a check for sticker price is exactly what you did when you bought your MS. You might argue that you saved the overhead of supporting the dealer network, but it remains to be demonstrated that Tesla's approach is more cost-efficient in the long run. We all know what we want to believe, but the data just aren't there yet.

@avanti - "We all know what we want to believe, but the data just aren't there yet."

What data do you need?

Dealers overhead costs for:
+ salaries for all the sales people
+ salaries for receptionists and other support staffs
+ salaries for "finance" managers
+ pyramid scheme payment to kick it up to each manager and the general manager
+ monthly rent for the dealer lot
+ finance costs for the huge inventory of cars sitting in the lot for weeks/months
+ promotional or advertising budget to attract customers to the show room.

Now which of the above items does Telsa incur without the traditional dealership model? I'll give ya the TM showroom rental cost and salaries for the TM reps in the store.

@ avanti,

"Say what you will about the dealer network vs Tesla's approach, but at the end of the day, writing a check for sticker price is exactly what you did when you bought your MS. You might argue that you saved the overhead of supporting the dealer network..."

Tesla would have to either absorb the dealer overhead (lower profit margins) or pass the overhead onto the consumer by way of higher cost (reduced sales numbers). Selling direct solves both of these issues and is a net win for Tesla.

"If you like a "no negotiation" approach to car buying, you local ICE dealer would be delighted to accommodate: Just write a check for the sticker price and you will be out of there in no time. What's not to like?"

Tesla's model is uniform and applied equally to all purchasers of its vehicles. I pay the same price as someone on the other side of the country. When you know there is not even the remote chance of getting a better deal elsewhere, it's okay to pay full price. I believe Saturn had the same "no negotiation" policy for their vehicles, but I've never wanted to buy a Saturn so I don't really know from first hand experience.

I prefer the Tesla way. It's uniform, simple, and scalable.


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