TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker or making a Paypal contribution here: paypal.me/SupportTMC

New York Times: A Car Dealers Won’t Sell: It’s Electric

Discussion in 'News' started by ToddRLockwood, Nov 24, 2015.

  1. ToddRLockwood

    ToddRLockwood Active Member

    Joined:
    Sep 11, 2012
    Messages:
    1,263
    Location:
    Burlington, Vermont
    Log In - The New York Times

    Everything Elon Musk predicted regarding traditional car dealerships' ability to effectively market electric cars is true.
     
  2. Ktowntslafan

    Ktowntslafan Member

    Joined:
    Nov 3, 2014
    Messages:
    713
    Location:
    Kingston, Ontario
    Staff at our local Nissan dealership was downright panicky when we asked them about the Leaf. "The Leaf? Ummm...wait right here Sir...(pssst: this guy is asking about the Leaf...what am I supposed to say again?)...right, Sir...no Leaf available today...how about a VERSA!!! HALF THE PRICE!!!"

    Angering!

    When I finally got a quote for a lease, it was +/- $600/month vs $199/month in Cali. Exchange rate was on par at the time. Ludicrous.
     
  3. JohnSnowNW

    JohnSnowNW Active Member

    Joined:
    Feb 13, 2015
    Messages:
    1,405
    Location:
    Minnesota
    The comments in the article are...quite something.
     
  4. Ktowntslafan

    Ktowntslafan Member

    Joined:
    Nov 3, 2014
    Messages:
    713
    Location:
    Kingston, Ontario
    What is sad is that Carlos Ghosn is a visionary leader, who is being undermined (by some) of his dealership network:

    Paris Climate Change Deal Is Critical for Smooth Transition to a Low Carbon Economy


    https://www.linkedin.com/pulse/paris-climate-change-deal-critical-smooth-transition-low-carlos-ghosn?trk=mp-reader-card

    Renault-Nissan and Partners Install 90 New EV Charge Spots Around Paris for COP21 -- PARIS, November 19, 2015 /PRNewswire/ --

    I have respect for this man. Tough to execute EV sales through dealerships who depend on service revenue from ICE.

    Elon got it right.
     
  5. ecarfan

    ecarfan Well-Known Member

    Joined:
    Sep 21, 2013
    Messages:
    10,366
    Location:
    San Mateo, CA
    Read that NYT article this morning. Nothing new to TMC: all those issues have been brought out long ago on these forums. But good to see them get exposure in a major news source.
     
  6. Ktowntslafan

    Ktowntslafan Member

    Joined:
    Nov 3, 2014
    Messages:
    713
    Location:
    Kingston, Ontario
    +1 #COP21
     
  7. Raffy.Roma

    Raffy.Roma Active Member

    Joined:
    Jul 22, 2012
    Messages:
    3,209
    Location:
    Rome (Italy)
  8. Patrick W

    Patrick W Member

    Joined:
    Mar 17, 2015
    Messages:
    842
    Location:
    SLC, UT
    The complaints about dealerships losing money on repairs remind me of my favorite Elon Musk quote:

    "Going a step further, I have made it a principle within Tesla that we should never attempt to make servicing a profit center. It does not seem right to me that companies try to make a profit off customers when their product breaks. Overcharging people for unneeded servicing (often not even fixing the original problem) is rampant within the industry and happened to me personally on several occasions when I drove gasoline cars. I resolved that we would endeavor never to do such a thing at Tesla, as described in the Tesla service blog post I wrote last year."
     
  9. anticitizen13.7

    anticitizen13.7 Enemy of the Status Quo

    Joined:
    Dec 22, 2012
    Messages:
    2,551
    Location:
    United States
    I asked a sales person at my local Honda dealer about a Fit EV, and he seemed really annoyed. At least one person at this dealership quietly told me that the management there was concerned that EVs would cause the service department to lose revenue.
     
  10. Trev Page

    Trev Page Member

    Joined:
    Sep 21, 2012
    Messages:
    576
    Location:
    Aurora, Ontario, Canada
    Out of curiosity I went to my local Nissan dealer so check out the Leaf since they showed it on their dealer website and they said they don't carry it. Kinda confirmed for me the whole ICE vs. EV thing when even Nissan can't get it's act together and have all dealers carry their product line. Tesla is doing the right thing by keeping franchises out of the mix and going direct.
     
  11. dogphlap

    dogphlap Member

    Joined:
    Jan 24, 2015
    Messages:
    90
    Location:
    Australia
    I live in Australia but my experience was similar. I was interested in EVs and made enquires at two large Nissan dealers near me (about 60km or 38 miles apart). I was not totally committed but a test drive might have swung it. Neither dealer was in the least interested in selling me a Leaf. Six months later I put a deposit on a Model S 70D that arrived six months after that.
     
  12. ChadS

    ChadS Petroleum is for sissies

    Joined:
    Jul 16, 2009
    Messages:
    2,401
    Dealer reluctance to sell EV's has been well known as a huge obstruction to the industry since CARB first told the industry to start building EVs in 1990.

    Most dealer profit (at least in the US) comes from service, then from used cars. New cars sales are barely above break-even for dealers. Explaining the new tech in an EV means a dealer typically has to spend 3-4 times as much time with an EV customer as they do with an ICE customer; and then presumably the EV will need less service. More work for less money - no wonder most dealers are not excited.

    Of course, it is more complicated than that. There are thousands of dealers; they are each small companies staffed by individuals. Just as some of us consumers only drive EVs and other would never consider them, some dealers are more excited about it than others. While most US dealers still don't offer a plug-in vehicle of any type, a few dealers are doing very well in the EV business - and loving how connected the customers are; they tend to get a lot of referrals. And a dealer with sales staff sitting in an empty lot most weekdays may be more interested in EVs than a very busy dealer.

    It also depends on the type of EV, which is partly determined by the automaker's ROI strategy for the vehicle (which, in a circular fashion, partly depends on dealer preferences). While most dealers really hate compliance EVs (high ramp up time, high sales effort, low-volume, low-profit car that cannibalizes ICE sales - worst case scenario for a dealer!), other types of EVs are not always so bad. A volume EV (if one existed) would still not be great, but at least the dealer ramp up would pay back easier with higher volume, and the dealership could sell more cars (dealers prefer higher margins to higher volumes, but are being forced to higher volumes by commodity markets and automaker pressure - the good news is that automaker pressure is largely from financial incentives when they move high volumes). Conquest cars, while only low-to-mid volume, at least bring in NEW customers as long as the design is not cannibalizing as with the LEAF and i3; dealers that aren't already swamped with customers could find the extra effort for new customers worthwhile (though they still wouldn't want a cannibalizing design that trades an ICE sale for an EV). And dealers love halo cars; they generally don't do much to sell them, they just park one in the showroom and let it drive traffic - who they then try to steer towards an ICE. (At least in theory; in practice the automaker may have a large set of requirements for halo cars, like training, EVSEs and very expensive repair equipment that make them less attractive to dealers).

    Automakers are both required to build EVs and (other than Tesla in some states) to sell them through dealers; but there are no requirements on dealers to sell them, so dealer preferences have a large effect on the type of EVs that automakers build. This is a large part of why Tesla doesn't have competition yet, most EVs look funny, and the advertising is so odd when it exists at all. I've written much more on how the auto industry approaches EVs in THIS thread.
     
  13. brucet999

    brucet999 Active Member

    Joined:
    Mar 12, 2015
    Messages:
    1,310
    Location:
    Huntington Beach, CA
    Is this why the i3 is so ugly and the Leaf so odd looking? I had often wondered why BMW wouldn't make their EV model look sleek like its 3 and 5 series cars.
     
  14. ChadS

    ChadS Petroleum is for sissies

    Joined:
    Jul 16, 2009
    Messages:
    2,401
    #14 ChadS, Nov 25, 2015
    Last edited: Nov 25, 2015
    Yup.

    The automakers will never tell you that, of course. They will say the design is for aerodynamics, or good visibility, or something like that. Just like they'll tell you they are making an EV in the first place solely because they care about the earth and want to be good global citizens. But it's easy to see it's not like their other cars. And those of us that follow the industry have seen several quotes from Nissan and BMW executives saying that they didn't expect their current customers to buy the cars, and once the cars were out for a while, bragging about the extremely high conquest rate (which I think is over 80% for both cars; incredible numbers). It is clear they did something to make sure their existing customers would stick with their ICE offerings. That makes the dealers happy, because the extra work selling an EV gets them a new customer (a valuable commodity in a mature, saturated market), rather than just being an expensive cannibalization of an existing ICE customer.

    They were targeting "eco" customers. For some reason the automakers seemed to think this category was the only one that would be interested in EVs, despite their many advantages. This demographic supposedly cares about fuel economy, and TCO, but doesn't care about appearance. (They also tend to buy existing, proven models; which is at odds with the high number of technically-savvy early adopters buying EVs). They also have been said in the media to prefer cars that "scream" eco; though I have never seen any data to back that theory up - in fact, I've seen some of the opposite. I do think people primarily concerned with cost are willing to give up appearance to save money, but they do not prefer ugly cars.

    Nissan's CEO has stated that while the existing LEAF design was great for conquest customers and giving the brand eco-cred, to get to volume their next EV will have to have three things: more range, more infrastructure, and "more mainstream" appearance. In the past, a Nissan designer has said that they tried to make the first-gen LEAF look "EV-like". At the time they designed it, the only EV in the market they were supposedly aiming at was the Tesla Roadster, so I think they missed that mark.

    Mind you, they weren't shooting for completely ugly. They did want to sell some, and have the owners love it. I think both Nissan and BMW were looking at something slightly ungainly from some angles, but "futuristic" or "high tech" from others.

    BTW, I'm one far more concerned about the car than the appearance. If the LEAF or i3 had 150 miles of range, I'd probably have one now.
     
  15. Bangor Bob

    Bangor Bob Member

    Joined:
    Jan 5, 2015
    Messages:
    485
    Location:
    Bangor, ME
    Would it be wrong to for CARB to directly address/incentivize the dealer issue? If the manufacturers you have a franchise with offer PEVs, then xx% of dealership unit volume must be PEV's? CARB credit scheme at the dealer level? Certainly dealers would start putting pressure on manufacturers to start sending them mainstream-customer-acceptable PEVs.

    Yeah, I can hear the dealer lobby screaming bloody murder in Sacramento from here in Maine, but it's kind of a bed they have been making for themselves for a few years now...
     
  16. ZachShahan

    ZachShahan Member

    Joined:
    Dec 3, 2014
    Messages:
    497
    Location:
    Sarasota, FL / Wroclaw, Poland
    I personally think this assumption, though popular, is incorrect. Early adopters often want something new, different, futuristic. I think BMW & Nissan were basing these designs somewhat off of that, and Nissan somewhat off of the much loved EV1. I actually love the look of these cars (from most angles) and know others do as well. I think I understand why others don't, but I don't think it was BMW's or Nissan's aim to make ugly EVs. (Maybe I'm not cynical enough.)

    That said, the dealer network is a huge challenge to both of these companies despite their efforts to be leaders in the industry. [Anecdote] We recently got a LEAF for my mom (which she absolutely loves) and the dealership had one LEAF specialist who was basically the only one we could talk to about the car. He knew quite a bit about the LEAF and EVs, but certainly wasn't excited by it. He also didn't know some rather important things in some instances. He could talk intelligently about the Model S, BMW i3, BMW i8, Chevy Volt, and others, but it was also clear he wasn't an EV enthusiast. He mostly just liked the instant torque and acceleration of the higher-end models. This dealership moves a few or so LEAFs every month, and they all must go through him. My impression is he's better than most, but if that's the case, it's definitely the story that most people coming into the dealership have to really know they want a LEAF in order to get one.

    I test drove the BMW i8, BMW i3, Porsche Panamera S E-Hybrid, Chevy Volt, and Nissan LEAF recently. I had nice people who knew quite a bit about the cars (and were sometimes very enthusiastic about them and EVs in general), but I think I asked all of them a bit about who they sold the EVs to, and think they all said it was people who came in specifically for those cars, and often knew more about them than the salesperson.

    I wonder how many more EVs would be sold if there were EV-dedicated dealerships. (And I'm sort of thinking about what it would take to start one...)
     
  17. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

    Joined:
    Mar 8, 2012
    Messages:
    12,756
    Location:
    Texas
    I don't think it's possible to do. They are, in the long term, looking at something like 90% loss of service revenue.
     
  18. Olle

    Olle Member

    Joined:
    Jul 17, 2013
    Messages:
    333
    Location:
    Orlando, FL
    Elon's prediction about EVs at car dealers came true.
    The ICE-EV thing aside, IMHO Tesla sells a lot more cars themselves than they ever could have through dealers, just because most people, myself included, prefer the online or company store experience over the dealer experience.
     
  19. RichardL

    RichardL Member

    Joined:
    Oct 6, 2013
    Messages:
    402
    Location:
    San Carlos, California
    Very true - I don't think I would ever have made the huge jump from my prior car to the Tesla by going into a dealership. The whole Tesla showroom and online experience really enabled that 'leap of faith'.
     
  20. ecarfan

    ecarfan Well-Known Member

    Joined:
    Sep 21, 2013
    Messages:
    10,366
    Location:
    San Mateo, CA
    And yet the sales success of the Model S, a full size sedan that overall has a fairly conventional shape (though beautifully executed) supports the contention that early EV adopters don't need to "look different", they just want an EV that also happens to be a superior car overall compared to the competition.
    Of course the Leaf outsells the S in since it is a small fraction of the price of a Tesla. But it is my belief that it would sell even better if it was more attractive and less of a "weirdmobile" in appearance (and if Nissan dealers put more effort into promoting it). The i3 is selling in even lower volumes than the Leaf, I believe in part because it is even more peculiar looking.
    Tesla has clearly demonstrated that beautiful EVs can sell well even at high prices. The Model 3 is going to upend the auto industry and start the ICE vehicle on the road to extinction. I genuinely hope that the GM Bolt will also contribute to that process. By 2018 all major car companies will have no choice but to participate in the EV revolution. Their willingness to start building EVs will be driven by economic pressures and self-interest, but whatever it takes....
     

Share This Page