Tesla considering "Hybrid Dealers"?

[JohnQ]

Once again, the point was that the Probe wasn't killed because it didn't sell... It was killed because it sold instead of the Mustang. The higher priced car, with a higher margin, was sitting on the lot longer than expected. Dealers don't like that. Not. One. Bit. Each day that it sits on the lot bites into the holdback amount, and racks up higher financing costs while the vehicle is on consignment. Plus, since the Probe was based on the Mazda 626, it could be serviced at Mazda dealers instead of Ford locations.

And Ford couldn't simply increase the Probe holdbacks and incentives for the dealers? Make it more profitable to sell than the Mustang? The manufacturer can absolutely influence the behavior of their dealers.

The Probe went away for the same reason the Pontiac Firebird went away. The corporate bigwigs saw its sales bringing down sales of another product that had higher prestige. That could not be allowed. The Ford Explorer added to the bottom line, and F-150 sales continued to climb. If the Explorer had been taking sales away from F-150, the Explorer would have been canned.

But you can't have it both ways. Either the Probe was not pushed by the dealers or the manufacturer killed it because it was selling too well and cannibalizing another model. Which was it?

Dude, I'm barely representative of humanity. Advertising is a big hole in the ground that companies try in vain to fill with money. It doesn't work, for anyone but the advertising firms.

;-)

I would recommend some research on the subject from independent parties. One example (that addresses celebrity endorsements) is "The Economic Value of Celebrity Endorsements"

 

[Red Sage]

And Ford couldn't simply increase the Probe holdbacks and incentives for the dealers? Make it more profitable to sell than the Mustang?

Dealers would typically do a bait-n-switch on people. Someone would come in to look at the Mustang, and they'd send them out the door in an overpriced Escort or Tempo instead. That's why the Probe was a problem... People weren't spending as much as they would on a Mustang, but the profits the Dealer made were less than on the Escort or Tempo, which could be marked up to the range of the Probe.

The manufacturer can absolutely influence the behavior of their dealers.

Not in Michigan. It's illegal there. Oh, but it's perfectly OK for the influence to go the other direction...

But you can't have it both ways. Either the Probe was not pushed by the dealers or the manufacturer killed it because it was selling too well and cannibalizing another model. Which was it?

The Dealers complained to the Manufacturer about the Probe. Then the manufacturer capitulated by dropping the car from the lineup.

I would recommend some research on the subject from independent parties. One example (that addresses celebrity endorsements) is "The Economic Value of Celebrity Endorsements"

Loved Michael Jackson. Can't stand Pepsi -- nothing wrong with it, except that it isn't Coke. Loved Burgess Meredith. I didn't buy my first Honda until after he was dead. I was more impressed by the research I did on my own in the library than advertising. Loved James Garner. Never bought a Mazda. Now I never will. ;-)

 

[Ludus]

Saturn is an interesting reference. Tesla Dealers to be compatible would have to sell cars at exactly the same prices as the company direct path. They'd have to support exactly the same essentially profit neutral service system. No commission associates trained the same as at Tesla stores. They'd have to support the company certified previously owned program. It would be good if they handled no ICE vehicles either used or service.

This amounts to a pretty non-profit sort of dealer. The dealer gets to invest millions in exchange for a franchise that breaks even?

i've been wondering if there's any business Tesla is leaving on the table that might pay for this sort of dealer.

What comes to mind is the collision repair business as distinct from service. It's a 30B business large majority insurance and potentially very profitable. It's not Tesla's core business. Nothing on a Tesla is available aftermarket now. Tesla may be able to channel collision repair jobs to franchised dealers as well as salvage.

As Tesla production ramps up no matter how wonderful the engineering and quality, more and more Tesla's will be damaged or totaled in collisions. The existing collision repair system is entirely unready to handle Tesla repair and can't make effective use of salvage. If Tesla could capture this profitable revenue stream and channel it to dealers it might pay for a new kind of dealer that's compatible with direct sales and Tesla's approach.

Im not advocating dealers, just looking for ways they might be compatible

 

[macpacheco]

Is there an actual need for a local inventory or would it be ok if Tesla had a few hundred cars (a few thousands when the model 3 comes along) with most commonly sold configurations ready built in the factory (or in a few worldwide sites) ready to ship ? That takes away one argument. Having fewer lots really reduces the cost of that inventory by at least one order of magnitude.
Teslas should never require much maintenance, so a service center can handle a much larger local customer base than an ICE service center. As long as Elon keeps his promise to make service centers from becoming profit centers, this might work well.
For me the key is keeping the do it right even if it takes time mentality. This game plan has served Elon very well in all of his endeavours. We must assume that by 2020 there will be a few other vendors selling millions of EVs/yr combined, Tesla will not own the market.
Of course, I'm honestly not expecting Tesla will be selling a million cars / year. That would be something like US$ 50 billion plus in revenue. Assuming a 20x multiple Tesla might become a trillion dollar market cap, in the order of Apple and Exxon, scary.

 

[ToddRLockwood]

According to John McElroy with Autoline Daily, Elon says that Tesla might try to have hybrid dealerships in order to have a presence in all 50 states... http://www.autoline.tv/journal/?p=33977
I would NEVER, EVER go back to a dealer, after my experience with purchasing my S! This might be enough to make me reconsider Tesla when looking for a car for my wife (we're waiting for the Model III). These guys are nothing but parasites, and bring nothing but misery to the new car buying experience. I hope that Tesla never caves in to these guys...
Thoughts?

You have to consider the context in which Elon made this statement. There were probably car dealers in his audience at the time. It makes sense that he would throw this out to send a message that says, Tesla is open to whatever works best for the company and its customers. He is not on a mission to put car dealers out of business.

 

[TexasEV]

You have to consider the context in which Elon made this statement. There were probably car dealers in his audience at the time. It makes sense that he would throw this out to send a message that says, Tesla is open to whatever works best for the company and its customers. He is not on a mission to put car dealers out of business.

Tesla only selling direct would not put car dealers out of business. They just won't be doing business with Tesla.

Again, anyone wanting to understand his answer needs to hear the question first. Elon was asked if using dealers might be necessary for Tesla to be able to sell in all 50 states. He wasn't throwing a bone, he was commenting on the unfortunate political reality in some states.