tag:blogger.com,1999:blog-2959361113187475098.post7020385145710546148..comments2024-01-14T05:38:07.296-05:00Comments on Autos and Economics: Tesla's Distribution ChallengeMike Smitkahttp://www.blogger.com/profile/10310816368811158899noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2959361113187475098.post-87003111219475258182013-10-02T06:40:30.182-04:002013-10-02T06:40:30.182-04:00Posted on LinkedIn "Tesla vs Dealers"
@...Posted on LinkedIn "Tesla vs Dealers"<br /><br />@David - When I opine about these matters I work hard to formulate an unbiased opinion and base most of my statements on historical context and my personal expertise. Until you have been in the fight it is difficult for many who seem to think operating a dealership is an easy business is foolhardy. It looks easy from an outside perspective, but much more challenging once in the arena... Factories did run stores and still do in limited bases when a good sales point closes and the manufacturer is in need of an operator (less now than in years past) and any factory person will tell you that they do not want any part of the retail business as most lose money during these transitions.<br /><br />You mentioned the failed Ford Retail Network and the GM plan to operate stores that failed and they had former dealers in most of these stores. The modeled failed because the surrounding dealerships ate their lunch, they outsold them and out serviced them because the factory tried a controlled model (one price, service reservations, controlled advertising, everything the customer said they wanted) in a competitive environment and in the end the customers went to the competing, neighboring same brand dealership... lesson learned...<br /><br />Which does raise to mind, two business models in which Elon Musk/Tesla could find there way into states and circumvent existing laws, much like the FRN plan, he would set up a separate Tesla Dealership Ownership Corporation and hire a dealer operator and give them a significant ownership percentage/stake into the business who would become the President/Operator. This allows for the creation of more capital through the future dealership to have a floor plan and additional working capital, which will serve him well when the marketplace for customers who want to purchase electric vehicles heats up - Secondly, much like the old manufacturer dealer development models, Elon Musk/Tesla could set up dealer development programs in which the Dealer Operator buys Tesla out eventually through profit and stock purchase under a controlled plan that would satisfy existing state franchise laws, in this case he would have better control of his sales process and develop dealerships in his vision and hire dealers who don't currently have competing brands or new dealers who want to enter the business. Most state franchise laws allow manufacturers to own a majority % of the stock of a dealership who appoint an independent dealer/operator, who will eventually own the dealership/corporation.<br /><br />By Kevin KimbroughDavid Ruggleshttps://www.blogger.com/profile/04354349511843594159noreply@blogger.comtag:blogger.com,1999:blog-2959361113187475098.post-7912804247770470872013-09-29T16:19:27.595-04:002013-09-29T16:19:27.595-04:00For those who believe customers would flock to a n...For those who believe customers would flock to a no hassle buying experience we might hearken back to the Saturn Aura, a really good car that never sold well. It never sold more than 60K in a year, even though the car was good, the quality was high, and Saturn's consumer friendly selling process was in place. <br /><br />So where were all the consumers who said on surveys they prefer the No Hassle, One Price, approach? They must have down at the Toyota store getting abused, or perhaps at Honda? Camry, about 450K per year? Accord about 350K. David Ruggleshttps://www.blogger.com/profile/04354349511843594159noreply@blogger.com