Automakers such General Motors, Toyota, and BMW have a lot in common with software makers. They build their vehicles, then sell them to dealerships. Microsoft, in a similar vein, sells its Windows operating system to hardware makers like Dell, which uses the OS to run its PCs.
Roll out Tesla. The electric car maker is eschewing the traditional automaker-dealership paradigm by directly selling to car buyers, a similar model used by Microsoft nemesis Apple Computers.
Tesla does this—and avoids a lot of state laws—because it doesn’t “stock” cars at its dealerships. Tesla’s newest store, for example, is located between a shoe and clothing store with the nearest parking lot a block away. Says George Blankenship, Vice President of Design and Store Development for Tesla, “We are deliberately trying to engage with people when they are not thinking about buying a car. “That’s the best way to educate people about how electric cars work, how much they cost to operate and what Tesla has to offer when they eventually go car shopping.” Incidentally, Blankenship previously worked at Apple and Gap as VP in retail sales.
So what do passerbys encounter at a Tesla store? The vehicles present are for test drives, continues Blankenship. In fact, the Tesla Model S—the only vehicle currently for sale—is currently sold out. Potential customers can submit an order for one of the sporty EVs but would have to wait until next year to pick up their car. Note that service and maintenance of Tesla vehicles are handled by offsite service centers, another difference from traditional dealerships. Tesla store sales staff do not work on commission, either.
“There are pros and cons to both approaches,” says IHS analyst Rebecca Lindland, in reference to Tesla’s sales model. “You control the customer experience and the price and you don’t have to split your profits with another business. But you are spending important resources on retailing rather than on designing and manufacturing cars.”
Automotive.com’s takes: Dealerships are just to drive cars? No haggling, no hours wasted negotiating so-called “best price?” Where do we sign up!
Source: The Republic