Why Tesla's Direct approach to sales will fail

[mark360]

Just to add... years ago my dad (who was in his late sixties) bought a VW, ordered and paid for anti-lock brakes, back in the day when it was an option. This was Vermont, with their tough winters. I found that his car didn't actually have ABS and the dealer basically told him, too bad. I called VW North America and they explained they have zero legal control over their dealers, as this was regulated by each state. Their dealers could do whatever they wanted. An hour later I got a call from someone further up the VW food chain who was outraged. VW by-passed the dealership, took my dad's car back and gave him a new one with ABS.

When the manufacturer is their own "dealer", theoretically they will find themselves needing to be just as responsive as that great guy at VW North America.

Disagree. Sorry for that terrible experience!

I drove off the lot in my Tesla with multiple paint issues, which upon letting the delivery adviser of the location know, just told me to "email xxx and they will set up a body shop to go to". I did that and never got an email, but I never pursed it further. My service experience over the last year and a half has been terrible as well.

I was one of the tens of thousands who encountered the same exact experience. A rushed delivery, cars not inspected, multiple paint defects, wrong VIN, etc.

The issue with Tesla managing all aspects of their business is it actually becomes more difficult to be great at it all. Tesla has a great car, but they're trying to do to much.

Service is the worst out of any car dealership I've been to, delivery was the worst, car fit and finish was the worst. Tesla needs to drop the service and delivery side of the business and focus on fixing the fit and finish of the car.

When I first got my 3, I thought the interior build quality was great. After owning it for a year and a half, and hearing all the unfix-able squeaks develop, I've now decided otherwise. They really need to fix their manufacturing build quality and 3rd party out the sales/service to a dealership.

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[mark360]

Agree. Dealerships are very accommodating places.

 

[eastern refugee]

you have said it the best and explained it right. Thank you.

 

[eastern refugee]

I have been buying my cars from the same ford dealership since 2006. I have bought 13 cars in total. I have gone to several Tesla dealerships and told them let me think about it. I got zillions of emails buy now we will set up another drive test. Buy now we have this one available. It was crazy. When I go into my ford service center they have free fruit to snack on and free bottled water to drink. Comfortable lounging chairs to watch tv and several computers with head sets if you want to use them. There is an electronic board on the wall telling everyone that your car is in service and exactly how much time is left before your car is finished. In short the experience is great. Yes dealerships make their money off of service because on the average new car Ford dealers make approximately $1500 dollars. Maintenance is everything. I go to two different dealerships for service and both are PHENOMENAL. the ONLY time I have to go to a dealer is for oil and typical maintenance. The car itself is great. One time on my 2015 edge I had issues with the phone staying connected. I went to the dealer and the service advisor told me to go relax and come back in an hour. He did the service himself. BOOM in an hour it was done. He explained that he had to reset this and that and fit it four times to make sure it was right. He said he did it himself so I would not be there longer for a simple issue. In short I hate having to go to service because it means taking time off on a Saturday to do it. I do know that it will be done and fine. I live the concept of the Mach E so that I get to keep ALL of my saturdays. I have many clients with Tesla’s and none of them 6 months later say much. They actually sound apprehensive and almost trying to justify their reason for buying it. I have never owned one but the feeling I get is that Tesla sales people are extremely knowledgeable and truly better then Ford sales people but after the great sales pitch they have buyers remorse. I ALWAYS know more about the ford that I am buying then the salesman. But I buy fords strictly because I know that the car is well built and I will have little to zero problems with it. When I do their service is far better then the salesman.

 

[Ken7]

Actually Tesla has no 'dealerships' per se, they have 'boutiques' and rarely are sales conducted there. Most sales are conducted online just as the initial ME sales have been. Now agreed that having service performed at a Tesla Service Center can be a bit of a hassle depending upon where you live, but are you aware that Tesla can often come to your home and perform service right there!

I had that done for a clogged windshield washer line. I set up an appointment and a Tesla Service Van came right to my garage and performed the service. The tech was extremely knowledgeable and couldn't have been any nicer.

So again, perspective is a good thing. You can hear horror stories about Tesla service and many times that can be true, but the excellent service stories often get buried.

 

[cometguy]

I have been to dozens of dealerships over the decades, with many cars. Yes, some are fine. But most suck big-time. There's no brand that has a dealership that doesn't suck, big-time; on the flip side, every brand surely has a dealership or two (or more) that give excellent service and work hard to please their customers. But it's very uneven, and the bad ones far out-number the good ones, in my experience, spanning a bunch of US states. And pretty universally, it sounds like dealership salesmen on commission are treated pretty bad by their mega-rich dealership owners, and thus there is a high turnover rate, and lack of stability -- all of which is entirely visible to the customers and which turns customers off. Owners generally don't assure that their salesmen know the cars that they are selling; perhaps the owners know they won't be around long, but the owners evidently are in bubbles detached from the "lowly" poorly-paid salesmen in their businesses or they are just horrible businessmen, period. Becoming mega-millionaires at owning a car dealership (or at owning ANY business -- just look at Trump) does not make them good businessmen; it just makes them good at exploiting many other people to their own advantage.

Musk is no angel in this area, either. But he has the right idea in eliminating commissions for sales reps. There's no perfect answer to this mess. But I think that the business model that Tesla is using is better than the dealership model, as practiced. Yeah, as people on this thread have written, lots about Tesla's service and build quality sucks. But there's got to be some middle ground where we can take the best of both sides and make a better way to sell and service cars for everybody. Polestar is one such example, and it will be interesting to see how they fare with the Polestar 2 coming out later this year; I understand that they'll have both Polestar showrooms and will also have selected Volvo dealerships to show their cars, allow test drives, and have servicing.

It will be truly interesting to see how Ford dealerships end up supporting (or not supporting) the Mach-E and subsequent Ford BEVs. Some enlightened dealership owners may embrace the Mach-E fully and really try to get their salesmen and service men onboard; others may feel that BEVs like the Mach-E will hurt their dealership because they won't need servicing nearly as often as Ford ICEVs do. Generally, ICEV dealerships have been loathe to promote PHEVs or BEVs that their manufacturer produces. One exception that I see is Porsche, which has provided demo models of their new Taycan to all dealerships (with the mandate that each dealership must always have at least one Taycan for test-drives, so that if they have only the one, it cannot be sold -- but new ones can be ordered) and is sending every single salesman to California for a week of learning about the Taycan and actually driving it. Hopefully Ford will follow in Porsche's footsteps with their commitment to BEVs, starting right away with the Mach-E.

 

[Ken7]

Becoming mega-millionaires at owning a car dealership (or at owning ANY business -- just look at Trump) does not make them good businessmen; it just makes them good at exploiting many other people to their own advantage.

Oh please, spare me. Why must people inject politics into these discussions when you know you’ll probably turn off 1/2 of the readers. It never ends.

 

[mark360]

People still fail to understand that instead of an individual in your town that gives to charity and adds to the local economy.... it goes to into the pocket of elon musk. I would much rather have many multi millionaires in my town vs the mega rich billionaires like elon musk.

Tesla has to make the same margin the dealerships do. That doesn't change. All they're doing differently is using salaried workers to sell cars erm I mean show the cars.

The only way we would save money is if tesla drove the car from the factory straight to our door and no one needed financing, trade ins, etc. If that's the type of buying experience you enjoy, which is the level Tesla is trying to achieve, then good luck. I don't enjoy that.

That type of experience is called the auto auction and a reason why cars get sold for whole sell pricing.

 

[jlauro]

I have been to dozens of dealerships over the decades, with many cars. Yes, some are fine. But most suck big-time. There's no brand that has a dealership that doesn't suck, big-time; on the flip side, every brand surely has a dealership or two (or more) that give excellent service and work hard to please their customers. But it's very uneven, and the bad ones far out-number the good ones, in my experience, spanning a bunch of US states. And pretty universally, it sounds like dealership sale

Perhaps I am lucky, or maybe it's the part of the country I am in, but so far I have had only good luck with new car dealerships. Used car dealers are more of a mixed bag... In this day it's a lot easier to get online reviews and ratings from several different places and to avoid a bad dealer than 40 years ago. Generally I will only consider a dealer unless it has at least a 4.0 rating with over 100 reviews, and typically most of the dealers have a rating over 4.5/5.

 

[eastern refugee]

I love my dealership. Never had an issue with Ford. I get snacks free and water and chill out in a comfortable lounge chair and listen on my air pods. If you do not like your dealership go to another. We on here have all said that dealerships make their money in their service department. If you do not like yours then find another. I drive 100 miles to go to mine. Sure there are closer ones but I love sitting on a lounger under a palm tree shaded and free sodas. If I want I can walk and get a Starbucks inside the dealership. They also have a REAL restaurant with AWESOME food including steak and lobster. Sure they are lonely the only one but they obviously value their customers. My local one has free fruit comfortable chairs and water. I drive cause I am VERY fond of their strawberry shortcake.

 

[Ken7]

Huh? Service Centers are one part of Tesla and the boutiques are another. You don't order a car at a Service Center, you get your car serviced there. If I wanted to I can't order a car at my Service Center, but I can at one of the mall 'boutiques'. Bottom line is the overwhelming majority of orders are online. That's a fact any way you'd like to twist it.

 

[Ken7]

Tesla simply does not have the same 'sales model' as traditional car companies. How could you not know this? Are you aware that the traditional car companies have lobbyists in most states that prevent Tesla from opening dealerships in numbers where they can compete with the traditional car companies? The overwhelming number of orders are online.

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