Time to ditch the dealers!?!
11-30-2018, 10:22 AM
#1
Time to ditch the dealers!?!
It’s time for Porsche/VW to ditch the dealership sales model for EVs and allow direct to consumer sales online with regional service centers. The dealerships makes sense with ICE vehicles which are tethered to the parts and service departments but not so much with EVs’ limited service needs and over the air updates. Dealerships are unnecessarily inserted into the sales process and simply make it more difficult, confusing and expensive for consumers to purchase the vehicles with their varying policies, procedures and markups. Plus, we all know how pleasant it is to deal with most sales departments.
Anyone else agree?
Anyone else agree?
11-30-2018, 12:26 PM
#2
Burning Brakes
I have mixed feelings on this. My Porsche dealership has been excellent to work with. Most other cars brands I've dealt with have been your typical slimy dealership, but having someone to speak with in person has typically been beneficial.
I just order my first Tesla several weeks ago and so far the buying experience has been frustrating. The test drive and ordering process went smoothly, but getting a trade-in value for my wife's Volvo and any follow up questions have been difficult. It's not a huge improvement over the traditional dealership model. Biggest benefit was no negotiating on price, so you don't have to play games.
At the end of the day, customer service is still required for both business models, and in my opinion makes or breaks the business.
I just order my first Tesla several weeks ago and so far the buying experience has been frustrating. The test drive and ordering process went smoothly, but getting a trade-in value for my wife's Volvo and any follow up questions have been difficult. It's not a huge improvement over the traditional dealership model. Biggest benefit was no negotiating on price, so you don't have to play games.
At the end of the day, customer service is still required for both business models, and in my opinion makes or breaks the business.
11-30-2018, 02:05 PM
#3
The question comes after some loose talk of Audi dealers not stocking EVs for “lack of demand.” Probably not a Porsche problem per se, but maybe an industry problem?
What could be done to make online trade ins easier?
What could be done to make online trade ins easier?
11-30-2018, 03:35 PM
#4
Burning Brakes
It is an industry problem. If Tesla had tried marketing their Roadsters through dealers 10 years ago, they would have gone out of business 9.5 years ago. ("Why buy that $100K Tesla, when you could get this nice $80k whatever...") As a Volt owner I've heard MANY stories of potential Volt customers being steered by sales droids over to other cars. And if the prospect insists on a test drive, often the car is in the back of the lot, unwashed, and isn't even charged up... Many dealers don't understand plug-in cars, and they don't even _want_ to understand plug-in cars.
In fact it was the avoidance of dealerships which led to Teslas whole over-the-air diagnostic and software update features. It kinda came for free since they used Linux to control the car. (One of my neighbors did the original Linux port to the Roadster.) That has turned into a fairly major feature. E.g., a 2012 Model S can generally run the latest software with the latest fixes and features (as hardware allows). Whereas any other 2012 car is basically stuck as a snapshot in time. If you want some annoying bug fixed, or newer UI that is in a newer model, the manufacturer and dealer will tell you to trade the car in on the newer model year.
I traded in a 2006 MB when I bought my Model 3. The process wasn't that bad. Take a few photos, upload them to an on-line form, and answer a few questions. They got back to me within 24 hours with an offer. I also took the car over to Carmax for a comp. Tesla beat Carmax by a few hundred, so I went with Tesla. When I took delivery on the Model 3, they had a person look at my trade-in to make sure it was what I represented it as and the deal was done. BTW, I don't miss the MB at all.
In fact it was the avoidance of dealerships which led to Teslas whole over-the-air diagnostic and software update features. It kinda came for free since they used Linux to control the car. (One of my neighbors did the original Linux port to the Roadster.) That has turned into a fairly major feature. E.g., a 2012 Model S can generally run the latest software with the latest fixes and features (as hardware allows). Whereas any other 2012 car is basically stuck as a snapshot in time. If you want some annoying bug fixed, or newer UI that is in a newer model, the manufacturer and dealer will tell you to trade the car in on the newer model year.
I traded in a 2006 MB when I bought my Model 3. The process wasn't that bad. Take a few photos, upload them to an on-line form, and answer a few questions. They got back to me within 24 hours with an offer. I also took the car over to Carmax for a comp. Tesla beat Carmax by a few hundred, so I went with Tesla. When I took delivery on the Model 3, they had a person look at my trade-in to make sure it was what I represented it as and the deal was done. BTW, I don't miss the MB at all.
11-30-2018, 06:02 PM
#5
Many manufacturers want to sell directly to the public but it is against the law in most (if not all states). Supposedly 100 years ago when the 1st car dealerships came about, franchise dealers were finding it impossible to compete with manufacturer-owned dealerships. As a result, a fair competition law was passed stating that a manufacturer cannot sell directly to the public if they have an independently owned franchise present in that state.
Tesla never had any existing, independently-owned dealerships so they were free to sell directly to the public from the start. Many states are still trying to stop Tesla from selling directly as it will kill the entire dealership business model. I believe Texas and a few other states have forbidden Tesla from selling directly in their state and Tesla is lobbying those states for the right to sell directly to the public.
A more detailed explanation of what I summarized above:
http://alloveralbany.com/archive/201...-a-car-company
Tesla never had any existing, independently-owned dealerships so they were free to sell directly to the public from the start. Many states are still trying to stop Tesla from selling directly as it will kill the entire dealership business model. I believe Texas and a few other states have forbidden Tesla from selling directly in their state and Tesla is lobbying those states for the right to sell directly to the public.
A more detailed explanation of what I summarized above:
http://alloveralbany.com/archive/201...-a-car-company
12-01-2018, 05:45 PM
#6
I had to deal with a number of GM car dealers here in Oshawa/Whitby, Ontario, I can tell you it has been a terrible experience, I even had a dealer tell me direct lies to get me to buy what he wanted to sell.
However, I hear very few bad things said about Porsche dealers, I think they can do the job of selling electric cars and do it well.
Earl Colby Pottinger (Tesla and Bollinger fan)
However, I hear very few bad things said about Porsche dealers, I think they can do the job of selling electric cars and do it well.
Earl Colby Pottinger (Tesla and Bollinger fan)
12-02-2018, 01:27 PM
#7
It’s time for Porsche/VW to ditch the dealership sales model for EVs and allow direct to consumer sales online with regional service centers. The dealerships makes sense with ICE vehicles which are tethered to the parts and service departments but not so much with EVs’ limited service needs and over the air updates. Dealerships are unnecessarily inserted into the sales process and simply make it more difficult, confusing and expensive for consumers to purchase the vehicles with their varying policies, procedures and markups. Plus, we all know how pleasant it is to deal with most sales departments.
Anyone else agree?
Anyone else agree?
· Tesla – 350 Global – 150 USA
· Porsche – 600 Global – 189 USA
· Mercedes – 600 Global – 368 USA
· Audi - - 600 Global – 290 USA
Tesla’s direct marketing strategy is a total financial loser when compared to the existing dealer networks that all the major manufacturers have established. On a global scale those roughly 300 Tesla showroom/ serve centers have to be creating an overhead cost in excess of $500 Million annually when real estate, labor costs, and taxes are calculated.
Now for Tesla, Elon reinvented the wheel and went to a direct to customer model, as he had no other choice. There are benefits to direct channels but the initial and reoccurring costs are daunting. All the real estate, whether it’s a sales or service center falls on Tesla, and then add all the labor costs for sales and service, equipment to service vehicles, and let’s not forget inventory costs for loaner vehicles and sales inventory. In aggregate this is a large number for SG&A on the Tesla balance sheet. Personally I think if Tesla starts to lose market share this is going to be a key metric that Wall Street will look at that will really hurt Tesla from a profitability standpoint going forward into the future. These are fixed costs that get ugly if sales stagnate or go down.
Tesla’s competitors in the luxury market dwarf the Tesla channel significantly. Most importantly all the European brands have major foot prints in China, to the extent that the China market is already their #1 or #2 market on a global basis.
As the major luxury brands create EV’s for the segment, they have a huge advantage it terms of cost and being able to recognize and control revenue. The BEV’s are just another vehicle to send through an existing distribution pipeline. Once the BEV hits the dealer lot the manufacturer invoices the dealer and is paid. The dealer is responsible all for inventory costs, operation of the dealership to include real estate costs & all labor costs. Yes, there are warranty costs but those are a shared cost between the dealer & manufacturer. The dealer does make significant profits servicing out of warranty vehicles but the manufacture makes significant monies selling parts to the dealer channel.
In the dealer model, the manufacturer has no costs for real estate, labor, etc. Per the excerpt below, Porsche is telling its dealers that they have to buy the charging stations from Porsche, and install them at their own cost. That’s roughly $75 million in costs that Porsche moved onto their dealers.
Porsche Cars North America CEO Klaus Zellmer told Automotive News that they are ramping up the effort to 700 charging stations.
“The company wants its U.S. dealers to pay an estimated $300,000 to $400,000 per store on average to install 200 of those charging stations.”
If a dealer balks at investing in BEV infrastructure as in the case of Porsche the outcome is 100% certain. Porsche would utilize the dealership contract and simply pull the dealership rights and “SELL THEM” to another interested entity looking for a Porsche dealership.
Anyone thinking that Porsche or any other major auto manufacturer is going to abandon their dealer network is simply delusional.
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12-03-2018, 04:42 PM
#8
I believe the OP is totally wrong. After some searching on the web below are the approximate numbers of “Dealers “for each of the main European compotators and Tesla:
· Tesla – 350 Global – 150 USA
· Porsche – 600 Global – 189 USA
· Mercedes – 600 Global – 368 USA
· Audi - - 600 Global – 290 USA
Tesla’s direct marketing strategy is a total financial loser when compared to the existing dealer networks that all the major manufacturers have established. On a global scale those roughly 300 Tesla showroom/ serve centers have to be creating an overhead cost in excess of $500 Million annually when real estate, labor costs, and taxes are calculated.
Now for Tesla, Elon reinvented the wheel and went to a direct to customer model, as he had no other choice. There are benefits to direct channels but the initial and reoccurring costs are daunting. All the real estate, whether it’s a sales or service center falls on Tesla, and then add all the labor costs for sales and service, equipment to service vehicles, and let’s not forget inventory costs for loaner vehicles and sales inventory. In aggregate this is a large number for SG&A on the Tesla balance sheet. Personally I think if Tesla starts to lose market share this is going to be a key metric that Wall Street will look at that will really hurt Tesla from a profitability standpoint going forward into the future. These are fixed costs that get ugly if sales stagnate or go down.
Tesla’s competitors in the luxury market dwarf the Tesla channel significantly. Most importantly all the European brands have major foot prints in China, to the extent that the China market is already their #1 or #2 market on a global basis.
As the major luxury brands create EV’s for the segment, they have a huge advantage it terms of cost and being able to recognize and control revenue. The BEV’s are just another vehicle to send through an existing distribution pipeline. Once the BEV hits the dealer lot the manufacturer invoices the dealer and is paid. The dealer is responsible all for inventory costs, operation of the dealership to include real estate costs & all labor costs. Yes, there are warranty costs but those are a shared cost between the dealer & manufacturer. The dealer does make significant profits servicing out of warranty vehicles but the manufacture makes significant monies selling parts to the dealer channel.
In the dealer model, the manufacturer has no costs for real estate, labor, etc. Per the excerpt below, Porsche is telling its dealers that they have to buy the charging stations from Porsche, and install them at their own cost. That’s roughly $75 million in costs that Porsche moved onto their dealers.
Porsche Cars North America CEO Klaus Zellmer told Automotive News that they are ramping up the effort to 700 charging stations.
“The company wants its U.S. dealers to pay an estimated $300,000 to $400,000 per store on average to install 200 of those charging stations.”
If a dealer balks at investing in BEV infrastructure as in the case of Porsche the outcome is 100% certain. Porsche would utilize the dealership contract and simply pull the dealership rights and “SELL THEM” to another interested entity looking for a Porsche dealership.
Anyone thinking that Porsche or any other major auto manufacturer is going to abandon their dealer network is simply delusional.
· Tesla – 350 Global – 150 USA
· Porsche – 600 Global – 189 USA
· Mercedes – 600 Global – 368 USA
· Audi - - 600 Global – 290 USA
Tesla’s direct marketing strategy is a total financial loser when compared to the existing dealer networks that all the major manufacturers have established. On a global scale those roughly 300 Tesla showroom/ serve centers have to be creating an overhead cost in excess of $500 Million annually when real estate, labor costs, and taxes are calculated.
Now for Tesla, Elon reinvented the wheel and went to a direct to customer model, as he had no other choice. There are benefits to direct channels but the initial and reoccurring costs are daunting. All the real estate, whether it’s a sales or service center falls on Tesla, and then add all the labor costs for sales and service, equipment to service vehicles, and let’s not forget inventory costs for loaner vehicles and sales inventory. In aggregate this is a large number for SG&A on the Tesla balance sheet. Personally I think if Tesla starts to lose market share this is going to be a key metric that Wall Street will look at that will really hurt Tesla from a profitability standpoint going forward into the future. These are fixed costs that get ugly if sales stagnate or go down.
Tesla’s competitors in the luxury market dwarf the Tesla channel significantly. Most importantly all the European brands have major foot prints in China, to the extent that the China market is already their #1 or #2 market on a global basis.
As the major luxury brands create EV’s for the segment, they have a huge advantage it terms of cost and being able to recognize and control revenue. The BEV’s are just another vehicle to send through an existing distribution pipeline. Once the BEV hits the dealer lot the manufacturer invoices the dealer and is paid. The dealer is responsible all for inventory costs, operation of the dealership to include real estate costs & all labor costs. Yes, there are warranty costs but those are a shared cost between the dealer & manufacturer. The dealer does make significant profits servicing out of warranty vehicles but the manufacture makes significant monies selling parts to the dealer channel.
In the dealer model, the manufacturer has no costs for real estate, labor, etc. Per the excerpt below, Porsche is telling its dealers that they have to buy the charging stations from Porsche, and install them at their own cost. That’s roughly $75 million in costs that Porsche moved onto their dealers.
Porsche Cars North America CEO Klaus Zellmer told Automotive News that they are ramping up the effort to 700 charging stations.
“The company wants its U.S. dealers to pay an estimated $300,000 to $400,000 per store on average to install 200 of those charging stations.”
If a dealer balks at investing in BEV infrastructure as in the case of Porsche the outcome is 100% certain. Porsche would utilize the dealership contract and simply pull the dealership rights and “SELL THEM” to another interested entity looking for a Porsche dealership.
Anyone thinking that Porsche or any other major auto manufacturer is going to abandon their dealer network is simply delusional.
When one buys an ICE car, one is entering a relationship with the dealer, for better or worse, because they require constant maintenance. EV just don’t. So why are dealers inserted into the process? Why do we need to cross shop? Why do they all have different deposit schemes and lists for every model? Additional dealer markup? Extended warranties? Ushering customers to high markup vehicles? Plus all of the other games!?! Let the dealers sell only the ICE vehicles, it’s what they know.
12-03-2018, 05:22 PM
#9
Rennlist Member
like everything there are pros and cons
I think Digital tends to drive out middle men jobs that add no value, that being said a reliable/staffed "service" network is a requirement for any car manufacturer, although there is less service for an EV
dealers are entrenched political interested with lots of decent paying blue collar jobs, it's not a good plan to try and disenfranchise those people, but I agree most dealer experiences are horrible…
Tesla is making a go of it, but with mixed results
overtime I see consolidation happening, but there will have to be service centers and those can also sell cars, but more and more online configuration and ordering may happen.
I agree with the configure the car and click the 'buy now' button - it's been a great way to purchase my 5 Tesla's - really really much better than dealing with any dealership.
I think Digital tends to drive out middle men jobs that add no value, that being said a reliable/staffed "service" network is a requirement for any car manufacturer, although there is less service for an EV
dealers are entrenched political interested with lots of decent paying blue collar jobs, it's not a good plan to try and disenfranchise those people, but I agree most dealer experiences are horrible…
Tesla is making a go of it, but with mixed results
overtime I see consolidation happening, but there will have to be service centers and those can also sell cars, but more and more online configuration and ordering may happen.
I agree with the configure the car and click the 'buy now' button - it's been a great way to purchase my 5 Tesla's - really really much better than dealing with any dealership.
12-03-2018, 05:44 PM
#10
Rennlist Member
Porsche's North America CEO praises Tesla, says its production volume is 'truly astonishing' - Business Insider
Porsche North America CEO Klaus Zellmer complimented Tesla in an interview with The Los Angeles Times published on Friday, calling the automaker's pricing and production level "astonishing."
"If you look at what Tesla has done, if you look at their volume and look at their price level, it's truly astonishing," Zellmer told The Times. "If you can do that with one brand and a sales network that is not comprised of dealers and a real sales organization, it's even more astonishing."
Read more: 5 reasons why Elon Musk should rescue a GM factory in Ohio
Tesla has increased its rate of production since introducing its Model 3 sedan, which is less expensive than the automaker's other vehicles, in 2017. The first year of Model 3 production was subject to significant delays, though the vehicle played a large role in Tesla reaching an all-time high in quarterly production, 80,142 vehicles, during the third quarter of this year. The automaker has said the base version of the Model 3 will at some point cost $35,000, though the vehicle currently starts at $46,000.
Tesla's approach to sales stands apart from the rest of the auto industry's. Rather than licensing the right to sell its vehicles to independent dealerships, the automaker operates company-owned stores. In bypassing traditional dealerships, Tesla has run into trouble in some states, like Texas and Michigan, that forbid auto companies from selling their vehicles directly to customers
Porsche is preparing to begin production of a rival to Tesla's Model S sedan, the Taycan, in 2019. The automaker has said the Taycan will be able to drive at high speeds for a longer amount of time than the Model S.
Porsche North America CEO Klaus Zellmer complimented Tesla in an interview with The Los Angeles Times published on Friday, calling the automaker's pricing and production level "astonishing."
"If you look at what Tesla has done, if you look at their volume and look at their price level, it's truly astonishing," Zellmer told The Times. "If you can do that with one brand and a sales network that is not comprised of dealers and a real sales organization, it's even more astonishing."
Read more: 5 reasons why Elon Musk should rescue a GM factory in Ohio
Tesla has increased its rate of production since introducing its Model 3 sedan, which is less expensive than the automaker's other vehicles, in 2017. The first year of Model 3 production was subject to significant delays, though the vehicle played a large role in Tesla reaching an all-time high in quarterly production, 80,142 vehicles, during the third quarter of this year. The automaker has said the base version of the Model 3 will at some point cost $35,000, though the vehicle currently starts at $46,000.
Tesla's approach to sales stands apart from the rest of the auto industry's. Rather than licensing the right to sell its vehicles to independent dealerships, the automaker operates company-owned stores. In bypassing traditional dealerships, Tesla has run into trouble in some states, like Texas and Michigan, that forbid auto companies from selling their vehicles directly to customers
Porsche is preparing to begin production of a rival to Tesla's Model S sedan, the Taycan, in 2019. The automaker has said the Taycan will be able to drive at high speeds for a longer amount of time than the Model S.
12-05-2018, 10:56 AM
#11
RL Community Team
Rennlist Member
Rennlist Member
Times are getting interesting.
As someone who serial shops cars, I can tell you that even at "luxury brand" dealers, at least 50% of the sales people there suck / are full of **** / are incompetent. Go to a non-luxury brand and the experience is generally woeful, especially if it is owned by a national dealer chain. I have encountered good service at independently owned shops / minor regional chains. But even with good service, the $ put into the dealership facilities is lacking.
Overall, the dealer experience is not good.
But then again, that's the same of most retail. Which is why more and more people have migrated to buying online. Forget just the convenience, people don't want to have their time wasted by some idiot who knows less than them. Or they think knows less than them anyway.
The dealer is going to be around for a while. Cars, even EV's will need to be serviced. Hell, that's where most of the $$ comes from anyway. Smart dealers or brands will use web tools to help the ordering process. It will come. But some habits are hard to break, until a very smart and very convincing person demonstrates how you can make more money that way.
As someone who serial shops cars, I can tell you that even at "luxury brand" dealers, at least 50% of the sales people there suck / are full of **** / are incompetent. Go to a non-luxury brand and the experience is generally woeful, especially if it is owned by a national dealer chain. I have encountered good service at independently owned shops / minor regional chains. But even with good service, the $ put into the dealership facilities is lacking.
Overall, the dealer experience is not good.
But then again, that's the same of most retail. Which is why more and more people have migrated to buying online. Forget just the convenience, people don't want to have their time wasted by some idiot who knows less than them. Or they think knows less than them anyway.
The dealer is going to be around for a while. Cars, even EV's will need to be serviced. Hell, that's where most of the $$ comes from anyway. Smart dealers or brands will use web tools to help the ordering process. It will come. But some habits are hard to break, until a very smart and very convincing person demonstrates how you can make more money that way.
12-05-2018, 02:11 PM
#12
Too true
But then again, that's the same of most retail. Which is why more and more people have migrated to buying online. Forget just the convenience, people don't want to have their time wasted by some idiot who knows less than them. Or they think knows less than them anyway.
Most salespeople SUCK at their job, but management is to blame too. Too often management will not pay for the needed training either.
12-07-2018, 06:46 PM
#13
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I do personally like my local dealership (Porsche Centre Oakville). They’ve always treated me well. Their sales people are knowledgeable and never pressure me into buying something I don’t want. Their service department always makes things right, making me willing to pay the premium.
Dealerships cost money to run. They have building costs, inventory financing costs, staff costs, loaner vehicles, perks to customers etc. If you have manufacturer owned dealerships, you’d just be passing these costs onto the manufacturer, not eliminating them. I don’t think it’ll significantly lower the cost of the vehicles.
I also like the competition between dealers and the possibility to negotiate, though I respect some people preferring a rigid “no haggle” policy.
Regarding service, while you don’t have annual oil changes, repairs are still needed time to time. At least in my experience, 75%+ of repairs in my various ICE vehicles have been in non-powertrain components (infotainment, power seats/windows/locks etc, plastic trim pieces cracking or rattling, cleaning leaves and debris out of places, suspension components, backup camera and sensors, climate control). These repairs would still be needed on an electric car. Perhaps more such repairs may be needed as cars become more complex.
With that said, I will say that my experience with several non-Porsche dealerships has not been so positive. My local ford dealer delivered me a car with a door ding that I didn’t notice till I brought it home, and they were problematic in dealing with to fix the issue. My local M-B dealer seems incompetent with non-powertrain repairs, at least on ancient cars. However, I don’t think a manufacturer owned dealership would solve this. If anything, dealing with a large company that doesn’t negotiate or make concessions may be worse when you encounter an issue.
Dealerships cost money to run. They have building costs, inventory financing costs, staff costs, loaner vehicles, perks to customers etc. If you have manufacturer owned dealerships, you’d just be passing these costs onto the manufacturer, not eliminating them. I don’t think it’ll significantly lower the cost of the vehicles.
I also like the competition between dealers and the possibility to negotiate, though I respect some people preferring a rigid “no haggle” policy.
Regarding service, while you don’t have annual oil changes, repairs are still needed time to time. At least in my experience, 75%+ of repairs in my various ICE vehicles have been in non-powertrain components (infotainment, power seats/windows/locks etc, plastic trim pieces cracking or rattling, cleaning leaves and debris out of places, suspension components, backup camera and sensors, climate control). These repairs would still be needed on an electric car. Perhaps more such repairs may be needed as cars become more complex.
With that said, I will say that my experience with several non-Porsche dealerships has not been so positive. My local ford dealer delivered me a car with a door ding that I didn’t notice till I brought it home, and they were problematic in dealing with to fix the issue. My local M-B dealer seems incompetent with non-powertrain repairs, at least on ancient cars. However, I don’t think a manufacturer owned dealership would solve this. If anything, dealing with a large company that doesn’t negotiate or make concessions may be worse when you encounter an issue.
12-08-2018, 03:34 AM
#14
And we will not bother with used car dealers.
Earl Colby Pottinger (Tesla & Bollinger fan)
12-17-2018, 06:42 PM
#15
I imagine most people do not know that around 1980 Porsche wanted to sell their cars directly and only have dealers as service centers. At the time Volkswagen of American was the distributor for Porsche in the US and it had the contractual relationship with the dealers to supply them with the cars. Porsche notified VOA that they were going to terminate their relationship with them and VOA was in deep trouble as their relationship with the dealers failed to state that they would supply them with cars only so long as they were the distributors for Porsche. So VOA was on the hook for the loss of income of the dealers for their inability to supply them with cars. VOA did some serious begging with Porsche and Porsche gave in allowing them to remain the distributor for the remaining period of their contracts with the dealers. Eventually Porsche decided to keep the dealers but they would distribute the cars themselves, etc.