How Tesla Transformed the Future of Car Dealerships

by Denis Gurskiy

If there’s a single thing that will bring us all together it’s our combined hatred towards the traditional car buying experience. Everything from the process to the outcome, for lack of better words, sucks. It’s the retail equivalent of spending the day at the ER.

With a car dealership background I can honestly say I know more than most. The average person is clueless on the subject of new cars, let alone electric cars. For the most part, they go into a car purchase blind. They might know what color they want and how many doors they need, but that’s just about it. They spew out a few buzzwords every now and then to seem knowledgeable and unscamable. It doesn’t work.

Not you, you read an EV blog, you know your stuff. You’ve been scouring the web for the best prices out there. You’ve configured your next car online and know exactly what you want, down to the exact options.

The Experience

You step foot on a lot and are instantly prowled by a scummy salesperson looking for his next mortgage payment. Oddly enough, you know more about your inquired vehicle than he does. Your thoughts go unanswered and misinformation fills the air. You question the responses, his morals, and life as a whole. The salesperson’s just there to make the already dreadful experience that much worse.

You guessed it, the car in your preferred specifications isn’t available. You called prior, you checked the dealerships website, you were assured it would be there, it’s not. But they got you in the door and that’s all that matters to them. Now you can either continue your search elsewhere, settle on another similar vehicle, wait a few days for a dealer trade, or wait months on a custom order. Simply because you despise this process, you want it over with as quickly as possible.

Juggling you around from one employee to another with a smile that says “I hate this process as much as you”, you’re just waiting on the unknown. Facebook, Instagram, Twitter, it’s all checked and caught up. What now? Refusing to make any actual human interaction (ew) you watch the scratchy local channel on that sweet 42” screen and grab yourself a free watered down coffee in a shot-glass sized Styrofoam cup. You start to think “do I even want a new car?” Right then, As you question your actual needs, they come to harass you. Never leaving you enough time to think your decisions over.

Then the numbers come. As it turns out, everything you know is a lie. Your new car will cost significantly more than the advertised selling price. They’ll call it “mislabeled” and add another grand in dealer fees. Fees you simply pay for this luxurious and prime experience. You can haggle your heart away, but you aren’t walking away with a new car without first making them happy.

For the next hour you’re pitched 3rd party warranties, GAP, and unnecessary insurances. All of which will be valueless once you break some fine printed exclusion. You don’t understand half of what any of it means, but they’re very persistent. You probably got a few.

You end up buying, maybe you don’t, regardless it sucked. In no knowledgeable scenario do you leave satisfied. The dealership laughs their way to the bank while you lie to yourself about it all. Thankfully you won’t have to experience it again for years to come. Maybe if it didn’t suck so much you’d buy new cars more frequently.

This hits close to home because it’t the most common case out there. It’s shared by thousands of unsettled customers daily across the U.S. Fun fact: The average time spent at a dealership when buying a car is over 3 hours long.

The Tesla Experience

If you’ve bought a Tesla recently you already know the odds of you going back to a traditional dealership are slim to none. Just like driving electric closed your eyes to outdated fossil fuel vehicles, the new, simplified, Tesla dealership buying process opened worlds.

With a few taps of the screen your new car is ordered. You submit a credit application alongside a few digital signatures and wait for your approval. It’s done, your pickup date is scheduled. Using your cellphone just take a few photos of some required documentation and send them over.

On the day of delivery you show up to the Tesla dealership excited to see your new car on display. You hand over any required physical documents, sign a couple of lines, and drive off into the sunset. You just bought a car in the future. Total time taken from your life: approximately 15 minutes. And people wonder why Tesla has the highest customer loyalty rate.

One price, no haggling, and no one is pushing you for commission. You get exactly what you wanted at the exact price told to you. It’s almost perfect… too perfect.

The Problem

Tesla works a bit different from traditional automakers. With the direct sales method they skip franchises altogether. This allows for better control over their brand experience and lower prices.

Staff is payed on salary making commission sales a thing of the past. Rather than just lying to you for a quick sale, knowledgeable specialists are there to inform you on the product and it’s many benefits. Everything else is done over the internet leaving your time at the Tesla dealership to a minimum.

See, legacy automakers don’t sell cars to consumers. Instead, they sell their vehicles in bulk to privately owned franchise dealers. These dealerships will then add 10-15% on top of the advertised purchase price to make their ends meet. Sales staff are paid commission as a percent of the profits.

This outdated practice isn’t fond by many, but it’s required. Tesla’s direct sales method is actually restricted, limited, or banned in 48 states. You get a clear view of that in Texas.

“You can visit one of the two galleries Tesla Motors operates in the state — one in Austin, the other in Houston — but employees can’t tell you how much the car costs. They can’t offer you a test drive. They can’t even give you their website address. And if you buy one, the car is delivered by a third party — in a truck that’s not allowed to have Tesla markings.”

Auto manufacturers actually want to sell cars like Tesla, but they can’t. These regulations are backed by the thousands of “small business” franchise owners. NADA (National Automobile Dealer Association) is constantly lobbying against the direct sales method. Nothing seems to be changing in the near future but that hasn’t stopped Tesla from making industry leading changes.

The Future

Tesla is still a growing company and with that comes some growing pains. Many will argue that their sales method leads to an unwanted extended delivery time. Simply put, that’s not true. Today, Tesla’s demand still outpaces their production capabilities. When possible, they could easily buy up empty lots and store an excess of inventory around the country. This could lead to the same same-day purchase experience found at traditional dealerships while remaining dealer-free. Tesla’s lack of available inventory is not a sales problem, it’s a demand problem. They have too much to keep up with.

The Tesla Dealership overall better experience is not due to a line between direct sales and a franchise network. Any dealership or even manufacturer willing to make changes could follow in Tesla’s path. There is nothing stopping someone like Ford from implementing tighter rules for their franchise network that would leave customers happier than they currently are. There’s nothing stopping any used car lot like CarMax from making the very same changes used to make the process easier, quicker, and better. The current automotive buying process is stuck in its current state by nothing other than stubbornness. Unwillingness to adapt to customer feedback and our future will leave everyone behind in bankruptcy and it’s clear that an online car dealership experience is important to future success.

The Tesla buying process is one of the highest rated aspects of the company. The people have spoken and it’s time to make changes.

It’s no wonder why Ford is implementing new rules with the sale of their new electric SUV, the Mustang Mach E. Under the new guidelines, dealerships won’t be allowed to mark the Mustang Mach E under MSRP leaving it one-price and haggle-free. Since Ford franchises are actually privately owned, Ford themselves can’t actually restrict anything. Instead, they will provide monetary incentives to the dealers who adhere to the new guidelines.

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