Tesla Sales Model Intrigues Volvo, Lexus (by John Voelcker)

2015-01-23 Read: 616x

Tesla Sales Model Intrigues Volvo, Lexus,

AutoNation - Though Dealers Must Remain, By Law

Electric-car maker Tesla Motors has shaken up the auto industry in many ways, and it continues to do so.

Now, aspects of Tesla's online direct-sales model are starting to influence other companies in the car business--and their executives are saying so--even as lobbyists for franchised car dealerships fight Tesla's online direct sales in state courts across the country.

Last month, an executive at Toyota's luxury brand Lexus called Tesla's idea of stores in shopping malls "clever," while simultaneously reassuring the brand's franchised dealers that all sales leads generated from any such Lexus sites would of course be completed by dealerships.

Now, as it plans to launch its crucially important and all-new 2016 Volvo XC90 large SUV, Chinese-owned Swedish carmaker Volvo plans to start selling cars online.

It too is required by state laws to transact such sales through its franchised dealers. The company's head of sales said at the Detroit Auto Show earlier this month that it sees online sales as "complementary" to its dealer channel.

“We believe the actual ordering of the cars can happen with a click;" said Alain Visser, Volvo's global sales and marketing chief, "but the delivery of the car,the full service for the car, will always be at the dealership level."

Then there's giant dealership chain AutoNation. Last month, it said it would start to offer online sales at a fixed price--again with delivery through its retail network of dealers.

"The car dealer," said Mike Jackson, AutoNation's CEO, "should not be a time machine that moves backward."

As the Los Angeles Times notes, "Consumers, empowered by a torrent of online data, are demanding a simpler, more efficient process for one of their most important purchases — along with a fair deal."

Certainly, it's unrealistic to attribute all these changes to Tesla's influence. Defunct GM brand Saturn, among others, offered fixed prices for its cars 20 years ago. But it seems fair to suggest that by offering an entirely different way to shop for, learn about, and buy a car, Tesla publicly underscored one of the longstanding issues in the auto business.

To wit: Many consumers truly fear, loathe, and despise the way cars are sold at dealers.

Many buyers don't want to haggle, and would be happy to pay a fixed price for a given vehicle. Many want to do some or all of the transaction online. Most don't want to be pressured into "a great deal" on whatever the dealer happens to have large supplies of that week.

And that doesn't even get into the issues of many dealerships being singularly inept at selling cars that plug in.

Chalk up one more for Tesla.

by John Voelcker - Green cars report

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