YOU WOULD HAVE to be living a pretty insular life not to be aware of the changes in the way automobiles are being sold. The business model of manufacturer-to-dealer-to-customer has changed only slightly since it was established early in the 20th century, and as we know, it’s a model that has been copied by motorcycle manufacturers.
The internet has changed the way cars, motorcycles and related accessories are marketed and sold.Last year, General Motors began experimenting with an online sales program called Shop-Click-Drive that enables a consumer to buy a car or truck without ever going into a dealership. The test program involved 100 dealers in Michigan who, according to an article in Time magazine, collectively sold 900 vehicles. The program went national in 2014, and a recent news release by GM claims 1,600 cars have been sold in more than a third of GM’s 4,300 participating dealers in 47 states via the program.
Vehicle selection, test ride, trade-in value estimation, pricing, financing and delivery all can be accomplished without the buyer calling on a dealer. In the case of a test drive and delivery, the dealership will, at some additional cost, deliver the car to your doorstep and pick up your trade-in.
The Game Changer
Like the motorcycle OEs’ direct accessory sales program, the dealer in the GM scenario makes a smaller profit but (according to GM project management) should make up in volume what’s lost in margin.
It’s not a bad program, and it may work for the motorcycle business.
Tesla Motors’ business model, however, is a real game changer for automotive retailers. The brand has attracted a lot of attention over the past few years, first with an expensive all-electric, two-seat sports car followed by a somewhat less expensive four-door sedan. The most remarkable thing about Teslas in a world of emerging hybrid and electric cars has been the fact that they can get up to 175 miles on a charge and be recharged quickly enough to make them a practical alternative to a gasoline-powered vehicle.
In the meantime, Tesla is radically reshaping the way vehicles are sold. It doesn’t have privately owned dealerships. All “galleries,” service centers and dealerships are company-owned. Vehicles are sold by the factory direct to consumers, leaving independent dealers out of the equation.