Print 70 comment(s) - last by ballist1x.. on May 17 at 11:24 AM

Bill sponsor received $8,000 in campaign donations from the North Carolina Automobile Dealers Association

Living in the Research Triangle Park (RTP) area of North Carolina, which I nickname Silicon Valley East, I quite frequently see Tesla Model S sedans and Roadsters silently cruising down city streets and interstates. However, the North Carolina Senate Commerce Committee unanimously approved a measure that would make it illegal for Tesla Motors to sell vehicles directly to customers without the ever-present "middleman" in new car transactions: car dealerships.
Not surprisingly, the NC Automobile Dealers Association (which represents North Carolina's franchised car dealership) is behind this latest stab at Tesla. But according to NC ADA President Robert Glasser, this isn't an attack specifically aimed at Tesla. Glasser notes that the precedent Tesla has set for direct sales could set into motion a chain of events that would topple the entire dealership model of business.
“We care about the franchise system,” said Glaser. “The whole point of the retail system is to protect the consumer.”
Of course, Tesla Motors sees things quite differently. “They’re trying to insulate the dealer franchise model from any competition,” said Diarmuid O’Connell, Tesla’s VP of Corporate and Business Development. “It’s a protectionist move to lock down the market so we have to go through the middleman – the dealer – to sell our cars.”

And here's an interesting tidbit that shines a whole new light on the story. Slate reports that Sen. Tom Apodaca, the Republican sponsor of the bill, received $8,000 in campaign donations (the maximum allowed by state law) from the NC ADA.
It's pretty clear to see why dealerships are shaking in their boots at the prospect of Tesla (and other auto manufacturers) selling directly to customers. Tesla managed to deliver a whopping 4,750 Model S sedans to customers during the month of April. Compared to other luxury sedans that also dance in the $70,000 to $100,000+ price range, the Model S outpaced monthly sales of the Audi A8 (1,462 units), BMW 7-Series (2,338), Lexus LS (2,860) and Mercedes S Class (3,077).

 Tesla Model S
Tesla has sold 80 Model S sedans in North Carolina and has an additional 60 orders in queue from residents. The overwhelming majority of those sales have come via the internet.
And one could argue that an electric vehicle like the Model S needs less attention from dealerships due to the much lower maintenance needs of the electric motor and battery pack. Quite simply, there is potentially less to go wrong with a Model S compared to BMW 750i with its twin-turbocharged V8 and 8-speed automatic transmission.
Despite this new speed bump in Tesla's road to electric vehicle proliferation, the company has been showered with a wealth of good news in the past week. Last week, Tesla reported its first profit in its ten years of existence and Consumer Reports gave the Model S a near perfect rating: 99 out of 100 possible points.
Tesla's stock is up 57 percent since its quarterly earnings were released last Thursday to just under $90/share.

Sources: News Observer, Slate

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: lolwut?
By Mint on 5/14/2013 1:38:50 PM , Rating: 2
That's a pretty good explanation. Thanks.

I do suspect that there will be a lot of potential chaos in transitioning to a dealer-optional system. Manufacturers still have incentive to provide showrooms for test drives and trying out features, but they may have a very different payment system as opposed to the current commission based one.

Dealers would be screwed for a while as customers use them for test drives but then buy direct at a lower price. Only when they start closing down and impacting sales will manufacturers support them.

RE: lolwut?
By Brandon Hill on 5/14/2013 1:58:54 PM , Rating: 2
Dealers would be screwed for a while as customers use them for test drives but then buy direct at a lower price. Only when they start closing down and impacting sales will manufacturers support them.

They could get lessons from Amazon shoppers using Best Buy as a showroom ;)

RE: lolwut?
By boobo on 5/14/2013 11:16:46 PM , Rating: 3
To be fair, people who buy in brick and mortar stores will often go to Amazon to check product reviews.

RE: lolwut?
By somedude1234 on 5/15/2013 5:38:25 PM , Rating: 2
I did exactly this earlier today!

Specifically, I was in need for a new wireless router so I researched online, checked out reviews on Newegg, Amazon and elsewhere. Then I checked out prices locally and online and decided that the price at my local Fry's was competitive enough to justify a short drive to pick it up today. Sure I could have ordered it online and maybe saved $5-10, but I have the kit today and that was worth it to me.

Also, I got to overhear one of the Fry's guys explaining router choices to a different customer while I was there, and thought two things:
1. That guy actually knows a little bit about what he's talking about, so refreshing for a modern electronics retailer (cough, Best Buy, cough).
2. Even so, I'm glad I researched online instead of trying to decide which one to get while I was here in the store.

RE: lolwut?
By Manch on 5/16/2013 1:50:19 AM , Rating: 2
Best Buy employees are notorious for talking out the @$$. The AAFES stores on the bases have a similar issue. They have these so called "Manufacturer Representatives" that sometimes come to the store. 99% of the time what flows out of there mouth is gibberish. It annoys the hell out of me, so when Im in there and they're feeding some poor bastard a load of poo, I usually say something. I try to be polite about it, but some of them get really nasty. I had one "rep" start to yell at me. I just kept telling him to read the box. The other customer that he was trying to "help" read teh box, looked at the guy funny, handed it back to him and walked off lol. Dude came up to me a few miuntes later and asked me for recommendations.

RE: lolwut?
By BRB29 on 5/14/2013 2:09:11 PM , Rating: 2
If Tesla can set up a network maintenance and repair shops, then I assume setting a sales office with test cars is much easier.

A small office with 5-10 vehicles outside ready for test drives all day. If you want to buy one, then you can build it online or in the store itself. Financing can be done by just about any banks now and they can have a kiosk there also.

The direct order system actually ends up saving automakers a massive amount of production costs. There's less waste because they usually have to guess how many of which trim and options to equip since most are prebuilt. Demands for vehicles are also 100% predictable as they have data immediately.

I think dealers were a good intention back then but it is becoming increasingly irrelevant now.

An efficient business model would be:
Instead of reselling vehicles. They should turn themselves a service center for repairs/maintenance and warranty work. They can charge automakers for rent of using their office and parking lot to giving customer test drives.

This model is much more efficient as it takes the liability away and income is predictable. Service work actually generates more cash flow than selling vehicles now.

Why is this model more efficient? What people don't realize is that dealers didn't pay for any of the cars. They work on a line of credit. So essentially, it's the bank's money. The interest is high because its risks are high. That's why dealers are very eager to get vehicles off their lot when it's been there a while. The owners of dealerships don't really care because he takes money home every month. But if the businesses loses millions and close, he is not liable since all liabilities dies with the corporation. His millions are secured in his personal accounts and he just open another dealer.

Home developers do the same thing.

RE: lolwut?
By lelias2k on 5/14/2013 3:02:29 PM , Rating: 3
Now, back to Tesla:

Tesla's ability to sell units will be limited if it can not have units and maintenance facilities in places where people want to buy them.

Then they are the ones who should be worried, not the government, wouldn't you agree?

RE: lolwut?
By BRB29 on 5/15/2013 7:36:33 AM , Rating: 2
EVs actually have very low maintenance because there's barely any moving parts. Conclusively, they don't need as many maintenance shops for the same amount of vehicles. It also looks like they designed their cars to be more on the modular side where you can easily swap part.

I'm also sure modern mechanics can adopt to fixing EVs since it's easier than ICE cars.

RE: lolwut?
By lelias2k on 5/15/2013 5:11:42 PM , Rating: 2
I honestly have no clue how my answer ended up on your post. I was replying to another post. Go figure.

But yeah, your points are spot on.

RE: lolwut?
By wiz220 on 5/14/2013 3:10:56 PM , Rating: 2
I see no reason why you couldn't have a store (like Tesla has) that was big and offered test drives. You can have a dealership-like experience without the "dealer" it would just be a store built, maintained and run by the car company. The consumer might save money since there would be no middle man. That setup might work better for some companies and not so much for others, I think the main point is that there is zero reason for it to be legislated (aside from protectionism of course).

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis

Most Popular ArticlesAre you ready for this ? HyperDrive Aircraft
September 24, 2016, 9:29 AM
Leaked – Samsung S8 is a Dream and a Dream 2
September 25, 2016, 8:00 AM
Yahoo Hacked - Change Your Passwords and Security Info ASAP!
September 23, 2016, 5:45 AM
A is for Apples
September 23, 2016, 5:32 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki