Rather than the traditional franchise-dealer system, Tesla wants to sell cars directly to consumers. Tesla wants to establish a network of "stores," where prospective customers can check out vehicles, take test drives, order cars, and get service.
There are a few reasons this is a problem with Tesla. It is costly to build dealerships, have to deal with the legislation in states/ countries, it is costly to distribute vehicles to so few dealerships, but they need many more Tesla dealer locations, and also its yet another business to run for CEO Elon Musk.
The immense cost of running a dealer network is one of the reasons why traditional automakers see some benefit in offloading that responsibility to dealers! Bob Lutz in a Road and track column explained that "Nobody has ever been successful with company stores, though plenty of manufacturers have tried them."
Tesla doesn't want to make use of the traditional franchise-dealer system that has ruled car sales for a century. That's just not good enough for Tesla, and it makes sense. Traditional dealerships can be good businesses for one very key reason: service. Oldfangled cars need relatively routine service, everything from oil changes to more ambitious tune-ups and repairs. …show more content…
But, the fixed costs for an Apple store are next to nothing compared with a car dealership's. Smartphones and laptops don't need anything beyond a mall storefront and a staff of kids. A car dealership is very different. It sits on multiple acres. You need a big building with service bays, chargers, and a trained sales force, plus all the necessary finance and accounting people. It ties up a staggering amount of capital, especially when you factor in inventory. Under a traditional franchise arrangement, the factory never has to carry that
There are a few reasons this is a problem with Tesla. It is costly to build dealerships, have to deal with the legislation in states/ countries, it is costly to distribute vehicles to so few dealerships, but they need many more Tesla dealer locations, and also its yet another business to run for CEO Elon Musk.
The immense cost of running a dealer network is one of the reasons why traditional automakers see some benefit in offloading that responsibility to dealers! Bob Lutz in a Road and track column explained that "Nobody has ever been successful with company stores, though plenty of manufacturers have tried them."
Tesla doesn't want to make use of the traditional franchise-dealer system that has ruled car sales for a century. That's just not good enough for Tesla, and it makes sense. Traditional dealerships can be good businesses for one very key reason: service. Oldfangled cars need relatively routine service, everything from oil changes to more ambitious tune-ups and repairs. …show more content…
But, the fixed costs for an Apple store are next to nothing compared with a car dealership's. Smartphones and laptops don't need anything beyond a mall storefront and a staff of kids. A car dealership is very different. It sits on multiple acres. You need a big building with service bays, chargers, and a trained sales force, plus all the necessary finance and accounting people. It ties up a staggering amount of capital, especially when you factor in inventory. Under a traditional franchise arrangement, the factory never has to carry that