The author's views are entirely his or her own and may not always reflect the views of Dealertrack.
Tesla Recently Announces Another Production Delay
Tesla made another big announcement this past week, alerting consumers to a delay in the release of their Model 3. The upbeat, electric car, set to be priced at $35,000 and sold directly to consumers through the Tesla website, will be delayed until their infrastructure is able to keep up with the production demands. Struggling to overcome production bottlenecks, the company has been reporting losses as they fail to meet market requirements. However, the setback isn’t deterring consumers.
Consumers crave the Amazon shopping experience today. No one wants to drive to a physical location, listen to sales pitches and schemes, and make a decision on a product. They want to click a few buttons on their phone, with the product delivered right to their doorstep. It’s more transparent and convenient, putting total control into the hands of consumers.
People want this same type of shopping process for their cars. Right now, you can only buy a Tesla direct from the manufacturer since there are no Tesla dealers. You can complete the entire purchase on the website. It’s the opposite of what goes on in dealerships across the country. It’s pressure-free, with no haggling or price gouging. That’s exactly what consumers want.
If Tesla is able to overcome their production setbacks, their consumption process will put many dealerships out of business. They make the case to sell directly to consumers, something the traditional method can’t compete with. With the Tesla delay, dealerships have bought themselves some time. It’s important that they get this time, because dealerships are faced with four indisputable problems right now:
Customer Dissatisfaction: Just about everyone is sick and tired of going to car dealerships and undergoing hours of sales pitches and negotiations to arrive at a final deal. It seems dishonest and unfair to consumers, who are not car experts. You, like everyone else reading this, are probably tired of the dealership process.
Tesla: Competition is a beautiful thing. Tesla is offering a standard against which all dealerships will have to compete if they want to stay relevant. Once a consumer experiences a direct sale off of the Tesla website, they are going to tell their family and friends about it.
Direct-to-Manufacturer: Manufacturers are trying to bypass dealerships today as well. They’ve discovered if they open up their inventory directly to consumers, they can keep all of the profits.
Used Cars: Startups are moving into the automotive industry as well. Numerous startups are making platforms that place used cars in the hands of interested buyers, bypassing the dealership process.
Perfect Dealership: Surviving The Digital Disruption
The time is now for dealerships to make a change. In the book Perfect Dealership: Surviving Digital Disruption, a step-by-step process regarding each department of the car dealership for success is outlined. Fortunately, it’s not too late to make the necessary adjustments to make the sales process more transparent, convenient, and customer-focused. However, not taking any action guarantees disappearance over the next few years, much like the video store and travel agency.