Tesla Motors CEO Elon Musk told the press last week that he is open to the idea of expanding their U.S. dealer network to include franchised dealerships. This would be a sea change for the direct-to-consumer business model company but we are not surprised. A few weeks ago, I predicted that Tesla would hook up with traditional dealers sometime in 2015. Back in 2013, my alter ego, Virgil Hilts, proposed that Telsa head in that direction sooner rather than later.
Now that it might actually happen, here is how we think Musk should put it together.
During the same speech he noted that his company's 2020 worldwide sales goal is 500,000 units, which presumedly means 150,000 to 200,000 in the United States, well up from 2014's estimated sales number of 11,000. Musk emphasized they would implement this plan only with dealers who could provide customers with a "really good experience." In a shot at stores who are lobbying to keep in place existing franchise laws prohibiting direct sales, Tesla said about their possible dealer selection process, "If you're a jerk to us, we're not going to turn around and try to do a partnership later."
Ct. lobby dumb anti direct reason
dealers don't care about direct, they do care that they cannot get the Tesla franchise.
individual dealers vs parnerting with OEM
markup 25% vs 15/10? discounts will happen price fxing days are over.
Neither would it be a wise idea to partner with one of the public-held groups, such as AutoNation, Sonic or Lithia. Those bureaucratic organizations value their own brand name over those of the automakers' and would subject their Tesla dealerships to monthly beat-up sessions wanting to know why they are not generating as much F&I or parts income as their Chevy or Dodge stores.
So what franchise with well-heeled customers, a track record of excellent CSI, nice facilities, in need of additional traffic to survive themselves and with the right number of outlets (270), would the best partner for Mr. Musk? We think it should be Acura. If each Acura outlet sells 40 Teslas per month, that is an additional 130,000 sales annually for Tesla plus the huge jump in traffic would cause Acura sales to soar. What say you?
The post Tesla Might Consider Partnering With Franchised Dealers appeared first on The Truth About Cars.
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