Dealers spend a lot of money on facilities, service and sales training and inventorying cars and trucks. Those are costs manufacturers would have to carry on their books if they insist on direct sales, Jeff Carlson says.
DETROIT – If Tesla were to win its battle in Michigan and a handful of other recalcitrant states to bypass franchise laws and sell its electric vehicles directly to consumers, would other automakers follow suit?
Colorado dealer and National Automobile Dealers Assn. Chairman Jeff Carlson says he doesn’t believe so, though his group is adamantly against manufacturers, including Tesla, cutting out the independent retail network middleman and selling vehicles directly to the buying public.
The reason he’s confident the franchise model will remain intact? Cost.
“To try and sell cars direct and not have us as their inventory source is a couple-hundred-billion-dollar proposition (for volume automakers),” he tells WardsAuto here following a speech to the Automotive Press Assn. “The cars don’t just go off the line and to the customer. Somebody’s got to inventory them.”
Add to that the required investment in facilities, service and sales training and the prospect looks even less attractive.
“So I do not know of a manufacturer who has come out and said, ‛If we could, we would like to adopt (the Tesla model),’” Carlson says. “In fact, there’s a manufacturer in this town I’m not going to name that is nowhere near embracing the Tesla model.
“Volume is the enemy of direct sales.”
Many see a federal court victory by Tesla allowing it to sell direct in Michigan as the edge of the slippery slope that would erode dealer franchise laws and persuade other automakers to follow suit. But Carlson insists NADA’s opposition is more customer-focused, saying direct-sale methods cost consumers money and ultimately hurt the economy.
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Author: Digital Dealer
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