What happens when a Honda dealer sells cars like Tesla?(Read article summary)
Tesla's direct-sales model has fought battles with traditional auto dealers in several states. But what happens when a traditional franchised dealership adopts some of the practices of Tesla and the company whose retail model inspired it: Apple?
Tesla Motors' direct online sales model has led to state-by-state battles with franchised dealers and their lobbyists.
While Tesla works to sell its electric cars in as many states as possible, dealers decry direct sales as a threat to healthy competition and a danger to consumers.
But what happens when a traditional franchised dealership adopts some of the practices of Tesla and the company whose retail model inspired it: Apple?
For one Seattle dealer, it showed that change doesn't come easily--but that it can please customers when it works.
To that end, he and COO Babak Mohammadi decoupled sales sales commissions from the profitability of a sale.
He also eliminated the Finance & insurance (F&I) office--where customers typically go to have their loans approved, and to be sold extras like extended warranties.
The new direction came with a slogan: "One Buyer, One Price, One Hour."
"We think we compete with the Apple Store" for customers' time, Miller said.
The Apple Store concept and Tesla's current retail stores were concocted by the same man--George Blankenship--who did stints at both companies.
Like Tesla, the Miller dealerships also offer haggle-free pricing, and simple finance options.
Prices and interest rates are fixed, and customers in need of financing are referred to a chart, where they can trace a line from their credit score to the amount of the loan.
Just as at an Apple Store, buyers also have their entire transaction processed by a single salesperson--although they don't transact the sale online, as Tesla buyers do.
A touchscreen at the entrance to the showroom even lets customers select which staffmember they want to talk to--rather than getting pounced on.
The initial result of these customer-friendly changes was turnover: Most of the staff went out the door last year when traditional sales commissions vanished.
Then, sales at Miller's Honda store dropped from 100 cars a month to 70--despite a booming new-car market.
Another problem: Without F&I staff, salespeople were charged with processing loans as well as selling cars--and their learning curve was steep.
Things have now improved, however.
Sales are back up to their previous rate, the staff is now better trained, and management hopes to offer its salespeople larger salaries in exchange for the extra responsibilities they have taken on.
And Miller expects things to improve further with last month's opening of side-by-side Honda and Toyota dealerships near stadiums for the Seattle Seahawks and Mariners.
"Sooner or later," he predicts, "everybody will have to sell their cars this way."
[hat tip: Hugh Crawford]