Skip to footer

Not all car dealers hate Tesla Motors' direct sales. Here's why.

Tesla Motors' practice of selling directly to customers has drawn the ire of many car dealers, who view Tesla's direct sales as a threat to their franchise sales model. Then why do some car dealers support it? 

|
Carlos Osorio/AP/File
The Tesla logo on the new Tesla Model S 70D. Tesla Motors' business model of selling directly to customers has caused fickle with many car dealers, whom view Tesla's direct sales as a threat to their franchise business model.

Tesla Motors' business model of selling cars directly to customers without franchised dealers has earned it the ire of many a car-sales mogul.

Viewing Tesla's online sales as a threat to their franchise model, quite a few state auto-dealer associations have undertaken campaigns against the carmaker.

Which is why--depending on where you live--you may not be able to buy a Tesla Model S electric car locally.

But not all car dealers hate Tesla direct sales, apparently.

Several large car-dealer groups are "quietly supporting" the Silicon Valley carmaker, according to MarketWatch.

That claim comes from a note published by Morgan Stanley, in which analysts said certain dealers "would be delighted with deregulation."

The dealers--not named in the note--apparently think relaxing laws that force carmakers to sell only through independent franchised stores would be good for their business.

The article suggests that large dealership chains in particular believe that carmakers would never invest in the infrastructure needed to replace their independently-run stores.

"The franchise model works on its own without laws to enforce it," Morgan Stanley said.

It also claims Tesla will be only the first of "many" entities that will challenge the traditional franchised model over the next few years.

This anticipated intensity in challenges to the status quo could force the issue to the highest levels of U.S. regulatory bodies, analysts said.

Meanwhile, individual franchised dealers may have more to fear from other, larger, more powerful dealership groups than from Tesla.

Currently, dealers are part of an estimated $1 trillion market "split 10,000 ways," Morgan Stanley claims.

The more than 10,000 dealer groups currently operating could eventually be consolidated into just tens of groups in the future, the bank suggests.

Ironically, dealer groups' attacks on Tesla have done a lot to promote the direct-sales concept--and gotten some industry players thinking.

Dealer chain AutoNation now offers online sales, though with delivery at a brick-and-mortar retail location rather than Tesla's home delivery.

Lexus and Volvo have also expressed interest in direct sales--although neither carmaker has made concrete moves in that direction.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to Not all car dealers hate Tesla Motors' direct sales. Here's why.
Read this article in
https://www.csmonitor.com/Business/In-Gear/2015/0608/Not-all-car-dealers-hate-Tesla-Motors-direct-sales.-Here-s-why
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe