The late Steve Jobs’ legacy lives on not only in making Apple a leading company in its sector but also in establishing a wholly new customer approach that has been widely acknowledged as a huge success.
It’s a practice that many companies try to emulate; automakers are not an exception, with GM having already said that its wants "to become the 'Apple' of the automotive industry”.
Tesla, though, is one-step ahead, eschewing the traditional auto dealership model in favor of stores within shopping malls. Elon Musk’s company has opened 17 factory-owned stores in 10 states and the District of Columbia, with another 6 to follow soon.
Surely it’s no coincidence that its vice president of sales, George Blakenship, is a former Apple executive who developed Apple’s retail stores.
Dealer associations in many states, though, are attacking Tesla over this practice, claiming that its factory own-stores violate franchise laws that don’t allow factory-owned dealerships.
They also claim that this strategy constitutes unfair competition for rivals, is not convenient for car servicing and has the potential to undo the whole franchise system; with the latter, presumably, being the biggest threat to the association.
“If a manufacturer sees that Tesla is successful with this kind of business model, who’s to say they don’t break out their own EV product lines and create a separate system that bypasses dealers?”, said the Massachusetts State Automobile Association executive vice president Bob O’Koniewski.
Tesla isn’t the only carmaker that’s emulating Apple’s strategy: the New York State Automobile Dealers Association fears that BMW will bypass its dealers and sell its new “i” sub-brand models directly to customers, despite the company having said that it will be sold through selected dealerships.
Stuart Rosenthal, general counsel for the Greater New York Automobile Dealers Association, had his 2010 lawsuit against Tesla’s Manhattan store dismissed on a technicality.
Nevertheless, Rosenthal and the association believe that Tesla’s three New York stores that are currently operational violate state law and are looking for ways to challenge their legality in court.
The National Automotive Dealers Association (NADA) says that 48 states prohibit or restrict factory-owned auto dealerships.
Blakenship commented on Tesla’s behalf: "We do what we're capable of doing, and we do whatever they let us do. It's unique for each location. If we can't be a dealer in a mall, we won't do reservations on-site. We tell people where to go on our web site to make a reservation."
By Andrew Tsaousis
Story References: Automotive News
7 Comments:
Hahaha. Worthless middleman salesmen have got no chance against the actual product manufacturer, R&D investor, and intellectual property owner.
The time of just slapping a profit margin onto some else's work is coming to an end. Get smart, get creative, earn profit of your own damn produce. Or if you can't change your mentality become a drug dealer.
Considering what clowns most new car dealers are, I say go Tesla! Personaly I hope never to visit a new car dealer again in my life. I was in the business I know what whores and thieves many of them are.
Your typical car (especially used) salesmen and dealerships. I have nothing but contempt for them. I hope Tesla changes the way consumers buy cars.
I actually have some experience in this side of the business: "Dealer associations in many states, though, are attacking Tesla over this practice, claiming that its factory own-stores violate franchise laws that don’t allow factory-owned dealerships." If you delve into the law, and it has to be for every individual state, you will find that most, %80-%90, have laws on the books that are unclear, nonspecific and written anywhere from 50 to 100 years ago.
"The National Automotive Dealers Association (NADA) says that 48 states prohibit or restrict factory-owned auto dealerships" Again this is true but all of these laws while generally similar in scope and intent, are all different as per state and the NADA knows this and their fears are well founded.
The recent movement to De-regulate and even in similar ways, break unions, is a move to free up operations for corporations to do business as they wish. This is one area that when laws were written decades ago, could and did not foresee the modern retail landscape.
All law makers write law that reacts to 'in the moment' events and try as best they can, to write for future proceedings but when the landscape changes so radically, it's time for new law. In this case the argument is about the freedom of an individual company to decide who, how, when, what, and why their products get sold to the final consumer. From the NADA perspective, it's relying on old law and interpretation: The walls set up between manufacturer, retailer and consumer are about to be broken down.
Not all dealers are bad and I feel for the ones who will get struck down in this. It will not be as bad as projected though: companies like BMW, Ford and all others who will and can set up their own internal dealer networks will need skilled experienced people to run them.
In the end it's about control. I make a product, I market a product, I sell the product and control every step along the way and control the purchasing experience in the end. That is how Apple does it and all manufacturers not just auto manufacturers are looking to do business this way today and in the future.
Who cares about franchise laws. If Tesla chooses not to operate via franchisees, and go direct, then what have franchise laws got to do with it? Why should car dealers have sole rights of representation? Thats no better than unions trying to muscle in on the organised labor market. None of them should have any automatic rights. If Tesla wants to sell direct, then let them sell direct. I really don't have an issue with that, and I'm sure most others wouldn't either.
Apple, Best Buy, a store . price is price. No B S negotiating. The way of the future. Just store associates... I used to be a new car salesman. Annoying. Get ready for change.
These laws are antiquated, protectionist, and now only serve as an arbitrary barrier to protect a special interest group -- the automobile dealers. Created prior to cell phones, ATM's, microwaves, PC's, the Internet, and especially Internet commerce; the laws no longer make sense in today's modern markets. They were originally enacted to foster competition. But over time as our modes of commerce have been updated, these laws have come to do just the opposite. If we allow them to stay in place, they will continue to stifle true competition, thus harming market efficiencies and the productivity of the automobile industry as a whole. Today, we consumers end up paying a little bit more for our cars due to this now unwarranted and inefficient protectionism. These laws should have been changed years ago.
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