Flipside of Tesla's Direct Method - Tesla Model III Forum, Tesla Model 3 Forums
User Tag List

 
Thread Tools
post #1 of 6 (permalink) Old 07-31-2014, 11:58 AM Thread Starter
Member
 
Join Date: Jul 2014
Posts: 56
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
(Thread Starter)
Flipside of Tesla's Direct Method

Consumers seem to be of the opinion that buying factory direct results in a better sales experience and above all a better price. What if that logic is flawed?

So you think dealerships make hefty profits off your purchase? Do you also think that pink is blue, chocolate is a vegetable and that pigs will fly from time to time? Dealers make at BEST a 5% margin, dealer average is 2.2% nationwide...

Thats not the only fallacy either... http://wardsauto.com/blog/tesla-wron...-system-better
Nadja is offline  
post #2 of 6 (permalink) Old 07-31-2014, 01:30 PM
Junior Member
 
Join Date: Jul 2014
Posts: 28
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
But 5% of the price of a car is quite a bit of money. Let's say your car costs $60,000. 5% of that is $3,000. That is quite a bit of money. I would definitely choose the sales model that saves me 5% on such a big purchase.
Volta is offline  
post #3 of 6 (permalink) Old 07-31-2014, 05:22 PM
Member
 
Join Date: Jul 2014
Posts: 99
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
good job breaking it down into dollars, looking at it like that, depending on what kind of car it is, that can be a whole different styling package or even a trim level or two up.



DWMTM is offline  
 
post #4 of 6 (permalink) Old 07-31-2014, 07:16 PM Thread Starter
Member
 
Join Date: Jul 2014
Posts: 56
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
(Thread Starter)
Quote:
Originally Posted by Volta View Post
But 5% of the price of a car is quite a bit of money. Let's say your car costs $60,000. 5% of that is $3,000. That is quite a bit of money. I would definitely choose the sales model that saves me 5% on such a big purchase.
Convenient that you ONLY took the high number, a 2.2% profit margin is $1320, what you thought business was in business to NOT make money? With that kind of return you're lucky there even is a place to buy your car from.

By your response I don't think you read the linked piece

Quote:
Profit margins are thin because dealers have to compete against each other, and this is especially true of dealers selling the same brand.

It’s so easy for shoppers to simply drive down the road looking for a better price. Do you think dealers would compete so heavily if they were factory-owned? No, the factory would set the price and there would be no negotiations – just like Tesla.
Quote:
Speaking of company stores, over in Europe they have a kind of hybrid retail system, where factory stores are allowed to compete against the independent franchisees. It’s not working. Daimler is being excoriated by the analyst community, which is advising the automaker to dump its company stores. Why? Because they’re not very good at selling cars, and they all lose money.
you know why they lose money? Because they baked their margins into the purchase price and refuse to negotiate, while the franchised stores are willing to be flexible to win your business.

And its all relative, if you're buying a $60,000 car and $3,000 grand is going to break your bank maybe you need to look at buying more within your price threshold.
Nadja is offline  
post #5 of 6 (permalink) Old 08-01-2014, 12:17 PM
Junior Member
 
Join Date: Jul 2014
Posts: 27
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
Quote:
Originally Posted by Nadja View Post
Convenient that you ONLY took the high number, a 2.2% profit margin is $1320, what you thought business was in business to NOT make money? With that kind of return you're lucky there even is a place to buy your car from.

By your response I don't think you read the linked piece





you know why they lose money? Because they baked their margins into the purchase price and refuse to negotiate, while the franchised stores are willing to be flexible to win your business.

And its all relative, if you're buying a $60,000 car and $3,000 grand is going to break your bank maybe you need to look at buying more within your price threshold.
Tesla stores still have to compete against other car manufacturers, so they can only charge so much for their vehicles. It's not like Tesla's direct sales model makes it immune from having to compete in the market.

I don't believe that by eliminating the middle-man (the dealer) people will be paying less. I also think that some people like to know that something is priced and that is it instead of having to deal with negotiations and dealers, wondering the whole time if you are actually getting the proper price for the vehicle.

$3,000 relative to $60k may not seem like much, but I don't see that amount of money as being something I can just throw away.

Razor is offline  
post #6 of 6 (permalink) Old 08-05-2014, 02:37 PM
Member
 
Join Date: Jul 2014
Posts: 99
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
Good points made, $3000 is a lot of money and shouldn't be thrown away, but also if it breaks the bank for you on a $60k car purchase, you definitely are spending above your means.



DWMTM is offline  
Reply

Quick Reply
Message:
Options

Register Now



In order to be able to post messages on the Tesla Model III Forum, Tesla Model 3 Forums forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.

User Name:
Password
Please enter a password for your user account. Note that passwords are case-sensitive.

Password:


Confirm Password:
Email Address
Please enter a valid email address for yourself.

Email Address:
OR

Log-in










Thread Tools
Show Printable Version Show Printable Version
Email this Page Email this Page



Posting Rules  
You may post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are Off

 
For the best viewing experience please update your browser to Google Chrome