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Why Car Salesmen Don't Want To Sell Electric Cars
HughPickens.com writes: Matt Richtel writes in the NYT that one big reason there are only about 330,000 electric vehicles on the road is that car dealers show little enthusiasm for putting consumers into electric cars. Industry insiders say that electric vehicles do not offer dealers the same profits as gas-powered cars, they take more time to sell because of the explaining required, and electric vehicles may require less maintenance, undermining the biggest source of dealer profits — their service departments. Some electric car buyers have said they felt as if they were the ones doing the selling. Chelsea Dell made an appointment to test-drive a used Volt but when she arrived, she said, a salesman told her that the car hadn't been washed, and that he had instead readied a less expensive, gas-powered car. "I was ready to pull the trigger, and they were trying to muscle me into a Chevy Sonic," says Dell. "The thing I was baffled at was that the Volt was a lot more expensive." Marc Deutsch, Nissan's business development manager for electric vehicles says some salespeople just can't rationalize the time it takes to sell the cars. A salesperson "can sell two gas burners in less than it takes to sell a Leaf," Deutsch says. "It's a lot of work for a little pay."
Jared Allen says that service is crucial to dealer profits and that dealers didn't want to push consumers into electric cars that might make them less inclined to return for service. Maybe that helps explains the experience of Robert Kast, who last year leased a Volkswagen e-Golf from a local dealer. He said the salesman offered him a $15-per-month maintenance package that included service for oil changes, belt repair and water pumps. "I said: 'You know it doesn't have any of those things,'" Mr. Kast recalled. He said the salesman excused himself to go confirm this with his manager. Of the whole experience, Mr. Kast, 61, said: "I knew a whole lot more about the car than anyone in the building." "Until selling a plug-in electric car is as quick and easy as selling any other vehicle that nets the dealer the same profit, many dealers will avoid them, for very logical and understandable reasons," says John Voelker. "That means that the appropriate question should be directed to makers of electric cars: What are you doing to make selling electric cars as profitable and painless for your dealers as selling gasoline or diesel vehicles?"
Jared Allen says that service is crucial to dealer profits and that dealers didn't want to push consumers into electric cars that might make them less inclined to return for service. Maybe that helps explains the experience of Robert Kast, who last year leased a Volkswagen e-Golf from a local dealer. He said the salesman offered him a $15-per-month maintenance package that included service for oil changes, belt repair and water pumps. "I said: 'You know it doesn't have any of those things,'" Mr. Kast recalled. He said the salesman excused himself to go confirm this with his manager. Of the whole experience, Mr. Kast, 61, said: "I knew a whole lot more about the car than anyone in the building." "Until selling a plug-in electric car is as quick and easy as selling any other vehicle that nets the dealer the same profit, many dealers will avoid them, for very logical and understandable reasons," says John Voelker. "That means that the appropriate question should be directed to makers of electric cars: What are you doing to make selling electric cars as profitable and painless for your dealers as selling gasoline or diesel vehicles?"
If dealers don't want to sell them, let manufacturers sell direct to the customers.
Why should they make any profit whatsoever? They're an anachronistic middle man.
Tell em what you want, they tell you how much it costs and when and where you can pick it up.
The takeway I get is that Tesla's attempts to sell directly and avoid dealers makes complete sense because dealers have a clear conflict of interest here. Heck, it makes it seem like we should get rid of dealers altogether since they won't in general want to sell any cars that are very novel or that require substantially less maintenance.
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Karnal
Not exactly the most rigorous analysis I've seen.
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I find dealerships very annoying because they don't want to sell you the car you want, they want to sell you one of the cars they have on the lot that day! Apparently their goal with every customer is to have them buy something the same day, not come back later to pick up the actual vehicle they wanted. Why can't I order a vehicle with everything I want from the manufacturer, and go pick it up at the plant or port of entry myself, saving the $800 in "destination fees"?
I've abandoned my search for truth; now I'm just looking for some useful delusions.
Except they do. They have less moving parts and the ones that are there don't burn their own lubricant, are closed to outside contaminates, and are not subject to nearly the same amount of heat and pressure.
Fossil fuels will increase in price again and eventually run out. This may take a long time but first the vast majority of cars will be electric hybrids and then fully electric. The one thing limiting the transition to plug in electric cars is the infrastructure of charging stations or battery exchange locations allowing long distance travel. Then again, long distance travel may done when most towns are connected by electricity powered trains and cars are only for local transportation.
In a time of universal deceit, telling the truth is a revolutionary act. George Orwell
Industry insiders say that electric vehicles do not offer dealers the same profits as gas-powered cars, they take more time to sell because of the explaining required, and electric vehicles may require less maintenance, undermining the biggest source of dealer profits — their service departments.
Electric cars are the future, gasoline guzzling cars are not. Anybody who thinks like that should join the same support group frequented by all those people who bet their business on film cameras being the future because "it takes too long to explain to customers how them them newfangled digital cameras work". Anybody who puts in the effort to push electric cars today faces an uphill struggle but also stands a good chance to gain market share down the line at the expense of established dealers who are to short sighted to bother with new technology.
I don't know how the expected lifetime service cost shakes down; but what the dealership cares about is the margins on the service and maintenance they perform; not the absolute cost.
I would suspect that battery swaps, while they involve a very expensive part, would be pretty unexciting for the dealer. Unless the manufacturer is extraordinarily tight-lipped, the price of the battery will become public knowledge; and the procedure for swapping it out(while it might require equipment that makes DIY impractical, depending on where the battery is located and what needs to be lifted) should be rigidly documented and leave little room for variation in how much labor you can bill for.
Somebody has to do the swap, and presumably they won't do it for free; but there is little room either for value-added expertise(as with problems that require diagnostic work) or just plain sleazy invoice padding(as with problems where the customer doesn't know the cost of the parts, or which parts are necessary, or what the expected labor time is); it's a rigidly scripted drop-in replacement of a single module.
If you were to ask me what I like most about electric cars (and Tesla in particular), it wouldn't be the economic or environmental benefits, or even the technology.
It's the way they are taking a long stagnant and mostly non-innovative industry and dragging it kicking and screaming into the 21st century. If the people who constantly preach about the free market truly appreciated the concept, they would know that in a legitimately free market, you either change with the times or you get kicked to the curb to make room for those who are actually innovating.
The more they resist, the more I'm going to enjoy watching them weep and wail as they slowly become irrelevant.
This is Slashdot. Any discussion of electric cars must include these obligatory posts -
"My daily commute is 762 miles. Therefore, electric cars are useless to anyone and everyone."
(Variation also acceptable: "Twice a year I drive 600 miles to Phoenix. Therefore, electric cars are useless to anyone and everyone.")
"My electric power comes from coal, therefore all electric cars are more polluting than my Grandpa's 1978 Oldsmobile Cutlass."
Costco has a terrible car sales model.
They "shop around" to local dealerships by getting them to give a quote for the requested model. Then they sell it to you at the lowest first-quote price of any local dealership, plus a little markup for Costco, of course. Lowest first-quote price. That's pants-on-head retarded. You at least should get a second round of quotes.
Oh, and the best part is that they won't even bother to get a price for you unless you first commit to completing the sale with them! So you can't even go back and say "no, sorry, that's too much, try again or I'm gone". You have to buy a car from them if you get even a single quote on any car from them. I will never use Costco "services". They're shady as fuck and aren't a good price.
Answer: Some middle men add value and some simply extract rents. Distributing and warehousing a wide variety of perishable vegetables for purchase on demand at random times is a valuable and complex service. Having a showroom to poke at cars in person adds value, but basically *everything* else a dealer does is either overpriced compared to alternatives or actively subtracts value from the car buying experience.
An interesting anagram of "BANACH TARSKI" is "BANACH TARSKI BANACH TARSKI"
Coal powered cars are a bad idea.
No they aren't. Coal can be converted to electricity at about 40% efficiency, and that can be stored in a battery and converted to motive power at about 90% efficiency, so a total of about 35%. A gasoline ICE has an efficiency of about 15%. If the electricity comes from NG, the efficiency is even higher. Also, coal is domestically produced, providing jobs for Americans. We don't fight wars over coal.
Coal is filthy, and should be phased out as soon as economically feasible. But even coal generated electricity is cleaner than gasoline for powering vehicles.
A better question. Just why is it so profitable to sell gas powered cars?
"What are you doing to make selling electric cars as profitable and painless for your dealers as selling gasoline or diesel vehicles?"
What am I doing? That's easy: I'm NOT GIVING A SHIT HOW THEY FEEL. If I want to buy one, I'll walk into a dealer, and they can take my money, or not. Salesman's not making enough money? Wah wah wah, go get a real fucking job and do something USEFUL for a living.
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The black box situation ebbs and flows. The car diagnostics apparently used to require a specialized apparently rather large computer at a mechanic to run through paces or maybe just for the code, I'm not sure, but now a car parts store will hook a handheld device up to the car to read the codes stored in the car and give you a printout of their values and meaning for free. My brother-in-law said he could fix her Kia based on the codes and explanations, what he already knew and what he could read off the internet. She had to pay $160 bucks for two coils, but look what a search turned up. I even just put in kia coil and it offered the other search terms.
You totally misunderstand the value of forcing all oil to be sold in dollars. Since the world runs on oil, and countries must purchase oil in dollars, the countries of the world must keep a large reserve of dollars. This increases the value of the dollar, allowing us to offset by printing more without inflation. Fighting wars over oil is a very real thing. You just don't understand the mechanism of how this works obviously.
AC is incorrect. Costco lists the price so that you can shop around. No haggling.
You sound like you've never heard of the independent mechanic that as far as I can tell
You sound even worse. An independent has to specialize in a topic, like transmissions. Would you trust him to work on the cars computer system? A dealership say Ford, has to be able to work on all aspects of fords, same with gm, chyrsler and Toyota. And stand behind their repair.
You absolutely proved him correct when you claim an independent has to specialize in a topic as narrow as transmissions. Most independent mechanics I have used have been able to work on a wide range of automobiles. There has been some very specialized work, such as with more rare hybrids like the 05-07 accord hybrid, where I have had to use a dealer in the past. But I have only had one car repair in 20 years that needed a dealer. And if dealers did not exist, the market would compensate for those rare cases in their absence.
It is funny you stand up for dealers because of their repair services, when generally that is the department people like the least at dealerships. I thought it was general knowledge to never go to a dealership for service unless your car was under warranty. They are overpriced and refuse to use after market parts.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
They also deal with the fleet sales department rather than the retail sales department, and the fleet people just look at the numbers and figure out the dealer's markup and make a fairly quick response.
The best technique is to buy a car out-of-state though. Sales tax is paid to your state, not to the selling dealer's state, and there is no county or city sales tax in the equation. On top of that, if your state requires that the sales tax be based on the MSRP rather than on the negotiated price, this technique makes the sales tax price reflect the actual price, not an inflated MSRP.
Do not look into laser with remaining eye.
I don't know if Costco has changed the way they do it recently, but when I tried to use Costco's car service 5 years ago it certainly wasn't that simple. I went to Costco to check the price, and they told me I'd have to contact the Toyota dealer to get the price (and there was only 1 participating Toyota dealer in the area). I called the dealer up, and they absolutely refused to provide any pricing info over the phone. They wanted me to drive there...20 miles away. Let's just say I was less than impressed by usefulness of the service.
Oh, please. You could be in Kentucky or West Virginia, where the Koch brothers are experimenting with the laws.
Yeah, I would hate to live somewhere where jobs are plentiful, where the government is running a surplus ... wait, what economic problems?
The real "Libtards" are the Libertarians!
Car Sales are another dinosaur industry vulnerable to be disrupted, just like Taxis prior to Uber.
I'm surprised that some VC's aren't already plotting their demise as we speak.
It's huge, and it's basically split between a very right and a very left wing. They're mostly economically left wing, albeit with somewhat lower taxes that they get away with because of their huge economic output. Socially they're pretty conservative, with lots of "tough on crime" laws.
It's worth noting that when they had a Republican Governor (The Governator) they ran deficits and had a softer economy in general.
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We don't force oil to be sold in anything at all.
It's that the sellers of oil prefer to be paid in dollars, because then they can do something with that money which is relatively safe and secure.
In any case, the bond market is much bigger than the petroleum market, and that is the source of dollar, and euro, dominance.
That is a dealership to avoid and never go to...
It has been a long time, many years, since I purchased a car in person, the last few were via e-mail...
The most recent one was at my dining room table...
They want to sell a car, they'll make it easy for me, not the other way around...
Wow, that's an interesting reading of this thread. I thought I was responding to the hypothetical idea that nobody would repair cars if we didn't have a state-mandated dealer system. Apparently not.
I think that's somewhat true, but I also think that what the dealers will look like will be somewhat different. They'll end up competing with the few OEMs (like Tesla) that control their buying experience, and frankly, the buying experience through those operations is superior. There's not a human on earth who enjoys dealing with car dealers, so as soon as any cracks in the system show, they'll have to change their ways. They definitely won't go away (for reasons you mentioned), but they'll probably start looking more like retailers and less like the hellscapes they currently are. Toyota will be saying, "We have to compete with Tesla on price and quality, but we also have to deal with the hit that comes from a miserable buying experience." The threat that Toyota will start selling directly will definitely put pressure on Toyota dealers to up their game.
I think this will be the game changer. I bought 2 of my last 3 cars through CarsDirect. Reasonable straightforward price that's easy to check, no negotiation or games. My last car was delivered to me at my office with the paperwork. If I had to guess, I'd say we're going to move more and more toward that model and the only people who haggle at the dealer are going to be the real sharks who aren't profitable to haggle with. Once that starts to happen, the incentive for having a staff of professional hagglers goes away. Eventually, I expect prices will normalize and dealers will have to differentiate on other factors.
An interesting anagram of "BANACH TARSKI" is "BANACH TARSKI BANACH TARSKI"
Dealers are very well entrenched at the local political level. Most dealers are some of the richest and most connected people in their local markets. Many states have laws written around dealers and basically granting them monopolies over car sales.
As Tesla has discovered in Texas, getting these laws removed from the books is near impossible because of how well connected dealers are.
Every car I've ever owned has had more than $4k in maintenance costs by the time it's 10 years old. The water pump, the timing belt, flushing the transmission, flushing the radiator, etc... amount to a pretty penny. But the oil changes alone are going to net you more than $1000 in that timeframe. You get one major part going out on a combustion car that requires the engine to be disassembled and you'll drop $1k before they even know what's wrong. Yea if you do all your own maintenance you can save money on stuff but mechanical engines break down over time.
And from what I've seen of battery replacement information the only batteries failing at 8-10 years are the NiMH batteries in the Prius. The lithium-ion in the more advanced vehicles have not exhibited the same failure rate and currently have a very poorly understood failure rate because not many have failed.
In a connected world, customers can pick the cars straight with the makers - the whole article is written as if the unnecessary middle-men where a show stopper. They are the ones being stopped, and what makes one wonder is that are not gone already.
-><- no
We don't force oil to be sold in anything at all.
No one is saying the US is forcing anyone to sell oil in dollars. After all, we have a clear example of a country switching oil sales to the Euro with no major consequences.