You just say no. Pay full MSRP.

I have no issues with dealers. Some suck, some are good, some are in the middle. I am sure some Telsa dealers suck, some are good and some in the middle. Telsa corp must have some internal metrics or even third party metrics.

 

sigh. the MSRP with dealers is a SUGGESTED 'ceiling' price from which dealers usually discount to various degrees. and of course in the case of 'hot' cars dealers will charge MORE than MSRP. so the idea of a 'full price' for a Tesla is meaningless, the price is what it is, it's not a suggested ceiling price like MSRP. totally different. and tesla is STILL competing with other brands / vehicles anyway, so they don't have a monopoly on how much to charge. i for example am somewhat interested in a model X, but i'm not interested in paying what they want for one and will shop elsewhere instead.

exactly. and why do almost all retailers of all products have the word "SALE" on their windows and signs. because everyone likes a sale. i was (painfully) in a furniture store yesterday. individual chairs for over a $1000 were on sale because they were knocked down from $1200. insanity. i left them a quality google review.

how it should be. no the sales person, then the sales manager, then the "F&I" person, then the bend you over the desk person, etc. ...

 

Apple products are average to above average. I think they have been slipping more and more lately. My iPod Touch I use in my office has never been dropped, it has the left side screen coming unglued. The husbands MacBook Pro is definitely not superior to my excellent windows laptop that cost half the price. The Apple watch I have is great, but the cheap $10 knock off band is far superior to the bands that Apple sells.

 

Saturn did the no haggle the price is the price thing for awhile and it was great. As for Apple I think they are headed for a crash their products are not several tiers above the competition anymore they are just another mobile or computing device. Without the vision of Steve Jobs Apple has become stale.

 

Saturn, and Scion....failures. No longer around. Only a matter of time when Lexus No Haggle is no longer around. Tesla sales system, I think they will change if they are bought out.

 

Saturn was killed by GM's stupidity not because of the no haggle sales model. Scion was a dumb idea from the outset the cars were redundant.

 

GM made no money off Saturn. Neither did Toyota off Scion. No haggle brands have never worked. The Tesla method is the right thing for the brand at the moment, not long term.

 

Do you have any other note besides dealerships awesome Tesla bad?

 

I don't think I said Tesla dealers are bad nor did I say dealers are awesome. There are pros and cons to both setups.

 

The difference with Tesla is that it fills a desirable niche (premium EV's). Saturn in the end was a bunch of mediocre GM clones and ultimately was axed to reduce the 'bloat' so to speak. Scion had the same problem, losing any cool factor it had initally and was absorbed back into Toyota.

 

Mod hat

We're getting a bit personal here. Lets ease up a bit

 

One cannot compare even Saturn and Scion to Testa's method of doing business. True, both brands were no-haggle, but, unlike Tesla, they were sold from privately-owned franchises. GM and Toyota/Scion did not actually own their retail-sales outlet like Tesla does.

I totally agree, however, that Saturn was killed by GM's stupidity. With the S-Serices compacts and their unique Thermoplastic body panels, waterborne paint, spin-off-transmisison filter, space-frame, and other unusual features, and customer-friendly sales/service techniques, they had a real winner. Then they blew it all by undoing those features and trying to make the company into another generic GM division. It was one of the dumbest things I ever saw in the industry, although recent actions by Ford and GM also give it a run for the money.

 

Sounds like the old model is dying. Happy to see Tesla doesn't have these specific issues. lol

Selling New Cars Proves Unprofitable For Most Auto Dealers

Jeremy Alicandri



For the first time since the Great Recession, the average U.S. new car dealer operated at a financial loss in 2018. After adding the income from all dealership departments (i.e., new cars, used cars, service and parts), the typical dealer lost $13,000 last year — compared to a $430,000 profit in 2013. To survive, dealers are now dependent on conditional income or “strings-attached” financial incentives from automakers. This shift in dealership profitability is reshaping an industry that is over a century old.

Retailing new vehicles is unprofitable for most dealers, with the average car sold for a $735 loss as of the latest data. Consumer adoption of online shopping sites forced dealers to lower retail margins as buyers pursued the lowest prices. New car pricing is another cause, with the average sale price reaching $36,000 in 2018, up from $31,000 in 2012. The switch in consumer preferences to SUVs plus added electronic gadgets, with the latter partially mandated by government regulations, increased vehicle prices to levels out of reach for most car buyers. As prices rose, dealers lowered margins to make monthly payments affordable.

Compressed margins meant dealers needed another source of income, and automaker incentives quickly became the solution. To be eligible, dealers must comply with their respective automaker’s brand standards. These vary by make but generally include almost all aspects of a dealership, like brand-compliant facilities, staffing, websites, shop equipment and other features. For example, one automaker requires its dealerships’ staff to answer any sales-related phone call within two rings, while another requires a specific imported floor tile in dealerships’ service shops. These strict requirements ensure a consistent customer experience but come at a huge financial cost — requiring dealers to build luxurious and cutting-edge facilities, purchase high-end technology, and hire staff among other cost outlays, which can add up to millions of dollars.

Given the cost of meeting brand standards, many industry observers question dealers’ rationale for pursuing incentive income, but dealers explain that non-participation has disadvantages. They face reduced inventory allocation, less access to more desirable models, and the worst consequence of all — reduced competitiveness with same-brand dealers. If one dealer in a market agrees to take the automaker’s money, then others must follow to match their competitor’s pricing. And as more dealers participated, selling vehicles below cost became a common practice, even worsening new car margins further. As one Florida dealer explained to Automotive News, “We are forced to put current customers into new vehicles much faster than normal. We lose $2,000 or $3,000 per vehicle to do it, but we need to hit our objectives to get our $100,000 bonus.” So, if dealers don’t pursue incentive-related sales objectives, their pricing will likely be higher than their competitors’, and they’ll quickly lose market share.
According to one BMW dealer I interviewed, who asked not to be identified, the average 2018 gross profit for each new BMW vehicle sold in his New York City area dealership was negative $1,500 — down from a $1,200 profit in 2016. He explained that BMW provides him with a 5 percent incentive based on the cost of each vehicle he sells. While he admits his dealership is still profitable as a result of BMW’s incentive income program, he claims the automaker controls his dealership’s operations by controlling his profitability. “I’m no longer an independent retail store, but, instead, a delivery center for BMW. Nearly every aspect of my business — sales, service or parts — is tied to an incentive.”

State franchise laws prohibit automakers from selling directly to consumers (Tesla is a limited exception as it does not have franchise dealers). Thus, to continue selling their vehicles in the U.S., automakers have a vested interest in the profitability of their dealer network. “To a certain extent, this is a zero-sum game,” explained one California-based Mercedes-Benz dealer, who says his store is still profitable either way. However, he explained that as the industry continues to blur the lines between dealers as independent sellers and as automaker-controlled distribution points, there will be long-term ramifications, like less store autonomy and even fewer dealerships. Dealers who can’t meet brand standards are exiting the business, either selling their dealerships or, in extreme cases, closing them. According to Mercer Consulting, a 25 percent decrease in U.S. dealership ownership is expected by 2025, with difficulty meeting automaker brand standards driving the trend.

To counter incentive dependence and improve margins, dealers increasingly emphasize used car sales as well as making their service and parts departments competitive with independent repair centers. They’ve also focused on finance and insurance (F&I) packages, which bring customers back to the dealership for maintenance and service. Since 2011, the industry has seen double-digit revenue and profit gains in all of these areas, with service and parts sales growing nearly 50 percent. And while these tactics have increased dealer margins, they have not yet supplanted the income losses from new vehicle retailing. Moreover, automaker programs have expanded into these areas as well, with incentives tied to preowned sales, service, parts and F&I penetration.

Dealers’ dependence on automaker incentives is unlikely to change. As consumers increasingly switch brands, automakers are forced to move toward a customer-centric approach to differentiate their brands and build loyalty. They are aiming for consistency at almost all customer touchpoints — including the dealership experience. So far, this trend is beneficial to consumers, who receive a better brand experience and competitive pricing. However, for dealers, it means their businesses are increasingly controlled by automakers, and the operational independence they had in the past will fade further in the future.

 

^^^^^ This article tells us what we already know......that auto dealers make most of their money on service, not sales.

 

Not to pile on, but yeah sales doesn't make money (thank the internet and transparency that comes with it). Service and finance is how dealer franchises stay in business.