Jim Ziegler is a self-described public speaker on car dealership issues who says in his op-ed titled “Who’s Afraid of Elon Musk” for Wards Auto that Musk’s controversial manufacturer-direct sales business plan is the way of the future.
When you go to buy a Tesla you are not going through a car dealership/dealer, you are buying factory direct. That is the foundation for manufacturer-direct sales.
Car dealerships hate the manufacturer-direct sales model because they see it as competition with an unfair advantage. As with any factory direct purchase the middle man, in this case the car dealer, is cut out of the process meaning consumers save money on the product and basically pick the car, pick the features you like, pay the set price, and wait for your order to come in. There is no dealership upselling, no pressure to buy, and no lame promotions that you don’t care about because salespeople aren’t paid on commission.
Car dealerships are not taking this change lightly. There has been a bitter battle in many states led by well-financed and connected car dealers to keep Tesla and their manufacturer-direct sales model out. But one by one more states are opening their doors to Tesla, with Massachusetts being the latest to reject a lawsuit by car dealers seeking to stop Tesla sales in the Bay State.
It is because of this unified front against Tesla by car dealerships nationwide that Mr. Ziegler’s piece stands out. While Mr. Ziegler does maintain the battle cry of car dealerships by saying,“Franchised dealers give consumers a competitive advantage with service and pricing. Factory-owned stores do not provide that.” and,“Politically, consumers might think the protected dealer franchise system is not in their best interest. Dealers generally sell new cars at a loss or break even. The manufacturers make the lion share of the profit. With manufacturer control, margins and prices would increase.” Mr. Ziegler does freely admit that Musk knows what he is doing, “He’s (Musk) never lost at anything he’s attempted so far.”
So, in summary, what Mr. Ziegler is saying is that even though he does not like the idea of a manufacturer-direct sales business plan and feels it will end up costing consumers more money due to lack of competition in the market, the current car dealer system can not survive the tide that is Elon Musk. Mr. Ziegler is saying that Musk’s controversial manufacturer-direct sales business plan is the way of the future, and that the current business plan for car dealerships needs to adapt or die. Mr. Ziegler believes there’s a place for both sales models in the market, but only if dealers can deliver equivalent or superior customer service or prices.