Ganesh Srivats, Tesla’s vice president of North American sales, knows a thing or two about sales. Prior to joining Tesla last year, he was a senior vice president at Burberry, the upscale British clothing and accessory house. Tesla has already upended the auto sales model by selling direct to customers, but Srivats hints that even more drastic changes are coming. He says Tesla will soon completely redesign its retail stores but declined to offer many details. “We’re throwing preconceived notions of auto sales out the window and starting from the ground up.”
The redesign may be connected to the company’s impending introduction of the Model 3, a car it expects to sell a half million of in the first year or so it is on the market. Perhaps better incorporating solar energy & energy storage products is also part of the plan. At present, Tesla is selling fewer than 100,000 cars a year via its website and network of showrooms in upmarket malls. “We knew we couldn’t rely on dealerships to promote our mission, to operate the business the way we wanted to, to provide this great customer experience,” he explains. “So we’ve really had to chart our own course.”
Tesla stubbornly refuses to advertise, preferring instead to put that money into research and development. But expanding its business by a factor of 5 may require a fresh approach for its retail locations. In fact, Musk believes that Tesla will be selling “millions of cars” in a few years. But it is prohibited from marketing its cars directly to consumers in a number of states, especially key markets like Texas and Michigan.
Srivats has nothing good to say about the way cars are marketed by traditional dealers. “When you go to a dealership, there’s all this sort of doubt about the process,” he says. “The haggling, all the nastiness around it. Did I pay the same amount as the next customer? Did I get tricked?” He prefers the way Tesla customers can build their own car either online at home or in consultation with a Tesla representative at a showroom.
“We like the idea of owning the entire process,” says Srivats. “It creates an information loop from our customers straight into manufacturing and vehicle design.” A recent survey by Accenture revealed that 75% of respondents would like to conduct the entire car purchase process online if they could.
Elon Musk is the ultimate disruptor. Many of his ideas will result in lower profits for some, especially franchise car dealers. But even the factories have gotten involved. The franchise dealer model has been the backbone of the industry for generations. They are reluctant to see it change and have mounted offensives in key states like Texas and Michigan to beat back the inroads made by Tesla.
Their efforts may be in vain, however. Elon Musk is a relentless opponent. Some would call him stubborn. The ~400,000 reservations Tesla has booked for its Model 3 worldwide are a testament that the public is more than ready to toss conventional auto dealers aside in favor of a direct relationship with manufacturers. Time, it seems, is on Musk’s side.
Source: Fast Company