Posts made in May, 2013

Direct Auto Sales Fight in North Carolina

Posted by on May 27, 2013 in Uncategorized | 0 comments

A fight in North Carolina between the North Carolina Automobile Dealers Association  and automaker Tesla may soon be settled by the state legislature.




Per the Chris Kardish Associated Press article,

It’s the latest such battle for California-based Tesla, which like other car manufacturers must navigate a patchwork of state laws dictating how its vehicles can be sold. Nearly all states – 48 – require manufacturers to sell their vehicles through dealerships to ensure the companies don’t undercut their own network of franchised dealers, according to the National Automobile Dealers Association.

Tesla says it is cutting out the middleman by allowing people to view different options in a showroom, but then ordering the car direct from the company online rather than buying from a salesman. That approach also allows it to bypass state laws regarding franchised dealers, which have been in place for decades. However, lobbying groups say franchise dealers invest more locally and provide customer service that Tesla cannot.

The bill in North Carolina was mostly routine, simply updating the law governing the relationship between automakers and dealers. But it also changes the law to subject electronic sales to the same scrutiny. It has been unanimously approved by the Senate; the company is set to sit down with the state lobbying group for dealers, the North Carolina Automobile Dealers Association, to discuss a compromise that both sides say is unlikely to be reached. .

Tesla doesn’t yet have a showroom in North Carolina, where it has sold about 80 cars to date. The company recently announced the first quarterly profit in its 10-year history, around the same time Consumer Reports gave its Model S electric sedan a near-perfect rating.

Tesla currently operates 29 stores and galleries across 14 states and Washington, D.C. Customers can order a car online at a sales location or at home but not at galleries, which exist purely to showcase cars in states where auto dealers have launched suits or state law restricts the company from discussing sales in person.

Colorado was the first state to take action against the manufacturer’s stores, passing legislation in 2010 that halts their expansion. Since then, Minnesota lawmakers unsuccessfully pushed for a similar measure. In New York and Massachusetts, dealers have unsuccessfully sued to shut down the dealer’s stores. In Virginia, a judge recently rejected Tesla’s request for an exception to laws that prevent manufacturers from operating dealerships in most cases.

But the automaker can sell in every state because transactions legally take place in California. The North Carolina law, however, prevents customers in the state from making electronic purchases directly through manufacturers, said Diarmuid O’Connell, Tesla’s vice president of business development.

“This would be the first place to my knowledge that Internet-based communications with our company would be circumscribed,” he said.

Tesla, as a upstart automaker, has worked to build a successful business by selling direct to their customer.  This benefits Tesla by removing the requirement of building a large distribution and sales network.  It has largely proved successful, and is a model for other upstart manufacturing companies to follow.

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Not About the Experience Anymore

Posted by on May 25, 2013 in Uncategorized | 0 comments

In the good old days of retail stores, luxury retailers made the sale because of the experience of their consumers.  The look and feel of their location, decorating, environment, etc were all part of making a sale of high-end goods.

Times have changed as new forms of advertising inform customers more about the features, benefits, and luxury of the actual product.

Via Forbes Magazine:

(The) new luxury experience is in ownership. People want nice things more than
they want nice service. The luxury industry was shocked when it learned that
luxury consumers loved to (shop) at Costco, a warehouse style store that is
anything but fancy but also sells luxury vacations, furniture, high-end
timepieces, and $100,000 pieces of jewelry. A feeling of disgust fell on the
faces of luxury brand executives when they saw their goods sold via online
auction side eBay or Amazon – arguably the world’s largest shopping mall.
That however was in the beginning, and luxury brands are feeling friendlier to
places like eBay and Amazon because sales numbers prove their fears to be
without merit. The real fear however was that these mainstream shopping
experiences would devalue their high-priced goods, because they were not
being sold in a luxury environment. Nevertheless eBay and Amazon continues
to sell high-value goods at large volumes. Gucci for example has made their official authorized online retailer.

Consumers at all price levels want good service that is hassle-free and simple.  They are very informed and do not need a salesperson to steer their decisions.

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