Tesla Motors Inc (NASDAQ:TSLA) has been battling auto dealerships in multiple states for much of the year. At issue is the company’s direct to consumer sales model. Many consumers have said they like it because they don’t have to spend hours at a dealership and haggle with salesmen. Needless to say, however, auto dealers don’t like this because it cuts them out of the loop.
So is Tesla’s sales model good or bad? Some suggest it may provide more meaning to consumers, while others suggest it might provide less.
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Tesla’s sales model like buying from a farmer?
Stephen Edelstein of Green Car Reports compares Tesla Motors Inc (NASDAQ:TSLA)’s sales model to buying fresh produce directly from the farmer who grew it, perhaps at a local farmers’ market. The concept for the Tesla Store came from former Apple Inc. (NASDAQ:AAPL) marketing executive George Blankenship, who was Tesla’s sales vice president until recently. He modeled Tesla’s stores after the iconic Apple Stores.
Tesla’s stores are owned by the automaker, and many of them are located insider of shopping malls. According to Edelstein, Chris Riley, who had been a strategic planner for Apple, said last week that Tesla’s sales model could change the way consumers buy cars. Riley made the comment while speaking on a panel about global trends from Ford Motor Company (NYSE:F).
Tesla’s buyers search for meaning
Riley thinks Tesla Motors Inc (NASDAQ:TSLA)’s unique method of selling cars will resonate with younger consumers, who he thinks are looking for more meaning in their transactions. He suggests that buying a car directly from the company which manufactures it could provide the meaning younger consumers are looking for.
Of course auto dealerships don’t see things this way. They think buying from a dealership carries more meaning than buying from an auto manufacturer. Riley even agrees with them to some extent, suggesting that many auto dealers offer purposes beyond just selling and fixing vehicles. He said a number of dealers which sell vehicles made by Ford Motor Company (NYSE:F) follow a legacy of “civic responsibility.”
Riley notes that dealerships are locally owned and provide more one-on-one service than buying directly from a manufacturer would?
The value of meaning in transactions
So whether Tesla Motors Inc (NASDAQ:TSLA)’s sales model provides or meaning or auto dealerships provide more meaning depends on how you look at it. Edelstein’s question is whether rural buyers will prefer dealing with a salesman while urban buyers would rather buy directly from the manufacturer. I don’t know if vehicle buyers will necessarily be split between urban and rural so much as old-fashioned and ultra-modern. But then, the concept of needing to find meaning behind a transaction seems a bit strange to me.