Tesla Motors Inc Sales Model Suits Luxury Buyers

Tesla Motors Inc (NASDAQ:TSLA) continues to fight in several states to be able to sell its cars directly to consumers. Of course there are advantages and disadvantages to the model, but it certainly seems to suit the luxury automaker well, at least for now. Matt Miller of Bloomberg and Jalopnik.com Editor-in-Chief Matt Hardigree talked about the automaker’s direct to consumer sales model this week and seem to agree that it makes sense for Tesla.

Tesla Motors Inc Sales Model Suits Luxury Buyers

What the buying process probably looks like

With most other automakers in the U.S., buyers simply go to a dealer, pick out a car, and drive it home. However, the process tends to be different with luxury buyers, according to them. They believe Tesla Motors Inc (NASDAQ:TSLA)’s showrooms do play an important role in the purchasing process, but only in the sense that it allows prospective buyers to see and possibly drive the car.

In general, luxury buyers may be more likely to visit a showroom, talk to the people who work there, then go home and think about it before finally making the purchase online.

Advantages and disadvantages to Tesla’s model

Of course the main disadvantage Tesla Motors Inc (NASDAQ:TSLA)’s sales model has is that buyers have to wait for their car. They don’t just get to drive it home right after they see it. However, statistics show that the average transaction at a dealer takes six and a half hours. As a result, people may not mind waiting for their vehicle. In fact, luxury car buyers are used to waiting for their car because they want it to be exactly the way they want it. Tesla Motors Inc (NASDAQ:TSLA)’s sales model fits their desires exactly.

One of the reasons Tesla Motors Inc (NASDAQ:TSLA) is the only automaker to use this sales model is because of the many laws which are in place and the political clout auto dealers have in many states. It takes money and political power to fight back and break through the franchise model, which is why they think it takes a small independent automaker like Tesla to break through it.

They also note that most large U.S. automakers simply have no desire to be in the sales business, and some have even tried it in the past. In addition, automakers in most other parts of the world do have a sales option, so what Tesla Motors Inc (NASDAQ:TSLA) is doing is unique only in the U.S.


About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at Mjones@valuewalk.com.