As automakers go electric, some are trying to wrest control from dealerships over how these vehicles will be priced and sold, in an effort to bring the experience closer to the direct-selling model used by Tesla. Inc.
Ford F -1.78%
Motor Co. executives recently outlined plans for a system in which dealerships would not stock any electric vehicles on their lots, but instead customers would place factory orders at a no-haggle price. The dealership is always involved but mainly to deliver the vehicle.
General Engines Co.
requires its GMC-branded dealers to follow similar guidelines to sell the recently introduced Hummer electric pickup truck. The agreement stipulates that dealers will only receive Hummers ordered by customers through GMC’s website, a GM spokeswoman said.
Carlos Tavares, managing director of Jeep manufacturer Stellantis STLA -2.41%
NV, said the company was working in Europe on a new retail model for electric vehicles which he described as a “direct sales approach”, which would still involve dealers. It’s a dual effort that aims to improve customer service — which he says lags behind other industries — and to cover the automaker’s high costs associated with switching to electric vehicles, which require expensive lithium-ion batteries.
“The additional costs of electrification cannot be paid by the consumer,” he said at a recent press briefing.
The moves mark a significant departure from the traditional model, where buyers typically choose from hundreds of vehicles on the dealer lot and negotiate prices with a salesperson.
The proposals have raised concerns among dealers, and the topic is expected to be a focal point at the National Automobile Dealers Association’s annual meeting in Las Vegas this weekend.
Some auto executives see the industry’s pivot to electric vehicles as a chance to modernize the entrenched way Americans have been buying cars for generations.
“EV customers are not like our [internal-combustion-engine] customers,” Ford chief executive Jim Farley said at an investor conference last month.
While plans are still taking shape, auto executives stress the process needs to be simpler and more digital. They want to offer relatively few models and feature combinations, and want vehicle orders to be placed remotely, either through a dealership or the manufacturer’s website.
Some automakers are also urging dealerships to sell electric vehicles at the manufacturer’s suggested retail price, although the law does not allow them to dictate the final price the dealership charges a consumer, the lawyers say. State franchise laws generally prohibit traditional automakers such as GM and Ford from selling directly to consumers.
The new approach comes as consumers express their frustration on social media – some even speaking directly to automotive CEOs – at being charged sometimes thousands of dollars above the manufacturer’s suggested retail price. , or MSRP. Some automakers have said they’re worried about alienating customers and trying to crack down on dealer profit margins, but they admit the end price is the dealer’s call.
The success of Tesla’s retail strategy is becoming a threat to traditional automakers, which are trying to boost electric vehicle sales while selling through independent dealerships. Tesla sells directly to customers online or in retail stores, after waging a years-long battle across states to circumvent franchise laws that protect dealerships.
Startups such as luxury car maker Lucid Group Inc.
and electric truck company Rivian Automotive Inc. also sell direct, mimicking Tesla’s no-holds-barred approach.
has relied solely on online customer orders for its recently launched ID.4 electric sport utility vehicle, rather than shipping them to dealer lots, said Ray Mikiciuk, VW’s U.S. sales manager.
“We looked at the competition that came before us, and frankly, it’s mainly Tesla. They created this online ordering system,” Mikiciuk said.
The change is fueling tensions with some dealerships, who say they’re concerned that automakers are using the transition to electric vehicles to insert themselves more into the customer experience, potentially usurping dealers’ traditional middleman role.
Bill Wallace, who owns 10 dealerships in Florida, said he’s worried Ford is trying to change the rules around which he’s built his business, including spending millions on showrooms and real estate to park hundreds of cars.
SHARE YOUR THOUGHTS
Have you recently bought or sold an electric vehicle? How was the experience? Join the conversation below.
“It seems their plan is to start all over again with a different retail formula. It’s a scary thing,” said Wallace, who has worked in auto retail for decades and owns a Lincoln franchise, Ford’s luxury brand. “I think they’re going to be met with tremendous resistance” from dealers, he said.
Ford executives said they plan to work with Ford dealerships over the next two months to hammer out a new electric vehicle sales contract, seeing the company’s network of about 2,500 U.S. dealerships as an advantage. in the transition to battery-powered vehicles.
The industry shift to electric vehicles is still in its infancy. Plug-in vehicles now represent only about 4% of total sales in the United States. But the changes to the electrical appliance retail model are important for dealers, as EVs are expected to quickly become a bigger part of their sales in the coming years.
Phil Maguire, owner of a dealership group in upstate New York, said the current crisis in new car and truck inventory has shown dealers there can be benefits to stocking less. of cars. But he sees the potential pitfalls of a no-inventory approach to electric vehicles.
“When supply returns to normal, many consumers won’t want to wait weeks for their car,” he said.
Write to Mike Colias at Mike.Colias@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8