Tesla Looks to Put Charge Into Car Sales
With a $109,000 electric roadster, it’s clear that Tesla
is not your typical American car manufacturer. The Tesla difference, however,
goes beyond the product line. For one, the company plans to operate its own
dealerships. For another, those stores are being designed by the man behind
the Apple Store. While most expect something exciting from the latter point,
not everyone is sure what to make of the former.
David Zoia, editorial director
for WardsAuto.com, told the San Jose
Mercury News, “Company-owned stores is a concept that hasn’t worked
all that well in the auto industry. It seems the independent dealerships do
a better job of selling cars because the motivation of their sales force
is much stronger than at company-owned stores, where your job isn’t based
solely on commission and usually you’re not trying to build your business
like an independent dealership is.”
As to the Apple Store reference,
Tesla recently hired George Blankenship as its vice president of design and
store development. Apple’s former retail guru has been brought on to help
Tesla capture the same magic with consumers as the maker of the iPhone, iPod,
iPad and Mac.
“The Apple stores worked,” Mr. Blankeship told the Mercury News, “because
we were able to explain to customers why these products would change the world.
Fast-forward to Tesla, where you have proven game-changing technology that
hardly anyone knows about. We need to get people in front of these cars and tell
them the Tesla story.”
Tesla currently has 13 company-owned stores across
the globe and plans to open four other locations this year. Eventually, Tesla
is looking to grow to 50 locations as it expands beyond its roadster with the
launch of the company’s Model S sedan scheduled for 2012.
Mr. Blankenship told
the Mercury News that customers can expect continued
service from the Tesla Rangers, a service program that includes house calls.
Discussion Questions: How critical is the store environment to whether
or not consumers purchase a car? Is the time right for Tesla and will
George Blankenship be the difference between success and failure for the electric
car maker?
I guess it depends on how you define success. At over $100,000, you aren’t going to sell many cars, but then again you don’t really have to.
Taking one retail strategy and adopting it wholesale is not necessarily a strategy for success. The need to explain how products work certainly was a driving force behind the Apple stores and has worked well selling expensive technology. However, “expensive technology” is not in the same price range as Tesla automobiles.
Yes, there will be people who want to know how the technology works, and that may be an important reason for why people are intrigued by the Tesla automobiles. Is that the reason they will purchase? What will motivate people to purchase that automobile? That is what needs to be behind the store design.
If, as I read above, Tesla is going to own its dealerships, and if they are going to be providing most vehicle servicing through house calls, then they will surely not be like today’s typical car dealerships. Tesla’s facilities will be showrooms (little real estate for service will be needed with Tesla Rangers going out to the customers) where prospective customers can go to see, touch and test drive vehicles. Staff will be salaried and perhaps have attention to the sale that could take months to develop. Since it will all be one corporation, sales won’t necessarily need to take place at the dealership.
It really sounds like the facilities would be more about educating, entertaining, and romancing of the product (orders could just as easily be placed online and home delivery provided). I’m not sure about the design requirements but it does all starts to sound very much like an Apple store experience.
The Tesla cars aren’t your everyday car. They are not projecting sales in millions, let alone 100,000’s. This is something special, for special buyers that operates differently than every other car.
It seems the last place this car should go is to the typical auto dealer. The typical auto dealer, even those on the high end, add nothing to sales leverage of the Tesla. That incentivized salesperson will not be incentivized to sell such a small niche product when they can close a deal on another.
The fact that it has its own distribution system is likely more critical than if the store is magical. But, magical will help in the future. Magical will bring current non-buyers in just to look and eventually, Tesla will have autos in the Mercedes/Lexus range that these buyers might spark to.
This marketing move is brand building at its best. Clearly, this company is looking to success in the future.
Company-owned stores are exactly the right move for Tesla. First and foremost, Tesla must control their brand and the experience associated with that brand. A franchised model won’t come close to doing that. Look at even the best auto brands (I’m thinking of my personal experience with BMW): their dealerships have widely uneven service.
If Tesla establishes the brand–and once the product breadth is greater–eventually they can leverage Toyota’s distribution while maintaining their own high-end stores. Sort of like, oh, Apple and Best Buy/RadioShack?
With Tesla, the company owned store may be critical. Their product is very different from what consumers are used to and the ability of company personnel to ease consumers into the transition could be the difference between success and failure.
Consumers will possibly need help with route planning, parking, and a myriad of other issues that they don’t currently deal with every day. Awareness must be raised with buyers to the fact that the car is near silent. As it is an “in town” vehicle, they will have to become much more aware of bikers, joggers, walkers, etc. because their car will sneak up on everyone. Pedestrians and bikers depend a lot on hearing when navigating. The Tesla could become a killing machine if not operated properly. Much more responsibility will be required of these new owners and Tesla has to take responsibility for providing them the training that will keep Tesla out of the headlines.
I really like the direction Tesla is taking. It’s more of a classic retail approach; experience trumps all…and create demand with knowledge. Drive me. Touch me. Sit in me. Do anything to make that happen, then, oh-by-the-way…we’ll sell you one. Typical auto purchase processes are too focused on sales vs. experience.
I read that Tesla has some depth in their backing. I hope so, as being bleeding edge isn’t always the best road to take. Fast second is usually the financial winner. But in any case, we’re rooting for them!
Someone will have to explain to me how a roadster priced at $109,000 will be successfully sold in the U.S. The people who can and do spend this type money on automobiles may have an interest. But will there be enough interest to sustain a bricks and mortar operation in the U.S. at a time other manufacturers are looking for more ways to sell their cars profitably?
As to using Apple’s marketing genius, whom I do respect because they keep getting us to buy products every six months to replace the products we just purchased. But then again I don’t think the iPods are selling for $109,000.