Home Car Review Tesla vs. Car Dealers – What’s the Deal? | Consumer Reports
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Tesla vs. Car Dealers – What’s the Deal? | Consumer Reports

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Electric carmaker Tesla is fighting several states for the right to sell its cars directly to its customers. Consumer Reports explains both sides of the issue. Watch our video road test: http://bit.ly/146tNrA

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Comment(29)

  1. Yeah, it makes perfect sense that automaker-owned sales center would be less likely to respect warranty and would be reluctant to correct dangerous design issues.  It's not like they'd be directly to blame for any of the negative press. And they can always just hide behind their middlemen  Oh… wait…

    /sarcasm

  2. Be aware of the monopoly and oligopoly. Tesla is the number one manufacturer of the elecric vehicle market. I am thinking that manufaturing, selling, servicing should be separated. At the very beggining of the manufacturer taking control their own market, most customers would be satisfied but I am pretty sure that people would be struggled later as much as they rule their own market. We normally feel that dealer ships are useless and just pushing up the price between supplier and customer. Yeh, that is right some of that, but they play as a buffer between supplier and consumer. Find out and see the markets which manufacturers take all the process from supplying to servicing. There must be the kartell, monopoly and oligopoly. People, I am worring that you may try to bring up a future monster.

  3. The factory gives franchise is to reduce the cost and reduce to risk of some of the liability. If there is no cost problems and liability not an big issue. Would they give that to public?? That is the bottom line and you folks need to think from there to determine which is better, direct sale or franchise.

  4. Dealerships generate more employment than Tesla does. Again, we need to see the big picture. In this economy we need jobs not over-rated and overly-priced toys.

  5. +Sungkyu Kim
    Tesla Motors is selling a cheaper car, The Model E at around $35,000-$40,000 in about 3 years.

  6. Make all cars available to purchase directly from the manufacturer and eliminate all the extra costs Stealerships add plus the sales dishonesty and turn them into centers just to pick up the car and take for service which would be owned by manufacturers. The NHSTA would still control safety recalls like they do now.

  7. whoever thinks that its better buying the car from a dealership is plain $tupid. shoot the middle man!!!

  8. Dealers are protecting us from what? I bought a car for years ago from a dealer. On my second month of ownership, I realized that my rear calipers were frozen. I took it back and they tried to charge me for it, despite my car being a two months off the lot, we'll within warranty, and a brand new inspection sticker on the car. I'm sorry, but I don't feel "protected. "

  9. Here the thing is…  Tesla Motors' vehicles are profitable at their current price point.  That profit is used to reinvest in the company.  They use those funds to research means of reducing costs in battery technology and develop lower cost vehicles. 

    Tesla Motors is unable to sell the current vehicle at a reduced, wholesale level to dealers, because they need the money they get today to work toward their future goals.  So, if they were forced to sell only to 'independent franchise dealers', the same price they currently use for Retail would become Wholesale instead.  The price that Dealerships would sell at would be higher because of their markup from their cost.

    As a result, a vehicle that might be offered by Tesla Motors at $100,000 would be sold by Dealers at $130,000 to $200,000 each instead.  At that price point, the rate of adoption would be lower, cutting into profits.  That would delay development of a mass market vehicle at a lower cost.

    Obviously, someone wants to implement these, and other roadblocks to insure that Tesla Motors fails.

  10. if we let manufacturers sell direct to consumers the cars would be cheaper but the dealerships and service centers would disappear. good luck trying to test drive or view a vehicle in person…and your warranty would become useless. we need to keep the current dealership business model.

  11. Servco Toyota in Hawaii is both dealer and Hawaii distributor and the only Toyota dealer on the main island of Oahu in Hawaii. They set the prices for entire island and do not negotiate period. They are not technical a monopoly because you could go to another island and purchase a Toyota from a small dealer and pay hundreds to ship it back, but even the 3 small dealers are supplied by Servco. A manufacturer only monopoly can really bite.

  12. If you think dealers are good, YOU ARE WRONG!!!
    Look at Nick Murray (search on youtube) he had a problem with a Porsche dealer…

    Dealers only goal is to make their accounts bigger and bigger and bribe stupid politiciants… 

    There will be a time when population will eventually start a war to this bastards… The difference between poor and rich is very very high and is not just only that, the coruption is higher … 

    It makes me very mad to know that a god damn dealer has an influents on a STATE, WTF, this world is going down… 

    There are few people like Elon Musk that doesn`t care about bank accounts, he allmost lost everything many times, but still he tryes to make the world a better place. 🙂

  13. re: "manufacturers might be less likely to respect warranties and recall services because they may view them as an expense."

    well we don't know that.  but guess what, i can save you all the trouble.  you can go ahead and assume (whether a dealer is in the picture or not) MANUFACTURERS (no matter who they are) will ALWAYS view recalls and warranty claims as an EXPENSE.   

    when it comes to this Musk/Tesla are no different than Ford, no different than Chevy, no different than BMW, no different than Proctor Gamble, etc.  Accountants control all of this and "Accounting" by definition is the same no matter where you go, so there is no "new math".  you know what the Feds call "new math"…?

    FRAUD. 

  14. What are the dealership lobbyists afraid of? If their sales and service experience is truly superior, then they will prevail. It's un-American to try to eliminate a competitor through legislation, without actually competing with him! Let the market decide. 

  15. I think tesla is very it's a different company not a car yard if you want to buy a good car is the way to go online buy a good car tesla motor company

  16. Direct sales are the way to go, it would bring down the price of vehicles. You would get better service if you buy directly from the maker.

  17. I'm going to compare the Tesla sales model to Saturn sales. They both had something in common. No drama, you go in test drive, pick the car you want and buy it. Sure you still went in for service, but it was no drama service. Good car dealerships always have vehicles to take you where you want or a car to use while yours is in the shop. I'd say this whole conversation is really childish.. Like one gentleman said, " If you're so good then your sales shouldn't change". But lets go the other way if anyone has bought a car and dealt with the drama of buying a car, then you know that it takes stress and anxiety to buy one. 

    So what I believe! I bought a Saturn because I didn't want to haggle and deal with drama. So I did and was happy with results. I have bought several Saturn's with less stress than any normal dealership. I believe that the only stress or anxiety you should have when buying a car is deciding on what car you want to buy.

    Tesla offers the straightforward deal that dealerships cannot. If you have never done a direct manufacturer sales, then you have no idea what you are talking about when it comes to what Tesla does. That's what scares the Dealerships.

  18. Make them sell to a dealership and that $35,000 base model for the Model 3 will jump to $45,000 to $50,000. Just for the base model before you start adding autopilot software, ride control, etc. That is out of range of the ordinary consumer.

  19. This is the same thing as buying a stuff online or at bestbuy. At bestbuy everything is marked up and you have shady salesmen trying to push their product. Do we ban buying items at Amazon or Newegg?

  20. Per the Federal Trade Commission (FTC) there is no 'elimination of competition' from direct sales by Manufacturers to Consumers. There is no need to have intra-brand competition in the presence of inter-brand competition within the marketplace.

    The 53 Cadillac, 61 Lincoln, and 131 Chrysler locations for 'independent franchised dealerships' that appear within the Great State of Michigan alone should be enough among domestic premium automobile manufacturer brands to allow Tesla Motors to operate their own facilities in the State. That doesn't count the hundreds of foreign brand locations that operate franchises there.

    Until October 2014 the Franchise Laws in Michigan allowed automobile manufacturers a choice: 1) They could choose to use franchises; or 2) They could sell direct — they just couldn't do both at once. A rather covert change to Michigan franchise law made it so that it is now MANDATORY to ONLY sell new cars there through 'independent franchised dealerships' — thus removing the element of choice without just cause.

    Cadillac has over 900 locations in the United States of America. Yet, during 2016, every single passenger car they offer was outsold by the Tesla Model S. That, even though there were less than 100 Tesla Stores/Galleries in the nation, and their operations were barred in 24 of 50 States. That fact pretty much torpedoes the notion that Tesla would 'sell more cars' through 'independent franchised dealerships' as representatives of NADA claim.

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