Confirmation of Tesla's Sales Strategy

Agreed, that's why I will only ever buy a Tesla again.

That's true enough AnOutsider, except that everyone is entitled to feel how they feel. That is their reality. When one has to try so hard NOT to get ripped off, it's difficult not to feel that they 'probably' did get ripped off, anyway, despite their best efforts. Nobody likes to feel they've been taken advantage of and cheated. Cynic, hyperbole or not.

What else beside cars can you easily buy below the list price and yet feel ripped off?

smorgasbord said:

What else beside cars can you easily buy below the list price and yet feel ripped off?

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It's not a list price though, it's a manufacturer suggested retail price. It's like going to Jos. A. Bank and buying a $2000 suit while the guy next to you buys the same one for $800 and also gets two other suits for free.

You think everyone buying a TV at Best Buy pays the same price?

You don't think they then try to sell you extended warranties or oxygen-free copper cables you don't need?

smorgasbord said:

What else beside cars can you easily buy below the list price and yet feel ripped off?

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If you don't get invoice for a car you have been ripped off!

Starbucks below list price is a ripoff.
Apple products below list price...still ripoff

I'm totally with Scott Adams on this one. My first car I went into knowing very little and paid quite a bit more than I could have had I been a bit more savvy. I feel like I was taken advantage of because I didn't know "the tricks". The second car (completely different model and dealer) I went in prepared (I thought). I stuck to my guns and man, the guy pulled absolutely every trick in the book. It was a nightmare. Easily 2 hours in negotiations, and they hit me with something I was completely unprepared for and sold me a "new" car with over 7,000 miles on it (it had never been licensed so it was legal)! I was so angry! I made them pay me money for it, but I hated them for it and the whole stinking process. I got a reasonable price for the car in the end, but still felt completely screwed over and ripped off. I was fine with the car itself, but the buying process soured the enjoyment of it until I finally got rid of it. Never again!!

The two cars I've bought since then were both limited production and therefore the dealer (yet another one - which I'm actually reasonably happy with) wouldn't negotiate. I was actually glad to hear that. They still tried to sell the add-ons, but those are easy to say 'no' to if you're prepared ahead of time.

I am so glad Tesla is taking on the dealership sales model, and I hope they prevail.

Arnold Panz said:

AO, if you read the whole post, Adams is being a bit facetious and uses hyperbole to make a bigger point (as he is in Dilbert) about the process of buying a car. The point is that you feel like you're getting ripped off anytime you buy a car at a dealership, and that they are constantly trying to fool you into buying/paying more than you should or would if you knew better. People who buy Teslas don't need to worry about that, and that's huge. To Elon's point, this is why people rate buying cars so low in terms of enjoyment, and why Tesla can make the experience significantly less painful for the average Joe.

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I posted this earlier this year at Chelsea Sexton's blog. I'd like to believe that it describes my last bad car buying experience.

Lawrence Chanin said
April 15, 2012 @ 9:33 pm

Hi Chelsea, your statement, “It’s simple; those who are not truly invested provide a poor customer experience and hurt sales, which damages public perception of plug-in vehicles.”, was right on target.

My wife and I feel that visiting car dealerships is like going to the dentist to get a root-canal. It’s a procedure that periodically you have to endure despite the pain. Last May we visited our local Chevy dealership in the hopes of buying a Volt, but unfortunately the experience exceeded our pain threshold.

During the 1990’s I worked at an electric utility in the nation’s capitol and the company obtained an EV1. Only the executives got to drive it, but I had occasion to see it on a regular basis when I parked my car near it, and I quizzed the execs on the driving experience. Their enthusiasm must have rubbed off on me, since I have been fascinated with the prospect of owning an electric car ever since.

So for about two decades following the advent of the EV1 I waited for a modern incarnation of a practical electric vehicle to hit the market. When the Volt was announced I thought that maybe this was finally it. True, I had serious reservations about doing business with the same company that killed the electric car many years earlier. However, eventually I decided to visit the local Chevy dealership with my wife to check the Volt out.

We got to do a test drive, although the moron trying to sell the car knew less about it than I did. He also annoyed me by vigorously refusing to let me take it on an interstate highway. The car was also pricier than we expected. Nonetheless, the car did a better job of salesmanship that the sales staff so I paid the $1,000 deposit to reserve one and began my wait for the factory to allocate cars to the Florida market. The salesman made a point of explaining that the cars were being sold in California and I might not have to wait. He went on to describe that just a few weeks earlier one of our local celebrities, horror novelist Stephen King, had bought a Volt for his wife for an additional $10,000 premium over the list price.

Well, guess what, I’m no Stephen King, so I said we’d wait for the allocation. While we waited I received a call from the salesman. He said he was going over our order and he noticed that we had a PT Cruiser. He said that they had a Volt on-hand that matched our order and that they needed used cars for resale. So he figured that it would be a WIN-WIN situation, we would get our car earlier, and they would get a car that was in demand for resale. I said sure we’ll come in. When we got there it turned out that the car didn’t match our order, but more importantly they wanted an additional $8,000 over list price. We were rather incensed by this sleazy maneuver, told the salesman we didn’t appreciate being called in under false pretences, and left with a very bad taste in our mouths.

So we began to have misgivings about doing business with this dealer, and while searching for information on the Volt, I happened to find a website that listed a number of soon to be released electric cars. One of them was the very compelling Tesla Model S. WOW! As fate would have it a prototype was scheduled to visit our town in couple of weeks. When I saw it in person I immediately gave Tesla a $5,000 deposit for a reservation, and when my wife said she wasn’t interested in the Volt I cancelled my reservation and big GM lost a sale to a startup company.

Two months later Tesla invited us to join them for a factory visit. They wined and dined us, took us for a thrilling test ride, and in general treated us like royalty. It was night and day from our Chevy sales experience. Since then I have become a rabid Tesla supporter and have begun organizing a Florida Tesla Motors Club.

Larry Chanin

Zextraterrestrial said:

If you don't get invoice for a car you have been ripped off!

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Except there's no such thing as an invoice. Well, there is in that there is a piece of paper that lists the car and its options and a "price" but there are so many complicated funding mechanisms, hold backs, dealership remodeling credits, you name it, that the "price" on that invoice bears basically no resemblance to how much the dealer paid for the car.

Let's get one thing crystal clear. New-car dealerships make almost no money selling cars - ie charging a mark-up over what they pay the manufacturer which is the way most retail businesses make money. No, new-car dealerships are essentially investment banks. You see, when a dealer takes delivery of a car from a factory, they don't pay for it. In fact, they don't even pay them after you buy it. The factory effectively loans the cars to the dealers for an incredibly low rate (often 0%) and so the dealer takes all the cash (along with the kickbacks it gets for people financing cars through them) and invests it, making some money on the spread. This along with parts and service are how dealerships make money. So the price you pay for the car is secondary to them. They want to have the shortest possible time between delivery and selling the car which gives them maximum length of float to do what they want w/ the cash.

I view buying a new car as a game. Luckily I live in a densely populated area so I can easily go to multiple dealers and pit them against each other. There are also games you can play like figuring out when their quarters end so if they're behind their quota they'll deal more, etc. The single biggest thing I've found is what Scott did and that is to leave the dealership and come back the next day. The longer they keep you there the weaker you get because you just want it to end. So go in planning to not buy a car, haggle hard, then go home.

That being said, i've never had them screw up my paperwork (though I do always read it) on purpose (that would REALLY piss me off - I would not buy the car on principle) or give me the hard sell on scotch guard and such. In fact, they made a mistake in my favor when I leased a car (I was self-emplyed so there was a tax benefit) I told them I wanted to prepay for 15,000 miles/year but when I was reading the paperwork in the Finance person's office it said 12,000. I pointed this out, Finance person checked w/ salesperson and he changed the number but didn't adjust the price.

neroden,

Something you have to keep in mind is how much of this stuff is related to start-up and will only affect the first 10,000 buyers and how much of it is systemic. So much of the uncertainty and feeling of being nickel-and-dimed is because we are first. We didn't know what the service costs were going to be so we "feel" as though it's an add-on. Anyone walking into Tesla next year will be able to see a full and total accounting of exactly what the out the door and ongoing maintenance costs will be.

Also, the key is that even though there are destination fees and such they are not variable like they are in a regular dealership. Tesla just lays it out and you either buy or you don't.

This is how it was when I bought my Roadster. All costs were known, salespeople are salaried so no pressure, all the costs were laid out ahead of time, no haggling, salespeople didn't try to up-sell me on a Sport, etc. It was really a much better experience than the other cars I've bought through traditional dealers.

@neroden from the Tesla Car Buying Experience thread

neroden said:

I am, technically -- I've been driving other people's cars all my life.

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you seem to imply this is your first car purchase experience so I am not sure if your observations are based on personal experience or what other's have relayed to you. I ask because, the Tesla purchase has been far the easiest transaction for me speaking from personal experience on my 1/2 doz+ purchases. Many of the fess you list as "surprises" really should not be a surprise if you have a car purchase or two under your belt.

I would imagine that the truth hurts.

Any Tesla buyer upfront given the total + all the extras (the total total) will likely be sticker shocked into not buying since no other maker is upfront like that and their cars would look less expensive by comparison.

Dmd if you do, Dmd if you don't.

neroden said:

Someone compared buying a car at a dealer to getting a root canal. Well, buying from Tesla isn't like that, but so far, it feels like having a tooth pulled.

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That would be me in posting #11.

I realize that you have reversed your decision to buy a Tesla twice now, first canceling then renewing your reservation, and no doubt that colors your perceptions of the value proposition by sort of being on the fence. I reiterate, the buying processing in purchasing a Model S is by far much better than any I've experienced at conventional dealerships. There's absolutely no pressure by Tesla. To the contrary its a pleasant experience, not a root canal, nor teeth pulling or any other sort of dental procedure. As others have stated I didn't find any great surprises in the buying process. The only pressure I see is that of self-imposed pressures. Tesla provides 100% refundable deposits and then if you're not ready a no strings attached deferral process. What more could anyone ask for?

Judging from your recent postings you seem to have a distrust of Tesla's motives. If you really feel that your teeth are being pulled by Tesla perhaps it would be best to continue to do what you have done, wait... defer and see how things play out, or to cancel again if warranted.

Larry

I have never had a dealership put a price in the contract other than what was agreed upon. I had a very bad experience when I bought my 1976 American Motors CJ5 Jeep, but an excellent experience when I bought my 1986 Honda Civic.

Negotiating for the Civic, I mentioned that I wanted to wait for the invoice to come from CU, so the salesman handed me a copy of the invoice. (When I got the one I had ordered, it was identical.) He made me an offer on my Jeep, but he as good as told me that I'd get more selling it myself, which I did. He didn't have a blue one on the lot, so he arranged a trade with another dealership so I'd get my preferred color even though I had expressed a willingness to accept a second-choice color. And then when I bought the car, for the next decade (until the dealership changed owners) they offered me a loaner any time I came in for service.

When I bought the Prius, in 2004, when some dealerships were charging a premium, I paid MSRP. The salesman didn't know beans about the car, but it was a simple transaction. He even let me take the demo home from Saturday evening until Sunday morning. No loaners at that dealership, but a quick and simple transaction. With both the Civic and the Prius the salesmen took five minutes of my time to offer all the useless dealer add-ons and accepted my refusal without further bother.

Was I lucky? I don't think so. I knew what I wanted, had a general idea what I should pay, and walked out of dealerships that lied to me about the competition or tried to pressure me into something I didn't want. "I want X." "Let me show you Y." "Goodbye."

With Tesla it was better, except that I had to fly to Seattle, which was a nuisance. Had there been a Tesla store in Spokane I would have test-driven the Roadster two years earlier. The salesman offered me the pre-paid battery replacement plan and extended warranty, listened to my thoughts on the matter, and then told me it sounded as though I was better off not getting them. (They're priced to favor the seller, and I can afford to take the risk.) Then I had to wait a couple of weeks for delivery of my car.

Yes, there are bad dealerships out there. But there are good ones also. Just walk away at the first sign of sleaze. And don't expect the salesman (except at Tesla) to actually know anything about the car that isn't listed on the sticker.

vfx said:

Any Tesla buyer upfront given the total + all the extras (the total total) will likely be sticker shocked into not buying since no other maker is upfront like that and their cars would look less expensive by comparison.

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It's a slippery slope. If Tesla hiding the $7500 Fed rebate and $1100+ prep & delivery fees (do they really need an explicit item to have me pay Elon directly to inspect my car?) is a good idea because it gets more buyers and other car companies do it, then Tesla may adopt all the other things we hate - since they're all designed to get more buyers or more money out of buyers.

Musk has said Tesla doesn't have a demand problem. I say he should put his money where his mouth is and sell Tesla cars with no hidden fees. Put everything up front, get Blankenship to write a blog about it, get CR to write a story about it, etc. If Tesla loses some sales, what do they care - demand isn't their problem. As people buy other cars and get hit with the fees, they'll remember Tesla and come back.

smorgasbord said:

It's a slippery slope. If Tesla hiding the $7500 Fed rebate and $1100+ prep & delivery fees (do they really need an explicit item to have me pay Elon directly to inspect my car?) is a good idea because it gets more buyers and other car companies do it, then Tesla may adopt all the other things we hate - since they're all designed to get more buyers or more money out of buyers.

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The prep and delivery fees could change by location sometime in the future (even though the are the same now) and could possibly be taxed differently, so I don't have a problem with those being a separate line items. Hiding the $7500 is borderline sleazy and shouldn't be done. It should be a separate line item as well.