I was thinking about the TX dealer laws and what residents in TX need to go through in order to buy a Tesla, and that got me thinking about the financial model for an auto dealer. Specifically, if an exclusive dealer could survive. The dealer would need to be exclusive to TM or there would be reduced incentive to sell TM cars (i.e., why sell the EV is ICE cars generate more revenue).
Here are the major revenue sources for a dealer and my thoughts about the applicability to Tesla:
I'm sure there are other significant revenue sources for car dealers that I'm not listing here. However, my conclusion is that compared to the current business model if Teslas were sold through dealers it would be disadvantageous for either TM, consumers, or both.
Is there more to this - something significant that I'm missing? Can anyone think of a practical way that a Tesla dealer would make money and it would be good for the dealer, TM, and consumers alike?
Here are the major revenue sources for a dealer and my thoughts about the applicability to Tesla:
- Selling the car above manufacturer's invoice==> For a dealer to get revenue, either TM would need to lower the cost of the car to the dealer (bad for profits and therefore investors); or increase the price of the car over invoice (bad for consumers). So, this wouldn't work well.
- Selling options for new cars==> this basically fits into #1 above - the same principles apply, so this wouldn't work either.
- Servicing Teslas==> When Teslas are under warranty the dealer would need to get reimbursed by TM for the service cost. The price of parts for reimbursement would need to be increased (presumably) for the dealer to generate revenue. Again, bad for TM profits so this is not a good choice. When Teslas are out of warranty then the dealer would generate revenue. However, since currently the service centers are designed by TM to generate no profit, then compared to the current situation the dealer would need to raise the price of either/both parts and labor, compared to where they are today, so again bad for the consumer.
I'm sure there are other significant revenue sources for car dealers that I'm not listing here. However, my conclusion is that compared to the current business model if Teslas were sold through dealers it would be disadvantageous for either TM, consumers, or both.
Is there more to this - something significant that I'm missing? Can anyone think of a practical way that a Tesla dealer would make money and it would be good for the dealer, TM, and consumers alike?