Should traditional automakers switch to online sales?

Electric vehicles are disrupting more than just a shift from traditional automakers to electric vehicle manufacturers, they are also disrupting the way customers buy vehicles. Could electric vehicles disrupt the traditional dealership model?

What happened: Traditional automakers could struggle with competition from EV makers when it comes to buying online and providing accurate delivery times, Wolf Ventures Managing partner Gene Munster argued.

“While not quoting delivery times online may seem insignificant, it is another example of how traditional automakers are struggling,” Munster said.

Loup surveyed 11 automotive companies selling electric vehicles in the United States. The companies surveyed were Tesla Inc. TSLA, Ford Motor Company F, Hyundai Motor Corporation (OTC: HYMTF), Renault group RNLSY-belonging Nissan, Geely Automobile Holding GELYY Volvo, Rivian Automotive SHORE, Volkswagen Group VLKPF-belonging Audi and Porsche, Tata Motors Limited ADR MTT-belonging Jaguar, BMW BMWYY and Chevyproperty of General Motors Company GM.

Munster said only three of the 11 companies surveyed provided estimated delivery times online.

“I think manufacturers who resist giving consumers the option to order online, or who hold back on basics such as delivery times, are operating from the 80-year-old sales model of ‘bringing consumers into the store and pressure them to buy.”

According to Munster, the current sales model involves getting information from a potential buyer, getting them into the showroom, and then pushing them to buy an available vehicle.

Munster said the average delivery time for Tesla is 175 days. Other delivery times provided by companies called by Loup were 130 days to 210 days. Several of the EV models from the companies surveyed do not provide quote times on the vehicles.

Related Link: Tesla’s Religion: How Gigafactory Texas Fanfare Shows EV Giant’s Strong Brand

Why it matters: Electric vehicles have disrupted the automotive market, and alongside changing vehicle specifications, many are offering online sales and the ability to customize the vehicle before delivery.

Traditional automakers have used a dealership model that includes franchised dealerships, service centers, and other elements that increase revenue with the sale of the vehicle.

Munster said “traditional automakers still don’t get it” and he might be right.

Tesla has dominated the electric vehicle market in the United States. To be competitive, traditional auto companies must build models of electric vehicles that customers want, price them attractively, and be able to sell them and get them to customers.

Without adapting to the online sales model that has been convenient and has lowered the price of vehicles, traditional automakers may have a harder time dealing with electric vehicle leader Tesla.

Photo: makesushi1 via Shutterstock

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David A. Albanese