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Transportation Businesses The Almighty Buck

Why Car Salesmen Don't Want To Sell Electric Cars 482

HughPickens.com writes: Matt Richtel writes in the NYT that one big reason there are only about 330,000 electric vehicles on the road is that car dealers show little enthusiasm for putting consumers into electric cars. Industry insiders say that electric vehicles do not offer dealers the same profits as gas-powered cars, they take more time to sell because of the explaining required, and electric vehicles may require less maintenance, undermining the biggest source of dealer profits — their service departments. Some electric car buyers have said they felt as if they were the ones doing the selling. Chelsea Dell made an appointment to test-drive a used Volt but when she arrived, she said, a salesman told her that the car hadn't been washed, and that he had instead readied a less expensive, gas-powered car. "I was ready to pull the trigger, and they were trying to muscle me into a Chevy Sonic," says Dell. "The thing I was baffled at was that the Volt was a lot more expensive." Marc Deutsch, Nissan's business development manager for electric vehicles says some salespeople just can't rationalize the time it takes to sell the cars. A salesperson "can sell two gas burners in less than it takes to sell a Leaf," Deutsch says. "It's a lot of work for a little pay."

Jared Allen says that service is crucial to dealer profits and that dealers didn't want to push consumers into electric cars that might make them less inclined to return for service. Maybe that helps explains the experience of Robert Kast, who last year leased a Volkswagen e-Golf from a local dealer. He said the salesman offered him a $15-per-month maintenance package that included service for oil changes, belt repair and water pumps. "I said: 'You know it doesn't have any of those things,'" Mr. Kast recalled. He said the salesman excused himself to go confirm this with his manager. Of the whole experience, Mr. Kast, 61, said: "I knew a whole lot more about the car than anyone in the building." "Until selling a plug-in electric car is as quick and easy as selling any other vehicle that nets the dealer the same profit, many dealers will avoid them, for very logical and understandable reasons," says John Voelker. "That means that the appropriate question should be directed to makers of electric cars: What are you doing to make selling electric cars as profitable and painless for your dealers as selling gasoline or diesel vehicles?"
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Why Car Salesmen Don't Want To Sell Electric Cars

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  • Easy solution (Score:5, Insightful)

    by viperidaenz ( 2515578 ) on Wednesday November 25, 2015 @06:58PM (#51005477)

    If dealers don't want to sell them, let manufacturers sell direct to the customers.

    • by BoRegardless ( 721219 ) on Wednesday November 25, 2015 @07:00PM (#51005495)

      Tell em what you want, they tell you how much it costs and when and where you can pick it up.

      • Re: (Score:3, Informative)

        by Anonymous Coward

        Costco has a terrible car sales model.

        They "shop around" to local dealerships by getting them to give a quote for the requested model. Then they sell it to you at the lowest first-quote price of any local dealership, plus a little markup for Costco, of course. Lowest first-quote price. That's pants-on-head retarded. You at least should get a second round of quotes.

        Oh, and the best part is that they won't even bother to get a price for you unless you first commit to completing the sale with them! So you can'

        • AC is incorrect. Costco lists the price so that you can shop around. No haggling.

          • I don't know if Costco has changed the way they do it recently, but when I tried to use Costco's car service 5 years ago it certainly wasn't that simple. I went to Costco to check the price, and they told me I'd have to contact the Toyota dealer to get the price (and there was only 1 participating Toyota dealer in the area). I called the dealer up, and they absolutely refused to provide any pricing info over the phone. They wanted me to drive there...20 miles away. Let's just say I was less than impressed b

            • That is a dealership to avoid and never go to...

              It has been a long time, many years, since I purchased a car in person, the last few were via e-mail...

              The most recent one was at my dining room table...

              They want to sell a car, they'll make it easy for me, not the other way around...

        • by TWX ( 665546 )
          They also deal with the fleet sales department rather than the retail sales department, and the fleet people just look at the numbers and figure out the dealer's markup and make a fairly quick response.

          The best technique is to buy a car out-of-state though. Sales tax is paid to your state, not to the selling dealer's state, and there is no county or city sales tax in the equation. On top of that, if your state requires that the sales tax be based on the MSRP rather than on the negotiated price, this te
    • by Chris Mattern ( 191822 ) on Wednesday November 25, 2015 @07:02PM (#51005517)

      ..except that the dealers have made that illegal, for the most part. For our protection, of course.

    • Re:Easy solution (Score:5, Interesting)

      by Irate Engineer ( 2814313 ) on Wednesday November 25, 2015 @07:19PM (#51005623)

      This +100.

      Dealers need to step aside and get out of the fucking way of the sale. It's a stupid business model. There is no value in having a middleman in this process anymore.

      Put a firm price tag on the damned vehicle along with a spec sheet - haggling over the price of the of an expensive item like a car like you are in some Algerian bazaar pisses people off. Have an attendant handle the keys and accompany road tests. Done.

      I'll never go to a chain dealership to buy a car. I've bought my last several cars off lease from a used car seller who puts a price tag on the car, and simply hands you the keys for a road test and asks that you have the car back by closing time. Their prices are good because they don't have to pay a bunch of salespeople to play fucking mind games with customers all damned day, and they have good sales volume. They have an awesome local reputation.

      • If there were merely no value, it'd be an improvement. Not only does the dealership take its cut; the buyer has to interact with a car salesman, a definite negative-value-added experience.
      • Re: (Score:2, Insightful)

        by Anonymous Coward

        Its not a stupid business model by any means
        You forgot that the US didn't invented the car, they invented the business model, in plain English it means the land of the opportunity where any old world delinquent could get rich milking the unaware
        basically the manufacturer makes the car and makes deals with the dealer that will make money of parts and maintenance for a mint on the condition that the dealer push the brand by any trick available and in return the manufacturers make sure the customers are milked

      • by Luthair ( 847766 )
        I agree, I'm a programmer in my 30s and the main reason I don't own a car is I can't be bothered to deal with dealer bullshit.
        • i had a great experience at a mazda dealership. I think they take a different approach to pricing models and sales goals. its also true that in shopping for a car i went to a number of other dealerships that were shady as fuck. generally, you can tell in 15 mins if you feel comfortable there or not. if not, just walk away (literally, in midsentance, just be like "i'm really happy for you and imma let you finish, but first i need to get something from my car")

          • > i had a great experience at a mazda dealership.

            Saturn used to be like this. I had very positive experiences with them, for new car sales and used car sales, and for vehicle service. They did try to upsell, but gracefully, and took "no, thank you" for an answer. I found it sad that GM elected to sell off this division, rather than their other divisions, and the division closed when the sale fell through.

    • I imagine that's what will happen, because if people want to buy these, then someone will sell them. If it's not the current dealers, it'll be someone else.

      That means that the appropriate question should be directed to makers of electric cars: What are you doing to make selling electric cars as profitable and painless for your dealers as selling gasoline or diesel vehicles?"

      Is the bit of stupid I noticed because that's not how the world works.

    • that's all cool and stuff, but almost all car manufacturers work through the dealership model, and even if the law changed they would still go through the dealerships. so how would this help?

    • one stone 2 birds.

  • by Rix ( 54095 ) on Wednesday November 25, 2015 @06:58PM (#51005483)

    Why should they make any profit whatsoever? They're an anachronistic middle man.

    • Re: (Score:2, Interesting)

      why are they anachronistic middle man? the auto OEM wants to be an OEM, not a retail sales company. that's why they choose to contract with the dealers. you think Kia wants to open up their own showrooms at malls across america? I assure you not. The dealer is there not for the benefit of the consumers, but for the benefit of the OEMs.

      • by pla ( 258480 ) on Wednesday November 25, 2015 @11:16PM (#51006519) Journal
        you think Kia wants to open up their own showrooms at malls across america? I assure you not.

        Hey, if Kia doesn't want to sell directly to me - Tesla does. I have no problem with both business models competing with one another.

        I do, however, have a problem with needing to deal with middle-men because of protectionist laws that forbid companies like Tesla from selling directly to me. But hey, YMMV, right?
  • by JoshuaZ ( 1134087 ) on Wednesday November 25, 2015 @07:01PM (#51005509) Homepage
    The takeway I get is that Tesla's attempts to sell directly and avoid dealers makes complete sense because dealers have a clear conflict of interest here. Heck, it makes it seem like we should get rid of dealers altogether since they won't in general want to sell any cars that are very novel or that require substantially less maintenance.
    • by AK Marc ( 707885 )
      Dealers have a conflict of interest because manufacturers are dumb. Manufacturers have variable margins built into the cars that encourage sales. One would hope they line up with the maker's desires (or profits), but often they don't. And makers like GM that have $2000 rebates on everything almost all the time encourage buyers to avoid them when there isn't a sale.
    • Even beyond the conflict of interest, the dealer doesn't actually provide a useful knowledge base to help you make an informed decision when buying a car. If you ask them *any* question whose answer isn't plainly stated on the sticker or in the meager sales brochure, you will get one of two answers: 1) A shrug and, "I dunno". or 2) A flat out lie. A couple hours of research on a car will make you the foremost expert in the building on that particular car. By a significant margin. Car sales people are

      • Re: (Score:2, Interesting)

        when was the last time you shopped for a car? I shopped for a car last summer, and it was an eye opening experience. some dealerships were dodgy and I got out of there fast, and other dealerships were really great and spent a lot of time with me.

        and dealers aren't useless. they have incredible value... to the OEM. you think a foreign company like Kia wants to put billions into the ground to open up retail stores across America? They would much rather partner with other companies to be the retail agents, aka

        • by geoskd ( 321194 ) on Thursday November 26, 2015 @09:12AM (#51007901)

          and other dealerships were really great and spent a lot of time with me.

          You as the end consumer paid approximately $70 per hour for the time they spent with you, including the time of *both* people it took to process your loan application, *and* the two hours they stood around waiting for you to arrive. After all of that, they still provided you with less useful information than you could have gleaned by reading the relevant consumer reports issue. I'm sorry to have to be the one to tell you, you got swindled and you apparently didn't even know it. All told, that middle man added approximately 8%, which for a Toyota corolla is about $1500. Was it worth $1500 for them to treat you the way they did, and do you still feel that their service was "really great"?

          To put that in perspective, $1500 would buy you a night at a Waldorf Astoria with a McLaren MP4-12C rental car [hilton.com] for the day.

    • And we have a winner. :)

      The dealers, through political patronage, are fighting tooth and nail to prevent this model for the very reason that it will dramatically cut into their post-sales revenue stream.

      There is absolutely no reason for dealers to exist anymore. Just allow the car manufacturers to have showrooms and sell/maintain vehicles without the middleman.

      Surely, those smarmy sales guys can get jobs working for EMC, Cisco, Oracle or somesuch. :)

      • There is absolutely no reason for dealers to exist anymore. Just allow the car manufacturers to have showrooms and sell/maintain vehicles without the middleman.

        why would you think that if the law changed that everything would become different? OEMs don't *want* to sell direct to public. They like the dealer model. it works very well for them.

    • by ksheff ( 2406 )
      The manufacturers don't want to sell you "any cars that are very novel or that require substantially less maintenance". Hell, they don't have to be all that novel. Just try some manufacturer's "build to order" site for a car. "Oh, you want a manual transmission and a normal spare tire on that Chevy Colorado?...Too bad, you need to upgrade to the V6 and get the automatic." WTF?!?! A few of Fiat-Chrysler's vehicles are built in Europe and have more powertrain options than what they will sell you in the
  • from the owner. cheaper and easier. avoid the dealer.
  • by karnal ( 22275 ) on Wednesday November 25, 2015 @07:05PM (#51005537)

    "Would you like to buy the lifetime software upgrades for only 10 easy payments of $99.95? It's non-tranferrable."

  • I'm not sure the average service cost is that much less when you factor in replacing a $4000 battery pack every 8 to 10 years. Also, there are high end SUVs that cost even more than the low-end Tesla Model X at $80,000.
    • by jopsen ( 885607 )

      I'm not sure the average service cost is that much less when you factor in replacing a $4000 battery pack every 8 to 10 years.

      Well, that's a single big expense.. It's not a yearly visit to check oil every year...
      Granted I don't know much about cars, but don't eletric cars still need winter tires, aren't there still moving parts that needs oil, etc?

      • Granted I don't know much about cars, but don't eletric cars still need winter tires, aren't there still moving parts that needs oil, etc?

        You only need winter tires if you're in a location that experiences winter. Even then, for most of the USA good quality all-seasons* are more than sufficient. You still need to replace them though.

        Yes, there's generally still 'lots' of oil in an electric vehicle. However, the reason engine oil needs to be replaced so often is heat and contamination. The heat breaks down the oil eventually, and the byproducts of combustion contaminate it, which is why you need a filter.

        The oil in a properly operating EV

        • *Disclaimer: ~2" of snow and today

          Where I live, 2" of snow would mark the coming of the next Ice Age....

          • Where I live, 2" of snow would mark the coming of the next Ice Age....

            Where I live, 2" of snow would mark the coming of Halloween.

      • by ksheff ( 2406 )

        Well, that's a single big expense.. It's not a yearly visit to check oil every year...

        You should check the oil in your car more often than once a year.

    • I don't know how the expected lifetime service cost shakes down; but what the dealership cares about is the margins on the service and maintenance they perform; not the absolute cost.

      I would suspect that battery swaps, while they involve a very expensive part, would be pretty unexciting for the dealer. Unless the manufacturer is extraordinarily tight-lipped, the price of the battery will become public knowledge; and the procedure for swapping it out(while it might require equipment that makes DIY impract
      • by jedidiah ( 1196 )

        ppppfffft...

        I only go to the dealer for the every 30K service. The more frequent stuff I do at whatever "jiffy lube" happens to be most convenient on that particular day.

        Going to the dealer for everything is too much of a bother.

        That's one reason I would avoid crummy American brands and over hyped luxury brands.

    • Re:Less service? (Score:5, Informative)

      by rahvin112 ( 446269 ) on Thursday November 26, 2015 @02:34AM (#51007055)

      Every car I've ever owned has had more than $4k in maintenance costs by the time it's 10 years old. The water pump, the timing belt, flushing the transmission, flushing the radiator, etc... amount to a pretty penny. But the oil changes alone are going to net you more than $1000 in that timeframe. You get one major part going out on a combustion car that requires the engine to be disassembled and you'll drop $1k before they even know what's wrong. Yea if you do all your own maintenance you can save money on stuff but mechanical engines break down over time.

      And from what I've seen of battery replacement information the only batteries failing at 8-10 years are the NiMH batteries in the Prius. The lithium-ion in the more advanced vehicles have not exhibited the same failure rate and currently have a very poorly understood failure rate because not many have failed.

  • by 93 Escort Wagon ( 326346 ) on Wednesday November 25, 2015 @07:10PM (#51005571)

    Not exactly the most rigorous analysis I've seen.

  • by larwe ( 858929 )
    Car manufacturers, apart from those couple of specialized boutique electric-only manufacturers, DON'T particularly want to sell electric cars. They want to sell *cars* period. They make electric cars for two reasons: a) to game their CAFE numbers (and for this, it doesn't matter if the cars go straight into a shredder off the production line - they only have to be manufactured, not sold), and b) so they can issue press releases saying "we make the greenest car in the world, here's a 15 second video of polar
  • by Streetlight ( 1102081 ) on Wednesday November 25, 2015 @07:22PM (#51005635) Journal
    Fossil fuels will increase in price again and eventually run out. This may take a long time but first the vast majority of cars will be electric hybrids and then fully electric. The one thing limiting the transition to plug in electric cars is the infrastructure of charging stations or battery exchange locations allowing long distance travel. Then again, long distance travel may done when most towns are connected by electricity powered trains and cars are only for local transportation.
    • What's limiting right now is car manufacturers failing to provide a product because electric is inherently less costly to produce and maintain than ICE vehicles thus margins are going to be a lot smaller.

      There is also no governmental support to come up with an open standard for charging across existing and upcoming brands or mandate gas stations to install a single charger per dozen or so pumps.

      Tesla is making top-end, well supported cars (ala Ferrari/Rolls Royce) for the price of an average outfitted luxur

  • by Feral Nerd ( 3929873 ) on Wednesday November 25, 2015 @07:49PM (#51005771)

    Industry insiders say that electric vehicles do not offer dealers the same profits as gas-powered cars, they take more time to sell because of the explaining required, and electric vehicles may require less maintenance, undermining the biggest source of dealer profits — their service departments.

    Electric cars are the future, gasoline guzzling cars are not. Anybody who thinks like that should join the same support group frequented by all those people who bet their business on film cameras being the future because "it takes too long to explain to customers how them them newfangled digital cameras work". Anybody who puts in the effort to push electric cars today faces an uphill struggle but also stands a good chance to gain market share down the line at the expense of established dealers who are to short sighted to bother with new technology.

  • by Dega704 ( 1454673 ) on Wednesday November 25, 2015 @07:56PM (#51005809)

    If you were to ask me what I like most about electric cars (and Tesla in particular), it wouldn't be the economic or environmental benefits, or even the technology.

    It's the way they are taking a long stagnant and mostly non-innovative industry and dragging it kicking and screaming into the 21st century. If the people who constantly preach about the free market truly appreciated the concept, they would know that in a legitimately free market, you either change with the times or you get kicked to the curb to make room for those who are actually innovating.

    The more they resist, the more I'm going to enjoy watching them weep and wail as they slowly become irrelevant.

  • ...as demand for gas burning cars drops, pinching margins on the gasoline side. At some point in the future, nobody will be buying gas powered cars at all, so dealers won't have anything to compare the electric car margins to at all.
  • by CohibaVancouver ( 864662 ) on Wednesday November 25, 2015 @08:02PM (#51005835)
    This is Slashdot. Any discussion of electric cars must include these obligatory posts -

    "My daily commute is 762 miles. Therefore, electric cars are useless to anyone and everyone."

    (Variation also acceptable: "Twice a year I drive 600 miles to Phoenix. Therefore, electric cars are useless to anyone and everyone.")

    "My electric power comes from coal, therefore all electric cars are more polluting than my Grandpa's 1978 Oldsmobile Cutlass."
  • Electric cars are too expensive and too little profit because they don't make/sell enough of them, but we won't sell them because they're too expensive and too little profit. Sounds to me like someone needs to take a baseball bat and 'explain' to a few people that they're holding up progress, and to knock that shit off before someone has an unfortunate accident. Seriously, I'm getting pretty sick and tired of the almighty dollar being the deciding factor on everything. It's not science or technology or even
  • Better question (Score:4, Insightful)

    by ceoyoyo ( 59147 ) on Wednesday November 25, 2015 @08:55PM (#51006035)

    A better question. Just why is it so profitable to sell gas powered cars?

    • Because they require more service than an electric car, as the article mentioned. I don't buy the argument that electrics are too different from ICE cars Most car sales people don't know much about a full featured ICE car, either. Their primary objective is to sell you something on the lot, because it has a carrying cost. Better still, lease it to you or "help" you finance it and get you to buy an extended warranty. But the big money comes when you service it.

      You can make an argument that having a lot of
  • by sootman ( 158191 ) on Wednesday November 25, 2015 @09:13PM (#51006087) Homepage Journal

    "What are you doing to make selling electric cars as profitable and painless for your dealers as selling gasoline or diesel vehicles?"

    What am I doing? That's easy: I'm NOT GIVING A SHIT HOW THEY FEEL. If I want to buy one, I'll walk into a dealer, and they can take my money, or not. Salesman's not making enough money? Wah wah wah, go get a real fucking job and do something USEFUL for a living.

  • In a connected world, customers can pick the cars straight with the makers - the whole article is written as if the unnecessary middle-men where a show stopper. They are the ones being stopped, and what makes one wonder is that are not gone already.

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