Written by: Ma Xiaolei
Editor/Qian Yaguang
Design / Shi Yuchao
Source/CNBC, by Michael Wayland
Tesla's growing profitability has made traditional automakers red, and they have begun to follow the electric car maker's direct sales model.
Ford offers dealers an "EV certification" program with two main requirements: selling electric vehicles at a fixed price and investing $500,000 to $1.2 million in EV charging infrastructure. Depending on how much dealers choose to invest, they will receive a corresponding number of electric vehicles to sell. If dealers choose not to certify, they will not be eligible to sell Ford's electric vehicles.
Most other automakers or OEMs have realized the need to change their sales processes to adapt to the evolving industry, but are still exploring ways to achieve it.
Michael Alford, president of the National Association of Automobile Dealers (CAAA), which represents more than 16,000 newly licensed dealers in the United States, revealed, "We're all feeling the stones to cross the river. Different OEMs also have different levels or levels of involvement. ”
A customer wearing a mask looks into the interior of a vehicle for sale at a Ford Motor Company dealership in Colmar, California, February 1, 2021
Automakers and franchisees have complex relationships, and laws in many U.S. states make it illegal and nearly impossible to sell new cars directly to consumers, bypassing franchisees. Tesla has struggled with this since its inception.
Automakers and franchisees both want to maximize profits, but they are two relatively separate businesses that rely heavily on each other to succeed. Dealers rely on car manufacturers to provide products, and car manufacturers rely on dealers to sell and provide vehicle services.
At the National Association of Automobile Dealers Show in Dallas, how this age-old relationship fits into the pure electric future is expected to be the focus of discussions between automakers and dealers. The event attracts thousands of franchised dealers each year.
For dealers, selling EVs requires retraining of staff and significant investment in infrastructure and storefronts to be able to provide services such as EV sales and charging. Depending on the size of the dealership, these upgrades can easily cost hundreds of thousands or millions of dollars, and they certainly want to make sure the investment pays off.
Alford, a dealer who operates Chevrolet and Cadillac in North Carolina, said, "I think traditional OEMs are absolutely aware that dealerships are critical in the future. ”
Compete with Tesla
As automakers roll out electric vehicles, they are also rethinking their sales processes and selling new cars online as much as possible. Tesla was one of the first automakers to incorporate online sales into much of its business, while it still maintains physical dealerships, information websites and stores.
Moving online could weaken the dealership's role as a machining, repairing and serving as a future delivery hub that no longer stocks cars.
Automakers believe that doing so will provide consumers with a more streamlined sales process, while they also see dealers as important partners that can provide a strategic advantage when it comes to other sales and maintenance issues.
A Tesla dealer in Colmar, California, January 26, 2022▼
Honda said it plans to shift more of its sales efforts online, with luxury brand Acura's electric cars going 100 percent online. Mamadou Diallo, vice president of sales at Honda of the United States, said customers can order online and then have the car delivered by the dealer. These procedures are still being developed.
Mamadou told the media call: "We want to make sure that the convenience for our customers, that they provide what they need, bypassing distributors is not the goal. ”
Jay Vijayan, who helped build Tesla's digital and IT systems, said he is not in favor of moving all electric car sales online. Hybrid sales work best, he said, which is why Tesla and electric car startups are opening new showrooms and service centers alongside online sales.
"Apple is still opening new stores, right? Every car company you think you're going to go the direct sales route is also opening new stores. Vijayan is currently the founder and CEO of Tekion, a cloud-based reseller service provider.
The approach of automakers
Ford CEO Jim Farley has said he wants dealers to reduce sales and distribution costs per vehicle by $2,000 to compete with Tesla's direct sales model.
Ford's "EV certification" program has been resisted by dealers, as certification costs could exceed $1 million per store.
Ford dealers argued that the program violated franchise laws. According to Automotive News, 27 dealers in Illinois protested to the state's Motor Vehicle Review Board, and 4 dealers in New York filed a lawsuit against the automaker in December 2022.
Marc McEver, a Ford dealer, said he signed the highest level of EV certification at dealerships near Kansas City, but he was uneasy about the cost and time commitment of the program.
"I think everyone is worried that now let's invest so much, and by the time we start selling vehicles, the equipment is outdated again and needs to be upgraded or replaced." McVeil said. He also owns a Lincoln dealership.
In addition to the investment, dealers who choose to sell Ford's electric vehicles will need to adhere to relevant standards in order to maintain a good reputation: clear and non-negotiable pricing, charging investments, employee training, and improved customers' vehicle buying and ownership experience.
According to two people familiar with the program, Ford plans to make some modifications to the "EV certification" level. First reported by Automotive News, the changes will narrow the gap between the two tiers of the program. However, if the dealer investment is low, Ford will allocate a smaller number of electric vehicles.
However, unlike its old rival GM, Ford has allowed dealers to choose not to sell electric cars and continue to sell the company's gasoline vehicles.
GM has offered buyouts to Buick and Cadillac dealers who don't want to pay for electric cars. About 320 of Cadillac's 880 retailers have accepted the program. According to a spokesperson, the buyout of Buick is ongoing.
Akio Toyoda, who will step down as Toyota's president in April 2023 and serve as chairman, told dealers in September 2022, "In the process of investing in electrified vehicles, there are no plans to completely reform the franchised dealer network. "It was well received by the dealers.
"I know you're worried about the future. I know you're worried about where this business is going to go. Although I cannot predict the future, I can assure you. This franchise model will not change. It will remain as it is. Toyoda said.
This article was originally produced by Automotive Business Review
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