Are Car Dealerships Out?

Can Tesla keep selling cars with no ads and shuttered showrooms?

The electric car firm has cut showroom staff in favour of an online-first sales approach. But this is less about disrupting cars sales and more about cutting costs.

For a company in the automotive industry, an online-model seems counter-intuitive. Visiting a dealership, test-driving a vehicle and bargaining with a wiley salesperson are traditionally seen as part and parcel of the car-buying process.

“Last year, of the 140,000 Tesla Model 3s sold in 2018, 78% of the sales were made through the website. Tesla also appeals to a deeply unusual user: affluent technology enthusiasts, invested in the Tesla brand and comfortable with buying online.
82% of buyers last year didn’t even take a test drive. For these core devotees, the move is unlikely to affect their interest, just as Tesla’s no-advertising model hasn’t hindered its publicity.”

But we say Sri Lankan context will be different upon the online presence of the target market.

Elon wired

On April 8, 2019, Bloomberg revealed that Tesla had laid off dozens of sales staff from Tesla showrooms in Chicago, Brooklyn, New York and Tampa. The news came a month after Musk wrote an internal email to Tesla employees describing how the electric car firm would shift away from brick-and-mortar stores in favour of online sales.

But are these are the actions of a cash-strapped company struggling to shore up its bottom line, or a visionary firm choosing to shun stores because the majority of its customers prefer to shop online anyway? It’s complicated.

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