Despite a massive switch from big box retailers to online shopping, car sales are still done the old fashioned way, via a network of franchised dealerships, typically selling a single manufacturer’s lineup of cars.
Tesla does sell its own cars directly, but some states do no permit such sales. Now Amazon is entering the fray. Instead of buying from a dealership, or from the manufacturer, customers can directly buy three different Fiat Chrysler models right over the internet.
Initially, this is available only in Italy, but the practice is sure to spread.
Please consider Fiat Chrysler Teams Up With Amazon to Sell Cars Online Via Amazon.
Fiat Chrysler announced today that it will be be partnering with the shopping giant sell cars online at discount.
Before you get too excited, it’s important to know that this will only be offered to buyers in Italy (for now), and it will be limited to three models, the Panda, the 500, and the 500L.
A new Reuters report explains how it will work: “So, after making their clicks online, buyers will be contacted by Amazon to decide on a dealer where they can finalize their purchase and pick up the car. The vehicle should be ready within two weeks of the initial click.”
Still, this is great news for individuals who would prefer to buy a car online in order to avoid the hassle of haggling and bargaining. You do still have to go to the dealer to pick it up, but that’s an improvement over the current car buying process which can be tedious and full of upsells. After all, you do your car research online, you might as well buy it online too.
So will this sort of thing come to the US? It’s certainly possible. One of the hurdles facing online car purchases Jalopnik pointed out back in August had to do with dealer franchise laws that allow only authorized dealers to sell automobiles. In Italy, it looks like sales and pickup will still ultimately be with the dealer – Amazon is just your shopping and payment middleman – so it’s possible Amazon could do something similar stateside.
Tesla Files Federal Suit Against Manufacturers
Tesla does direct selling of cars, but many states have laws that require consumers to purchase form a dealer.
On September 22, Bloomberg reported Tesla Cranks Up Pressure to End Ban on Direct Auto Sales.
Tesla Motors Inc. is cranking up the pressure to sell electric cars directly to customers, filing its first federal lawsuit over the practice on the home turf of General Motors and Ford. Tesla sued the state of Michigan to overturn its ban on direct sales by auto manufacturers.
Until now, Tesla has been challenging prohibitions of its sales model on a state-by-state basis. A federal court ruling over the constitutionality of the ban would have national implications as the company races to bring the Model 3, it’s more affordable electric sedan, to market late next year.
“States can regulate business but can they do what they appear to be doing here, keeping Tesla out?” asked Carl Tobias, a professor of constitutional law at the University of Richmond. “It’s not a frivolous claim. They have a strong argument, but it depends on the judge and what they can prove.”
Tesla says it’s been stymied by the grip of automakers and dealers on the legislature in Michigan, which along with Texas, Connecticut and Utah are the only states where it has so far been unable to get a license to sell directly to consumers. The Palo Alto, California-based maker of electric cars and energy storage devices currently operates stores in 23 states and the District of Columbia, as well as in 20 other countries.
“Solving this legislatively always has been and continues to be Tesla’s preferred option,” the company said in a statement Thursday. “Unfortunately, the local auto dealers and local manufacturers have made clear that they oppose any law that would allow Tesla to operate in Michigan.
Self-Serving Manufacturer Propaganda
USA Today reports Auto Dealers Chief Warns of Tesla Direct Sales Model.
“Tesla’s sales model of selling cars directly to consumers would eventually lead to higher prices if the electric carmaker is allowed to move forward in Michigan, the chairman of the National Automobile Dealers Association says.”
What a hoot. If direct selling led to higher prices, consumers would buy from dealers.
End of Car Dealerships?
Having something like 18,000 car dealer middleman cannot do anything but jack up car prices.
Tesla will eventually get its way in the US, as will Amazon. Consumers, who do not like haggling with dealerships, will ultimately force the decision.
Spotlight on Distribution
I discussed car dealerships in Inventory to Sales Ratios: What’s Really Going On?
The distribution mechanism and the way autos are purchased has not changed in decades.
- Manufacturers ship autos to dealers.
- People buy autos from dealers.
- Dealers hold acres of cars.
The auto inventory-to-sales ratio is the least volatile in the group simply because the auto business has not changed. The number of auto dealers has not skyrocketed like the number of Wal-Mart stores. The number of US auto manufacturers changes very little over very lengthy periods of time.
Dramatic Changes Coming Up
Routine buying of cars online is ultimately a sure thing even if dealerships survive primarily as a customer service and maintenance setup.
On October 19, Tesla announced All Tesla Cars Being Produced Now Have Full Self-Driving Hardware.
We are excited to announce that, as of today, all Tesla vehicles produced in our factory – including Model 3 – will have the hardware needed for full self-driving capability at a safety level substantially greater than that of a human driver. Eight surround cameras provide 360 degree visibility around the car at up to 250 meters of range. Twelve updated ultrasonic sensors complement this vision, allowing for detection of both hard and soft objects at nearly twice the distance of the prior system. A forward-facing radar with enhanced processing provides additional data about the world on a redundant wavelength, capable of seeing through heavy rain, fog, dust and even the car ahead.
Auto Trends: Self-driving, Online Purchased
Not every car will be purchased online, but within a decade they will all have self-driving capability.
Car insurance will undergo dramatic changes as well.
- DOT Embraces Self Driving Vehicles: “Rise of New Technology is Inevitable, Unknowns Today Become Knowns Tomorrow”
- Self-Driving Myths Die Hard; Fear of Change; What Does the Future Hold?
Ford Targets 2021 for Mass-Market Self-Driving Car: 2021 a Near Certainty
- New Lidar Chips for Self-Driving Vehicles are Smaller Than a Dime, Cost $10 to Manufacture
- Singapore Beats Pittsburgh to World’s First Self-Driving Taxi Rides
Mike “Mish” Shedlock