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Will Millennials Kill the Franchised Dealer Network Model?



April 05, 2017 – Comments (0) | RELATED TICKERS: GM , F , TSLA

The franchised dealer network is an old and antiquated model for selling cars that has been around for 100 years.   The dealer buying experience is not pleasant for any consumers, as many hate the haggling aspect of having to try to get the best price possible.   Younger generations such as the Millennials are used to  ordering their “stuff” on the computer or smartphone and prefer the Amazon or Zappos online ordering system, while eschewing malls and big box stores.

Will Dealers Fade away like Brick and Mortar Retail Stores?

Auto industry veteran, Alain Visser, a senior vice president of Lynk & Co was hired by Chinese carmaker Geely to develop a new global brand and Visser decided to use a direct-to-consumer sales model to reach customers.    Tesla has adopted this model to relative success, but is battling franchised dealers across the country in state and local courts.   Franchised dealers are suing Tesla for this model as state laws protect dealers from the direct manufacturer to consumer model.   Tesla current sells in 23 states and the District of Columbia.

Visser believes the franchised dealer model is behind the times, definitely in terms of the younger generation of buyers.  Rather than haggle with dealers, millennials would prefer to buy a vehicle the way they buy their electronics and smartphones and the auto industry hasn’t caught up to the changes in consumer attitudes.   He believes that the auto dealers are “hugely arrogant” and still sells vehicles the same way it did a century ago.  Visser cited market data showing today’s consumers want to be connected, but aren’t interested in owning a vehicle.

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