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Old 05-07-2014, 10:06 AM   #1
XDCX
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Default Concerning Tesla, have any OEMs voiced their support of the franchise system?

I've been loosely following the news over the past several months as Tesla has attempted to get various state franchise laws overturned so they can implement their direct sales strategy.

While I haven't read all the reports, I was wondering if any of the OEMs have taken the opportunity to voice their support of the franchise system?

If not, I wonder if the OEMs are silently rejoicing that Tesla has put the franchise system and the laws designed to protect it in the spotlight?
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Old 05-07-2014, 12:39 PM   #2
twkrantz
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Yeah, I would bet the OEM's here would would love to get rid of the dealers for sure.

I mean I dont think anything is going to happen right now, laws will be there to protect jobs, otherwise whose going to buy those products.

Something we cant see coming might finish off the retail stores, kinda like refrigeration killed the ice farmer.
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Old 05-07-2014, 01:54 PM   #3
steve_biegler
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There is another company, www.eliomotors.com, that is going to try the same thing. I sent them an e-mail that I would be interested in being a dealer and they sent me to the website that states they will have their own stores. I told them about the Tesla problems and never got a response.
Actually it is a very cool concept and looks like it may just become a reality. Looks as if they will use part of the old Hummer plant.
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Old 05-08-2014, 11:17 AM   #4
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Quote:
Originally Posted by twkrantz View Post
Yeah, I would bet the OEM's here would would love to get rid of the dealers for sure.

I mean I dont think anything is going to happen right now, laws will be there to protect jobs, otherwise whose going to buy those products.
I'm still hooked into the belief that most OEMs don't want to get rid of their dealers they just want more control - that's why I keep harping on the McDonald's example.

In fact, I believe it was both Wendy's and KFC recently that made the decision to sell off a large percentage of their corporate-owned stores and switch them to the franchise model. In the case of KFC they reported they could get a better ROI by investing that capital for their plans to expand in China.

While I'm not so naïve that I'd expect an OEM to oppose Tesla and support state franchise laws, I'm a little surprised that some enterprising executive hasn't used the current opportunity to boast about how excellent their dealers are and how it makes their products more compelling to retail consumers.

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Something we cant see coming might finish off the retail stores, kinda like refrigeration killed the ice farmer.
Yep, I totally agree.

Often the greatest enemy is one you can't see and you've never heard of. Just like Microsoft, Apple, Google and Facebook - companies that were essentially created in a garage that ended up having a major impact on the world.
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Old 05-08-2014, 11:24 AM   #5
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Quote:
Originally Posted by steve_biegler View Post
There is another company, www.eliomotors.com, that is going to try the same thing. I sent them an e-mail that I would be interested in being a dealer and they sent me to the website that states they will have their own stores. I told them about the Tesla problems and never got a response.
Actually it is a very cool concept and looks like it may just become a reality. Looks as if they will use part of the old Hummer plant.
I've been meaning to create a thread about Elio Motors but I've never gotten around to it.

Elio Motors was on display at Barrett-Jackson - Scottsdale and I had a chance to look at the vehicle that was on display and talk to one of their representatives. He was telling me that they planned to follow Tesla's lead and go with company owned stores - a big mistake, in my opinion, for a small company with limited capital and limited resources.

When I get caught up I'll create a new thread about Elio Motors. It's been awhile since I've done the research, but I'm pretty sure that one of Chrysler's former executives, James Holden, is part of the company.
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Old 05-09-2014, 05:18 AM   #6
steve_biegler
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This is taken from the Elio web site.

Mr. Holden retired in 2000 after completing 27 distinguished years in the auto industry, including 19 years with DaimlerChrysler and its predecessor Chrysler Corp. (“Chrysler”). Highlights of his career include being named President of DaimlerChrysler in 1999 and Chief Executive Officer in June 2000. Mr. Holden served in various positions during his career at Chrysler, including Executive Vice President of Sales and Marketing responsible for directing all of the automaker’s sales, fleet and marketing organizations in the United States, Mexico and Canada, including Mopar parts operations. In addition, he serves as a director of Sirius XM Radio, Inc., Snap-on, Inc. and Speedway Motorsports. Mr. Holden was a director of Motors Liquidation Company until its dissolution in December 2011. Formerly, Mr. Holden served as a director for Meridian Automotive Systems, Inc. Mr. Holden earned a Bachelor of Science degree in political science from Western Michigan University and a Master of Business Administration degree from Michigan State University
Troy, MI April 18, 2014

Elio Motors, Inc., today named nationally renowned business leaders to its Board of Directors, providing expertise in automotive design, manufacturing, marketing and finance that will help the company launch its enclosed, three-wheeled vehicle in 2015.

The board members include James Holden, former DaimlerChrysler CEO; Ken Way, former Lear Corporation CEO; Hari Iyer, CEO of Pamban Energy Systems; and, Stuart Lichter, founder and Chairman of the Board of IRG, LLC.

Elio Motors' vehicle is anticipated to achieve a 5-Star Crash Test Safety Rating, get 84 miles per gallon and sell for $6,800.00. The vehicle is already creating a groundswell of customer enthusiasm, as 13,000 people have paid for a vehicle reservation, the company has 100,000 Facebook fans and averages 250,000 monthly unique visitors to its web site. Currently, the vehicle prototype is on a 33-city nationwide tour, introducing the vehicle to potential customers.

Elio Motors will create more than 1,500 jobs at its manufacturing facility in Shreveport, LA., help reduce the country's dependence on foreign oil and provide a more environmentally friendly transportation solution for American drivers.

"It is energizing to me and to our team to have so many industry icons as Directors who understand our vision, recognize the importance of transforming the American transportation industry and passionately support our development and success," said Paul Elio, CEOof Elio Motors. "We look forward to the strategic input of all our board members as we fulfill our mission of low-cost, high-mileage vehicles for American drivers."

James Holden
Mr. Holden is the former Chief Executive Officer of DaimlerChrysler, where he worked in various leadership positions for 19 years. His roles included Executive Vice President of Sales and Marketing responsible for directing all of the automaker's sales, fleet and marketing organizations in the United States, Mexico and Canada, including Mopar parts operations. In addition, he serves as a director of Sirius XM Radio, Inc., Snap-on, Inc. and Speedway Motorsports. Mr. Holden was a director of Motors Liquidation Company until its dissolution in December 2011. Formerly, Mr. Holden served as a director for Meridian Automotive Systems, Inc. Mr. Holden earned a B.S. in political science from Western Michigan University and a M.B.A. from Michigan State University.

Ken Way
Mr. Way served as the Chief Executive Officer of Lear Corporation from 1988 to September 2000 and Chairman of the Board from 1988 to December 2002. Mr. Way served with Lear Corporation and its predecessor companies for 37 years in various engineering, manufacturing and general management capacities. During his career he has served as a Director for several organizations, including Wesco International Inc., Wesco Distribution, Inc., CMS Energy Corporation, Consumers Energy Company of Consumers Gas Group, North American Rubber Inc., Cooper-Standard Holdings Inc. (formerly, Cooper-Standard Automotive Inc.), Cooper-Standard Automotive NC L.L.C. and Cooper-Standard Automotive FHS Inc., United Way Cancer Institute, Business Leaders for Michigan, RP Scherer Corporation, Lear Corp., Comerica Inc. (Holding Company of Comerica Bank), Catalent Pharma Solutions Inc., and Detroit Renaissance, He is a Trustee of Kettering University and Henry Ford Health Systems.

Stuart Lichter
Mr. Lichter is founder, President and Chairman of the Board for IRG, LLC. He oversees all critical aspects of the business, including acquisitions, leasing, and property management at IRG. Mr. Lichter has held positions with General Services Administration of the United States Government, Mortgage Loan Department of New York Life Insurance Company, Marine Midland and started Quadrelle Realty Services, Inc. In recent years, he has acquired, in various forms and partnerships, over 100 industrial and commercial properties with a total size in excess of 100,000,000 square feet-making the portfolio the largest private holding of industrial and commercial real estate in the nation. Mr. Lichter is a national leader in transforming former military bases and industrial sites into thriving retail, residential and business.

Hari Iyer
Mr. Iyer is Chairman & CEO of Pamban Energy Systems, a company specializing in enhanced oil recovery using advanced simulation tools. He has nearly 25 years of business strategy, product development and operations experience in the automotive industry.

Before Pamban Energy, Mr. Iyer was Executive Vice President at Envia Systems. At Envia, he led all customer-facing commercialization and scale-up efforts. Prior to Envia, Mr. Iyer was Vice President, Engineering at Next Autoworks Company, a Kleiner Perkins funded automotive startup. At Next Autoworks, he led the creation of a North American auto industry first vehicle development process, which involved true supplier collaboration of more than 65 major Tier-1 and Tier-2 suppliers. Before that, Mr. Iyer was co-founder and Chief Operating Officer at Elio Engineering, a product development firm specializing in automotive and clean tech applications. Prior to Elio, Mr. Iyer was an engineering analyst at Johnson Controls, working with the various automotive component groups and their OEM customers. He received his M.S. in Mechanical Engineering from Penn State and his M.B.A. from Stanford.

About Elio Motors: Founded by car enthusiast Paul Elio in 2008, Elio Motors Inc. represents a revolutionary approach to manufacturing an ultra-high-mileage vehicle. The 3-wheeled Elio will attain a highway mileage rating of more than 80 mpg while providing the comfort of amenities such as power windows, power door lock and air conditioning, accompanied by the safety of multiple air bags and an aerodynamic, enclosed vehicle body. Elio's first manufacturing site will be in Shreveport, LA., with plans for the first production vehicle to roll off the assembly line in 2015 and significant production, sales and distribution during the next two years. For more information, visit http://www.eliomotors.com or http://www.facebook.com/ElioMotors.

Last edited by steve_biegler; 05-09-2014 at 05:20 AM.
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Old 05-09-2014, 07:18 AM   #7
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This will be second attempt to revive the Hummer plant... the last one didn't work out so well. Vehicle Production Group LLC made mobility vans at the plant in 2011 and 2012. Nice looking product, but limited market... and they were sold through a traditional dealer network.
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Old 05-09-2014, 07:19 AM   #8
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And I just noticed that this is H3 plant making these... not the H2 plant in Mishawaka.
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Old 05-12-2014, 04:03 PM   #9
adastra
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I'm sure alot of research went into the decision and I would guess the overwhelming majority of the population would rather buy direct from the company than go through gauntlet that dealers throw in front of them.

Dealers have created a buying experience consumer hate... and hate them for it.
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Old 05-14-2014, 07:10 PM   #10
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I'm sure alot of research went into the decision and I would guess the overwhelming majority of the population would rather buy direct from the company than go through gauntlet that dealers throw in front of them.

Dealers have created a buying experience consumer hate... and hate them for it.
It's totally on us to change that process through transparency and being a trusted point of contact for the consumer. I know, it stinks to quote invoice (or lower) and end up giving up rate and all that, but if the consumer already knows, MSRP, invoice, incentives, and that PenFed is offering 1.49% for 48 months for online applicants, why should we put up a fight?

Provide the easiest possible process for these clients, take their money, and get the NVDR
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Old 05-19-2014, 12:18 PM   #11
adastra
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It also gives them the ability to strictly control price.

Something you're seeing with Fiat is massive discounts thanks to oversupply of 2013s, sending brand equity and prestige to the toilet. You can't offer $7000 off a $20,000 car without some serious fallout. Even if you go with a fixed price like Scion, there are still ways for franchises to work around.

They are also set up not to have inventory. Only test drive cars, then order online. Clearly they are not concerned with impulse buying or buyers remorse... We all know the chances of getting someone back once they leave the lot. There will probably be so much demand for a cheaper high range electric car they are not concerned with it.
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Old 05-20-2014, 10:42 AM   #12
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It also gives them the ability to strictly control price.
That's an excellent point.

For all of the pro-consumer groups that are applauding Tesla's efforts to eliminate dealers it would be interesting to determine if they've factored the loss of dealer-against-dealer competition into their thought process.

Tesla will have complete control of the selling price of the car, the price to get the car serviced and the price for any repair or collision parts. Will that monopoly ultimately be best for consumers?

Quote:
Originally Posted by adastra View Post
They are also set up not to have inventory. Only test drive cars, then order online. Clearly they are not concerned with impulse buying or buyers remorse... We all know the chances of getting someone back once they leave the lot. There will probably be so much demand for a cheaper high range electric car they are not concerned with it.
It will be interesting to see how this business model works for Tesla once the initial interest/demand for their car has dropped.

I remember at one time that Acura was only building the NSX if they had a retail sold order. As I recall, there were so few customers who wanted to go that route that Acura had to pool orders until they had enough orders to justify starting up the assembly plant. That meant it was almost impossible for an Acura dealer to provide a NSX prospect with an ETA for their vehicle - which further lessened demand.
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