Bob Lutz Talks Tesla And Its Move To Online Sales: Video11
Bob Lutz, industry veteran, occasional curmudgeon, and former General Motors vice chairman, has opinions and no fear of espousing them. On a recent interview with CNBC’s “Squawk Box,” Lutz discussed many of Tesla’s recent announcements—the move to online sales, the closing brick-and-mortar stores, and the $35,000 Model 3 to name a few. Lutz doesn’t hide his skepticism about Tesla, and this interview is no different. He took particular umbrage with Tesla’s move to online sales while also criticizing the company’s ambitious plan to own its dealerships, real estate, and inventory.
Lutz said he’s not surprised Tesla CEO Elon Musk is backtracking on owning and operating its dealerships, calling it a massive misallocation of capital. Instead, he advocates for the traditional franchise dealership model—the rule around the world, according to Lutz, pointing out how the franchise dealership model is used in other countries like Russia and China. He does come off a tad old-school in his thinking in this part of the interview, calling into question how successful Tesla will be moving sales online. He noted there are aspects of the car-buying experience that has yet to be worked out such as used car sales, vehicle trade-ins, and more, adding that the traditional franchise dealership model will be the norm for the next decade or so.
He also questioned Tesla’s ambitious plan to 500,000 sedans in the current market, as consumers are flocking to crossovers, SUVs, and trucks. However, it appears Tesla is hoping to help its position in the changing market. Musk announced, via his favorite PR outlet Twitter, Tesla would introduce the Model Y crossover March 14 with the new model on sale by the end of the year. The Model Y will share 75 percent of its parts with the Model 3, which will help with production and costs. This is something Tesla is struggling with in regards to the $35,000 Model 3, according to Lutz.
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Online sale is really good for automaker saving money, but I don’t think I can do negotiated price of car in there…
No need to negotiate the price if the price is the same wherever you go. Consumers like price stability across the board and don’t want to waste time hunting for lower prices.
Lutz is coming off a little bit out of touch with reality. The franchise dealership model may be used in Russia and China, but it is not the rule as you can also buy a car through a company owned store.
NADA doesn’t have any power to influence or dictate the primary sales models outside of the US. Tesla proved that by going through the courts, and here in Canada Mercedes has about a dozen company owned stores without any franchise holder complain, so I really don’t buy Lutz’s argument.
By and large, the consumer wants simplicity, not complications and interference that come with a dealer.
Here read this to be better informed and know what Musk fails to state.
Note there is not one automaker who would not love to move to online sales. But the local state laws are all over the place.
Also the federal goverment laws protecting franchises prevent the old automakers from leaving the system. They can not afford to buy out the dealers and they are prevented from shutting them down.
The whole system is like Pandoras Box that once opened is hard to reverse.
The only reason the automakers fight Tesla on this is to keep them on the same regulations forced on them 100 years ago.
If the goverment stepped in and removed the franchised regulations they would join in ASAP.
Carvana seems to be doing just fine selling used cars completely online. I am sure Tesla can as well.
Lutz sounds like a Tesla short seller every time he speaks about them. Makes you wonder if he’s involved in some Big Oil stock or companies.
How can he say that the Tesla is like any other car. Come on Bob. I really have always liked him and wish he was still at GM as he made GM invest in interior materials now they do not. I think he’s way out there and has been about Tesla. Just makes you wonder.
Carvana buys for you through dealers and takes the haggle out for those who don’t know how to haggle.
The customer leaves a little in the table to give to Carvana for being the broker.
Now on the other hand the automakers can take the haggle out but they could also talke all the dealer profits out and it could lower the prices on some models. On others the mfg will just make more.
Tesla is an automaker like any other they make vehicles for sale no matter how you frame it.
The dealer issue has to be all or nothing for one real big reason. If you let Tesla run free then when the. Hi see automakers come they will take advantage of the same loop hole.
While the traditional automakers are forced or stuck with the old franchise system they cannot get out of.
It needs to be a level playing field for all in the market or only the new will benefit.
The point isn’t whether customers get great deals or not, the point is people have ZERO issues ordering vehicles online. Tesla will be just fine.
It’s probably a matter of GM retainers, pension, etc.
I do wish he was still actively involved with the GM product portfolio. GM products would be in a much better place.
The interiors defiantly would be.
While I can’t stand some of the practices that certain dealerships employ I certainly DO NOT want to see them disappear and live my entire life sitting on my but clicking online and looking at little tiny pictures of a car that I can’t touch, see, sit in, drive and experience. Believe it or not many of us like to go out and hop around from one dealer to another and check these vehicles out in person. And most in my area already have the lowest price possible posted on the windshield with no negotiation needed on new models and many used ones. I can also count on taking it in right away for recalls, warranty work, service with original equipment parts if needed. If something is too expensive at the dealer I will shop around or do it myself but I have been finding that they have been competitive on oil changes and other service to the smaller chain shops like Monroe or Midas as 2 examples.
And Elon may be spinning this as a new better way forward but it also reeks of desperation and cutting costs. I buy only certain things online and something that costs up to 20-30K like a car will NOT be one of them ever! But if people want to buy something this expensive and controversial online then more power to them. Just don’t assume we all want this!
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