![]() ![]() For example, manufacturers could pre-distribute cars close to urban areas-creating automobile “fulfillment centers” not unlike those used by Amazon and other retail giants to get inventory to customers quickly. Even some new-car dealerships are testing the waters of online purchasing.ĭistribution could become more centralized. Online-only companies such as Carvana and NowCar let customers skip the dealership and offer no-haggle pricing for used cars. Costco’s Auto Program, which offers discounts and streamlines the purchase process for new and pre-owned cars, has seen sales rise from 400,000 vehicles in 2014 to an estimated 650,000 in 2018. Moving a large chunk of car buying online helps lock in today’s tech-savvy customers with price transparency, online customization and financing, and standardized delivery dates. Rather than deal with dealerships, buyers are spending 61 percent of their time online to narrow down the vehicle type and options they want, determine pricing, and even purchase cars outright, the Cox survey shows. This has led to a surge in online car shopping. According to the 2019 Cox Automotive survey, around a third of car buyers dislike dealership negotiations and paperwork processes, and 58 percent resent the time they must spend at the dealership. Many consumer industries are changing because of customer demands for greater transparency and fewer hassles, and many would agree that car buying is ripe for reform. Just look at the success of Tesla’s approach to sales and distribution: Selling cars online without even a test drive speaks volumes about the potential for a faster, less inventory-intensive process. Much of the technology and tools to do this already exist-and more are on the way. Thanks to the increasing digitization of the supply chain and the adoption of new distribution and logistics practices, these costs could be reduced by a third, saving $60 to $90 per vehicle, or as much as $1 billion to $1.5 billion a year. The system is an inefficient hangover from pre-digital days. Just the carrying cost of this inventory, even at current low interest rates, is $3 billion to $5 billion, not to mention the one-time cost of the inventory and all the real estate needed to store it. Typical inventories are 60 to 90 days of vehicles with a value of $60 billion to $93 billion, depending on the mix of models and whether they are assessed at their cost to the manufacturer or the market value. Inventory that sits around waiting for a buyer isn’t just taking up room, it’s also soaking up money. In North America, cars are shipped from the manufacturer to franchised dealerships, where they sit in stock until sold. ![]() Tesla, which is touted as the clean energy revolutionary automaker, is much more than just a car manufacturer.Despite the massive transformation in automobiles about to take place-from the proliferation of electric vehicles to the advent of fully autonomous ones-one thing that hasn’t changed in the past century is the way most new cars are sold. The firm's three-pronged business model approach of direct sales, servicing, and charging its EVs sets it apart from other carmakers. Tesla, which has managed to garner the reputation of a gold standard over the years, is now a far bigger entity that what it started off since its IPO in 2010, with its market cap crossing $1 trillion for the first time in October 2021.? The EV king's market capitalization is more than the combined value of legacy automakers including Toyota, Volkswagen, Daimler, General Motors and Ford.Over the years, Tesla has shifted from developing niche products for affluent buyers to making more affordable EVs for the masses. The company's flagship Model 3 is the best-selling EV model in the United States. Tesla is the market leader in battery-powered electric car sales in the United States, with roughly 70% market share.
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