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Could Tesla online-only strategy be a harbinger of how cars are sold in future?

Norris McDonald
Written by Norris McDonald

I came away from the recent Canadian International AutoShow convinced that the revolution in the automobile industry is just the tip of the iceberg of the changes that are coming to society as a whole.

That the changes are coming, let there be no doubt. It’s the complacency in the face of these changes that worries me. Let me give you an example.

Fewer and fewer people are buying newspapers. Anybody who was paying attention saw this coming as far back as 1990. It took at least 20 years for the people running the papers to catch on to what was happening and I’m afraid they still don’t get it. They talk about “transitioning to digital” as if this will be their salvation. But just about the only thing that’s changed is instead of putting the words on paper, the words are now on a TV screen. Or on a phone. There is very little, if any, video (for want of a better word) and/or audience interaction and participation. Multimedia, which is another buzz word, is exactly that (many mediums), but pretty much nowhere to be found on newspaper websites.  It’s no wonder nobody under 30 looks to newspapers.

Talk to anybody in retail and they will tell you that people will always want to try on a pair of jeans or a dress or a suit before purchasing. Oh, yeah? I have news. You can measure yourself for a suit online now. And buy and pay for it online. And it fits just fine when it’s put inside your front door the next day. Yup, it can be that fast. It’s not just books that are delivered to your house at warp speed. It can be anything and everything. The people running shopping centres had better be planning now for the day – not far off; I say 10 years, max – when there will be no stores in them. There will be no stores, of course, because everybody will soon be doing everything, including their shopping, online.

Within the last two weeks, Elon Musk, the genius behind Tesla, has taken another great leap forward. In order to bring the price of the Model 3 down to US$35,000, he’s closing stores and laying off people. Not all stores and not all people but enough.  Like him or not, this guy is always ahead of the curve.

But talk to dealer principals and they will tell you what the men’s wear and shoe stores have been telling you all the way up to the day they closed their doors for good: people will shop online but they will always want to see their car, and to sit in it, and maybe even drive it, before closing the deal.

Not so, says Musk. “It’s 2019, people want to buy online.”

It’s not that the dealerships haven’t been trying. You can go to a dealer website and have an online chat about the products for sale with a salesperson on duty. Some brands take the car to the customer for the test drive. They are doing all sorts of “traditional” things to continue selling automobiles.

I don’t think it’s enough. They have to start thinking outside the box. They have to start doing things completely differently. Much like Musk and his decision to shut down his stores and lay off his sellers.

He’s been right to this point. If I was a betting man, I wouldn’t be going against him this time, either.

POSTSCRIPT

I’m talking about automotive retail here. There will still be service departments, even when everything is powered by electricity and Level 5 autonomy is the norm. Why? As four-time NASCAR Pinty’s Series champion Scott Steckly told me when I dropped by his shop for a visit recently: “Cars will always need brake jobs, alignments, people will want their snow tires taken off and their all-seasons put on. Once upon a time we had to change spark plugs. We don’t do that any more and we still have a thriving service industry. So we won’t be changing the oil any more but other than that, I don’t think that much will change.”

We’ll see.

AUTO SALES STILL TERRIFIC, AUTOMAKERS SAY

It’s interesting how people can see the same thing but see it in different ways. No, I’m not talking about politics. I’m talking about statistics when it comes to car sales. For instance (and I don’t want to embarrass anybody, so brands will not be identified), one OEM – not among the Big Three (FCA, GM and Ford) – is down nearly a quarter in total sales not only month-to-month but year-to-date so far in 2019. And yet they sent out a news release that says: “Third best February for combined brands and each brand on its own;  X, XX and XXX all have outstanding months; Model B up 7 per cent YOY.

This, of course, is known as spin. And yes, you can’t blame the PR people for trying to make any message they put out positive. But sometimes it can get a little silly.

nmcdonald@thestar.ca