The Sierra Club recently conducted a survey revealing that a staggering 66 percent of dealerships had no electric vehicles (EVs) available for sale. Even more concerning, 45 percent of these dealerships indicated that they would not offer an EV even if they had the opportunity. This raises the important question: what motivates some car dealers to have such a negative attitude towards EVs? This article will delve into Why some car dealers resist selling electric vehicles.
Challenges of Electric Vehicles for Dealerships
Dealerships have been hesitant to fully embrace electric vehicles due to the challenges they pose, such as lower profit margins and a lack of sales expertise. The traditional dealership profit model heavily relies on service maintenance for profit. This model is disrupted by the lower maintenance costs of electric vehicles. This has made it difficult for salespeople to properly educate potential buyers on the benefits of EVs. However, as the industry shifts towards electric vehicles, dealerships must adapt and make changes to better serve all customers. Dealerships need to invest in the necessary training and knowledge to confidently sell these vehicles. After all, they represent the future of the automotive industry.
Electric Vehicles and the Impact on Car Dealerships’ Profit Margins
The introduction of electric vehicles has had a significant impact on the profit margins of car dealerships. In the past, dealerships would sell internal combustion vehicles at a lower price point. They would make most of their profits over time through regular and frequent service maintenance. However, due to the reduced number of moving parts in electric vehicles, they require much less maintenance. This means that many of the frequent services that were previously required, such as oil changes and tune-ups, are no longer necessary. On average, electric vehicles cost around 40% less to maintain than their gasoline counterparts. As a result, dealerships are now taking a significant hit to their ability to generate profits, and this is one of the primary reasons why they are hesitant to embrace EVs.
Challenges Faced by Dealerships in Selling Electric Cars
Dealerships face a difficult challenge when it comes to selling electric cars. Narrow profit margins and a lack of knowledge among salespeople make it harder to sell electric vehicles. Salespeople may steer interested buyers toward more profitable gasoline or hybrid vehicles, as they are more familiar with those models and can answer customer questions more easily. This can be frustrating for consumers who are interested in the benefits of electric vehicles. It is important for dealerships to be transparent about their limitations and educate their sales staff to better serve all customers.
The Need for Education and Training in Selling Electric Vehicles
According to a recent study carried out by Cox Automotive, only 46% of dealership employees feel confident when it comes to selling electric vehicles. The primary reason for this lack of confidence is that electric vehicles pose a new set of buying questions that require extensive research and knowledge. Unfortunately, most salespeople lack the motivation and expertise to sell electric vehicles effectively.
To remedy this situation, there are several key areas where additional training and information could benefit them. These include understanding the total cost of ownership for electric vehicles compared to gas-powered models at a model level, explaining the emission benefits of electric vehicles at a model level, and knowing the resale value of various electric vehicle models. Moreover, understanding charging costs both locally and nationally, knowing the lifespan of electric vehicle batteries, and understanding the differences in maintenance costs between electric and gasoline vehicles is crucial.
It is understandable that salespeople may find it easier to steer customers toward gas-powered models that they are more familiar with. However, it is important to note that salespeople are not always provided with the necessary tools and information to make selling electric vehicles easier. Salespeople need more education and training to sell electric vehicles confidently. This will help consumers make informed decisions when purchasing a vehicle.
How Tesla revolutionized the way electric vehicles are sold
Tesla’s unique approach to selling electric vehicles has revolutionized the automotive industry. Unlike traditional dealerships, Tesla sells directly to the public through its website, offering a hassle-free, standardized buying experience comparable to Amazon shopping. With fixed pricing and a quick, customer-centered process, Tesla has set a new standard for the industry. As a result, some dealerships are adapting by offering online transactions and paperwork similar to Tesla’s approach. Meanwhile, others have remained resistant to change. Moving forward, the industry will need to become more efficient and customer-centric to meet shoppers’ demands.
Lack of Preparedness can lead to customer dissatisfaction and hinder EV adoption
When it comes to shopping for an electric vehicle, there are a number of factors to consider. Unfortunately, some of these factors can create a less-than-ideal experience for shoppers. For example, many dealerships prioritize profits and maintenance, which can lead to bias toward selling gas vehicles over electric ones. Additionally, some salespeople may not be knowledgeable about EVs’ benefits, making it difficult for shoppers to get the information they need. Finally, the sales process at traditional dealerships can be frustrating, with hours of haggling and a lack of transparency. There are several factors that can create a situation where the dealer’s interests are at odds with those of the shopper. This can be discouraging for anyone interested in buying an electric vehicle.
The Transition to EVs May Necessitate Changes in Dealer Operations and Customer Relationships
As the automotive industry adjusts to the rise of electric vehicles, dealerships have begun to shift their focus towards the needs of the consumer. This shift has been a long time coming, as the industry has remained largely unchanged for decades. The advent of electric vehicles has forced dealerships to become more customer-centric in their approach. Many dealerships are now embracing online commerce and various forms of communication, such as video, in-person, and social. Some dealerships have even gone so far as to offer delivery of vehicles to their customers’ homes or places of business. This customer-centric approach is a welcome change, and one that is sure to benefit both dealerships and consumers alike.
Threats to Existing Dealership Business Model
As electric vehicles become more prevalent, their impact on the traditional dealership model is becoming increasingly clear. On average, EVs cost 40% less than gasoline vehicles to maintain, putting a significant strain on dealership revenue streams. For a healthy dealership, maintenance service accounts for nearly all of its operating costs. Losing 40% of the cost means the dealership’s business model is at risk. However, there are some potential benefits for dealerships. With EVs, dealerships will need to carry fewer parts. Dealer financing may become more important as electric vehicles are slightly more expensive than their gas counterparts. When faced with dramatically lower profits, it is understandable why some car dealers resist selling electric vehicles.
Direct-to-Consumer Sales Could Marginalize Dealerships
As the automotive industry shifts towards electric vehicles, tensions are rising between manufacturers and dealers on the best way to sell them. Manufacturers see the benefit of controlling the entire sales process through direct-to-consumer models. However, it remains unclear how this will impact dealers and the sale of used inventory. As electric vehicles continue to disrupt the market, dealers and manufacturers will need to adapt to meet the changing needs of consumers.
Dealerships and the Transition to Electric Vehicles
Why some car dealers resist selling electric vehicles because the automotive industry is undergoing a major shift towards them, which poses significant challenges. Dealerships are facing lower profit margins and a lack of sales expertise in EVs, making it difficult for them to fully embrace this new technology. However, it’s crucial for dealerships to adapt and innovate to remain relevant in this evolving market. Collaboration between automakers, dealerships, and policymakers is paramount to ensure a smooth transition to EVs. With the right support and education, dealerships can overcome their reluctance towards EVs and better serve all customers in a rapidly changing industry. Additionally, resources like Electric Driver empower those interested in electric vehicles to find the right one and gain confidence in making the transition to electric.