STLA-direct sales may be phased in

According to the Detroit News (subscription required), Stellantis is planning to move to direct sales rather than going through dealers, possibly during the shift into battery-electric cars. Tesla, the American electric car maker, has avoided using franchises, resulting in state-by-state legal battles.

Stellantis CEO Carlos Tavares claimed that distribution is about a third of a new car’s cost; to reduce those costs, for both dealers and the company, Stellantis plans to sell cars directly, at fixed prices. Dealers would still get a cut of the profit, in return for providing cars and demonstrations to customers and dealing with paperwork and preparation. Dealers would continue to provide warranty support. Ford and others are considering similar models; replacing existing franchises with company-owned dealerships would likely be politically and legally impossible in the United States.

feldman cdjr (jeep dealer)

This approach slashes inventories and dramatically increases custom orders, giving customers more control and allowing the car maker to adjust colors, options, and pricing as needed. It might increase the variety of colors offered to the public, given that dealers tend to be conservative and to prefer black, white, and gray.

Volvo, Ford, and Stellantis might be using the switch to electric cars as a way to phase in the new system, if they can withstand lawsuits and dealers’ lobbying of state legislatures. It is possible that the new system would be phased in by having some new battery-electrics ordered straight from the factory; Stellantis plans to have 40% of its sales in North America and 45% in Europe moving to an online model by 2030, which they believe will cut distribution costs by 50%.

Tavares said the change would be a win-win, since dealerships, freed of large inventories, would no longer have the risk of sudden changes in customer sentiment—such as when customers suddenly and briefly started caring about fuel economy with the 2008-09 gas crisis. Typically, American car dealerships have carried 70 to 100 sales days worth of inventory, borrowing money to pay for the cars and paying property taxes on vast parking lots to hold them.  From an original story by Breana Noble of Detroit News.

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