Even worse, I was driving around the other day and saw entire parking lots full of inventory at this weird thing called a dealership, maybe GM and Ford are going under since they have all this inventory sitting there?
shrug, someone made a poor choice when assigned the task of triaging the product returns. Should've used a database or some other sort of private index, this publicity looks bad.
> Tsla was always storing cars at 761 but not this many
Production is up, ergo returns are up.
The count of units returned is useless without normalizing it against the units produced. Of course, even with that it's likely a bad score for Tesla. There have been many public reports of poor quality product leaving the factory because of Tesla's challenges scaling up production. These returns are just the inevitable outcome from those earlier reports.
I mean, that's expected for a growth company. What's unexpected for a "growth" company is a sudden halt in growth.
Why would production drop by roughly 10% and deliveries drop by 30% in one quarter? I think most people were expecting a drop of some kind due to the loss of the $7500 tax credit, but 30% drop is far larger of a drop than almost anyone ever expected.
Note that Tesla also dropped the price of all M3 by $2000. So Tesla also has lower-margins in Q1 2019 than Q4 2018. Lower-margins AND lower-volume is a pretty bad sign.
> Unforeseen logistics issues when delivering to a multitude of countries.
Why did PRODUCTION drop? What happened to US demand? The M3 sold 61,000 Units Q4 2018 in the USA alone. Why would expanding to China + Europe lower both production and deliveries?
Why would Tesla only make 51,000 M3 cars when trying to satisfy China + US + Europe?
Note what Tesla said:
> At the end of the first quarter, approximately 10,600 vehicles were in transit to customers globally.
Okay, so lets say all of those vehicles in transit were delivered in Q1. That means Tesla "would have" delivered 70,000 cars (total, S+X+3), which is still a 20% drop from the 90,000 (S+X+3) delivered in Q4.
US car sales have been down for the first three months of the year [1], not to mention that Ford has got out of the car-market almost all-together in the States and I suspect GM is going to do the same pretty soon, too. All things considered the next few years are going to be pretty challenging for everyone involved in the auto market, from suppliers to manufacturers to dealerships.
Instead, they realized that gas guzzling midrange sedans don’t sell anymore, and killed those off. That lets them focus on smaller and larger vehicles, which is where the demand is.
If dealerships were a good arrangement for manufacturers, dealerships wouldn't have to turn to legislation to ensure their own continued existence. I mean, how much do you think it bugs the shit out of the German auto manufacturers that they spend an unfathomable amount of time and energy making world class cars, only to have their customers have to deal with a car salesman in order to actually buy one.
In the UK, and I think the EU generally, anyone including the manufacturer can sell to the public.
When Daewoo entered the UK market they made a big deal about not having franchise dealerships or commissioned salespeople. After a few years, the Daewoo owned showrooms were replaced with traditional dealerships.
Companies outside of traditional franchises haven’t cropped up selling brand new cars. New car sales happen through dealerships. Online sales, through specialists like jamjar.com, never took off.
None of this says franchised dealerships are perfect nor that they’re the same between the UK and US. However, in a place without restrictions on who sells new cars there has been no significant change in the model.
Thanks for the data point. I guess the model that always comes to mind for me is Apple. At some point they realized that they needed to control as much of the retail portion of the customer relationship as possible in order to successfully sell highly differentiated, but expensive products (Macs). Even their high-profile retail partners (like Best Buy) have Apple designed areas in their showroom. If I were BMW, Mercedes, or Audi, who all sell highly differentiated and expensive products, I would want a similar relationship with my customers.
Also, FWIW, Daewoo is basically a non-entity in the US auto market. I'm not sure how they fared in the UK and EU, but if it's similar, that may be a confounding factor with that particular answer. And, generally, I think the dealership model arose originally because the auto industry is immensely capital intensive before you start talking about having inventory sitting on a lot in every minor city in the world. And the auto industry was more speculative, so the manufacturers were happy to let someone else front the capital for carrying finished inventory. But the auto industry is established and capital is plentiful these days.
