As carmakers like Ford shift to selling directly to drivers, dealerships may lose the steering wheel
“What can I do to get you in this F-150?”… Ship it to me. Car dealers fear their biz model may disappear as auto giants like Ford sell more cars directly to buyers — and cut out the dealerships who make money as go-betweens. This week Ford CEO Jim Farley met with 300 dealers to cool their concerns.
- Ford wants to sell 100% online: what Farley told investors this month. The goal: save $$. Farley said Tesla’s direct sales model (think: Tesla stores) saves corporate $2K/car.
- Bye, “sell, sell, sell”... hi, “service, service, service.” Farley says dealers will still play an important role in the car game — but more as service providers, less as salespeople.
Separation of car and dealer… the auto industry’s equivalent of separation of church and state. For decades, “franchise laws” have forced automakers to sell cars through third-party dealers for antitrust reasons. But since 2013, Tesla has gotten several states to pass special laws that allow direct EV sales, sidestepping intermediaries.
It takes time to ditch old models… and dealers may not go down quietly. By 2030, auto execs expect that half of cars sold in the US will be EVs — and they’re betting direct sales will be an important channel. But unlike Tesla, legacy automakers like Ford and GM have to manage disgruntled dealers as they transition to direct sales. Pricey lawsuits could pile up, especially if big retailers like AutoNation and Penske, which own thousands of dealerships, get involved.