[quickdraw]

Originally Posted by GTO

It's easy for Tesla to talk about COCO dealerships because it's been selling one expensive car in an extremely niche market segment. Let them have 15 models selling in 50 countries - then we'll talk.

I disagree with you there. If you've been following up with how the company has evolved over time you would be quite intrigued with how they function. They deliberately launched with the expensive sports car, the Roadster because they knew it was their first car and there will be technical snags and issues. And people buying that car will usually have other vehicles at their disposal so won't mind the downtime. And they are working their way down from there to mass market vehicles. Their commitment to customer service is evident because they recently offered free of cost aero upgrade and performance upgrades to Roadster owners who bought their cars in 2008 (thats 8 years ago!).

Tesla has gone through lot of issues as we all know to try and sell their cars directly to customers and the dealers kept crying foul. So they had an amazing plan of just having 'experience' centres in the states where it was outlawed to sell directly to customer and they used to place the order online via the dealership in another state.

Tesla doesn't intend to be a auto maker actually, its a technology, design and sustainable energy company and its slowly and very steadily on that path. I think it currently operates in over 25 countries and have supercharger networks across continents. I visited the Tesla dealership in Burlingame, CA and it was amazing the way I was treated. I was even dropped back to the BART (Metro) station by the sales guy after the test drive.

[Zezé]

Tesla doesn't intend to be a auto maker actually, its a technology, design and sustainable energy company and its slowly and very steadily on that path. I think it currently operates in over 25 countries and have supercharger networks across continents.

This exactly the point that GTO was making. Telsa is not trying to penetrate the mass automobile market with its cars. It is targeting a niche market with premium products aimed at a clientele willing to pay for such products and high quality after sales service.

I believe that this thread is about the Indian automobile sector and hence bench-marking Maruti or Hyundai against Telsa is like comparing apples and oranges.

[quickdraw]

Originally Posted by Zezé

This exactly the point that GTO was making. Telsa is not trying to penetrate the mass automobile market with its cars. It is targeting a niche market with premium products aimed at a clientele willing to pay for such products and high quality after sales service.

I believe that this thread is about the Indian automobile sector and hence bench-marking Maruti or Hyundai against Telsa is like comparing apples and oranges.

Please read what I mentioned about the Roadster etc. They will be in the mass market segment in the coming years.

Their strategy, brand and positioning is completely different. They are already the 'Apple' of cars with the way they present themselves. Tesla's understanding was the old system was broken so they made a new one because just like Apple they want to have much tighter control of customer experience which results in high satisfaction ratings. And just like Apple you will get the same level of service for your Rs 10000 iPod or 5 lakh Mac Pro.

[Zezé]

Please read what I mentioned about the Roadster etc. They will be in the mass market segment in the coming years.

I have read what you have mentioned about the Roadster. The point is when Telsa enters the mass market segment, it will have to compete with other automobile companies that are also catering to that segment.

And at that time the business model will definitely undergo changes, including depending on other channels to push sales. Without pushing sales, economies of scale cannot be achieved.

[hybridpetrol]

Sticking to the core competence, and outsource everything else has been considered as an intelligent way of running a business.
More time you have to concentrate on your own core business, means you can improve your business well.

By digressing a bit here, I would like to give an example of a bank outsourcing its work of writing software. These days, the banks have gone online, and with just by placing a phone call (which responds with automated message), or using Internet banking, or using a mobile app, we can do many things such as check balance, transfer funds, order cheque books and a lot of stuff.
The bank itself cannot hire and train software engineers to produce such software frameworks. And whenever there is a problem with the software (amount incorrectly debited etc), they cannot afford to spend time in finding and addressing the bugs. They would need a separate support team to address such issues.
All these are out-sourced to the software / IT companies with such competence.

Back to the dealers / A.S.S, the car manufacturers would rather spend their time and money in a few locations where they run the plant, same as everything else.
A home appliance manufacturer produces a TV, but sells them through the retail channel and they do not involve in doing retail chain. Why? Because they cannot afford to set up so many outlets to reach the masses.

Same is the story here. Sales and service centres have to be set up everywhere, in order to sell more copies. If the company has the output capacity of 1 lakh units per month, assuming each outlet sells 100 cars, they would need 1000 outlets to be managed, and multiple times more service centres to be managed! They would rather give in house training, and let them manage their own!

[vinit.merchant]

Originally Posted by hybridpetrol

Sticking to the core competence, and outsource everything else has been considered as an intelligent way of running a business.

A home appliance manufacturer produces a TV, but sells them through the retail channel and they do not involve in doing retail chain. Why? Because they cannot afford to set up so many outlets to reach the masses.

Same is the story here.

I agree will all view points here, but cars are different from the examples cited.
Which home appliance has to be carried to the Service center for periodic servicing & maintenance? Regarding IT & Banking, both are totally different fields which require different skill sets. Cannot say the same for Cars.


Moreover, my point was more towards those manufacturers which have lost reputation due to their after sales, and hence suffer a great deal in sales.

Also, the Skoda/Fiat/Chevrolet/etc CEO's will be happy handling the plants, but during their annual sales target meetings, would be well grilled by the higher ups. All the bottom dwellers are loss making units as far as car business is concerned (i.e. excluding Fiat Engine sales). Bottom line is what matters at the end.

I understand it requires heavy investments, time & effort and global manufacturers will stick to their global policies and will not be interested, but it is a great opportunity to take for one of those laggards in sales. And the service centres will have their own margins to show (which may not be as low as 5% which the manufacturers are so used to).

[hybridpetrol]

Think about this:
If Maruti Suzuki, which also only have these dealers operating the service centres can provide acceptable levels or some times even exceptional after sales support, why others cannot replicate it?
MS now and then conducts surprise checks by directly calling the customer about the service quality. If the service provided is not satisfactory then the dealers will be held responsible and questioned.
I have seen that in my usual service centre they call me immediately after the service to ask about the service and if something wrong first tell them so they can fix and close at the dealer level itself. The dealer says even a rating of 9/10 is considered not satisfied.
If the manufacturer follows some strict policies when managing dealers while supporting them with technology and service training, my belief is that even with the current system they can make a huge change in the customer satisfaction in ASS. Manufacturers who are plagued by horrible after sales support have a thing or two to learn from Japanese about quality and dealer management.

[vinit.merchant]

Originally Posted by hybridpetrol

Think about this:
If Maruti Suzuki, which also only have these dealers operating the service centres can provide acceptable levels or some times even exceptional after sales support, why others cannot replicate it?

For the number of Marutis being sold, the showroom as well as the Service centre is a very lucrative business for the dealers. Hence the dealers accept the strict vigilance from Maruti.

Other manufacturers are hardly selling any vehicles. In short, the dealership business for some of the manufacturers is not a lucrative proposition for the dealers. The money they make (if they make) on their investment hardly beats inflation.
If these manufacturers start being a vigilante, the dealers might as well sever ties and look at alternatives.

These manufacturers are also not in a position to lose dealers, because finding another would be trouble. So they usually turn a blind eye i.e. they are not in a position to be as strict as the Marutis & Hyundais.

This is apt here as far as dealerships of the failed brands are concerned - If you give peanuts, you will only get monkeys.