For decades, car dealers had nightmares about being put out of business by non-car dealers. Cars at Costco? S-Class at Sam’s Club? Except for occasional trials that always flopped, it never happened. As it turns out, not big box stores, but the manufacturers themselves are the dealers’ biggest nightmare. Instead of facing competition that tries to sell cars along with detergent and 2 for the price of 1 peanut butter, car dealers are being culled like mad cows.
Now, there is a new threat: There will be cars that are plugged-in like appliances: EVs. So why not sell a plug-in along with all the other plug-ins, such as washer/dryers? If you are already moving ranges, why not a range of electric cars? That nightmare scenario is already shaping up in Japan.
Mitsubishi told The Nikkei [sub] today that it will partner with home appliance retailer Bic Camera to promote its i-MiEV EV. Despite its name, Bic is much more than a camera store. With more than 27 locations, mostly in and around of Tokyo, it’s the Japanese equivalent of Best Buy and Circuit City of lore.
For starters, four Bic Camera stores in the greater Tokyo area will display the pluggable car and host test-driving events. If people want to buy the car, they will be steered to Mitsubishi dealerships, but who knows how long that may last. Bic Camera is already on record that they actually want to sell EVs at their outlets.
Yamada Denki, Japan’s largest home appliance retailer, is also thinking about selling electric cars at its stores in and near Tokyo, says the Nikkei.
For all who had been complaining about appliance cars: They appear to be closer than we think. Personally, I think EVs will share the same future as the Betamax, the Segway, or the Sony Aibo. Let’s hope I’m wrong.
This isn’t too much a logical stretch…
1. People are sick of the traditional dealer network/system.
2. Mall vending machines now sell $400 iPods/iPhones, something most people would deemed impossible 10 years ago.
If you know exactly what you’re getting, why not? The dealer adds very little value to the equation, with the exception of selective discounting to move inventory. If your inventory is fresh, exciting, and selling at MSRP, the dealer is all but pointless. After-sale support can be handled by a very specialized factory service center, as needed. Low overhead.
Excuse me? Dealers provide valuable rustproofing and installation services. Those floor mats don’t magically jump off the shelf and appear on one’s floor. Neither does that full tank of gas when you roll off the lot. And how do you think the car gets rinsed all wet before you take delivery?
Right now, there’s no way Costco could possibly duplicate the dealer “experience”. None, whatsoever. Sure, they have hotdogs and sodas while you’re waiting, but you have to *pay* for them and there’s no espresso to be had at any price. Similarly, they’ve got gas pumps, but again, the buyer would have to fill it up themselves. And sure, they have a tire center, with auto mechanics, but right now, there’s no way to wash the car. I mean, Costco would have to add a brushless car was to every store that they wanted to sell cars out of. That’s a *lot* of hard capital to invest!
Sorry, the dealer experience is too “special”, and cutting corners on espresso machines, a tank of gas, and a quickie car wash just won’t be acceptable to the public at large.
This will only happen if they get small and cheap enough.
The dealer experience is the thing I like least about buying a car. The sooner it dies the better.
EVs are more like consumer electronics devices than traditional cars. The mechanical complexity in an EV is orders of magnitude smaller than a car with an ICE. An EV is only slightly more complex than my front-loading washer and dryer.
IF EVs become popular, I could definitely see buying one at Best Buy.
-ted
There’s the problem of the trade-in, of course.
This guy knows how to do it:
http://www.myfoxtwincities.com/dpp/news/car-crashes-into-eden-prairie-best-buy-aug-19-2010
When was the last time you brought your electric razor to the shop for service? Have you recently taken your hair dryer in for repairs?
Long-term users of EVs report service requirements that are easily carried out by the local gasoline station. One would expect them to be happy for any business to compensate for the lost gasoline sales.
You’ve still got gasoline stations with mechanics in your town? We have just convenience stores… Sorry, couldn’t resist…
We as consumers should be so lucky.
The dealer system exists to confuse one issue…price. The various option packages and incentives make it so that each appliance sale is unique, and it is almost impossible to compare a real sale price.
You have BMW, which uses options to simply raise the price of the car. No reason Xenons or an ipod hookup should be an upcharge on the ultimate driving machine for 40K, but it is to raise the price.
You have Caddy, which has six separate option packages for most cars, with sub options also. You can’t really compare the models even if you HAVE a scorecard.
Acura, by comparison, has Tech, Sport and that is pretty much it.
Years ago, when manufacturer prices were secret, the games were different. Today, we all have been trained to “go for invoice”, but even that is a shell game, as there are a variety of holdbacks and credits to other parts of the dealer which a typical buyer can’t parse. What is the invoice ? Another set of mystery numbers. I once bought a car for “invoice” but got to see the actual paper at some point, and realized the dealer made at least $1500 in credits even at “invoice”.
Add to this two other items. The car you lovingly build on the company website will never exist at the dealership, and as most US buyers buy off the lot, it means your assumptions and research fall over from the first interaction. The second is that most folks are not as sharp as the guy who sells cars every single day, and the buyer is much more stressed than the seller.
Finally, the chance to make money on the money is not to be passed up. Recall that dealers got themselves exempted from the recent consumer reform bill, when dealers are by far the most opaque and abusive of the lenders out there. Pure political power, not logic or good policy (OK, I live in the US and get that we have two parties representing corporations and none for people).
The last thing this business model needs is the ability to compare the new FamilyHauler 2020 at Costco for $30,000 vs the same at Sam’s Club for 31,000
Trying to compare two deals from the same car maker at two local dealers is next to impossible unless you make it a full time job….and that is exactly the way they like the system.
Why do manufacturers like this system ? It puts a huge barrier between YOU and THEM. They don’t have to deal with the retail end…fix the car…and the local stealership can get away with a lot more overall than a large, more findable, pressurable and accountable car maker could, especially in the age of the internet.
The dealer says “there’s an ass for every seat” and “all buyers are liars”. Both are true, but in point of fact, if there was an alternative, all buyers would greatly prefer a simple Point of Sale where the transaction prices are set and in a clear, competitive world.
I don’t think EV means squat to this. I drove a Volt this weekend, and don’t see any reason why it would be sold differently than a Camaro or Astrovan. (yes, it was very very cool, and I’d buy one)
@speedlaw: I saw your post after leaving mine, but you bring up a great point. The confusion on pricing is how the dealer system works. It definitely helps having politicians write laws to favor your business model also. I wish I could do that in my business, for sure.
GM had a real opportunity to make a difference with the Saturn stores. Too bad there wasn’t enough momentum to sustain such an initiative. If GM had applied the Saturn philosophy to all of the GM stores, buying a car would be a lot more like buying an appliance, which they are for the vast majority of buyers anyway. I would have to believe that GM would be in better shape than it is today.
@geozinger
The only new car ever purchased by either my wife or me (now in our early 30s) was a Saturn. I can’t say enough how good the experience was, even if the car was ~$1,500 overpriced from the get-go. The dealer performed as advertised, with great service and courtesy over the years. Too bad about the mostly uncompetitive products…
That business model seems to be working really well for Carmax…I’m just surprised all the new car retail dinosaurs can’t follow suit. A few of them do, but the traditional timewasting and haggling model still prevails.
@ash78: I have only purchased one used car at Carmax, I thought the pricing fair and the overall experience was OK. I also bought a used car at AutoNation and their pricing was sharper and the support was better. Even though we’re GM supplier family, we never considered Saturn, because the family discounts didn’t apply until the very end. And their lineup didn’t seem to suit us.
If we had more Carmax or AutoNation stores in this part of Michigan, I’d buy from them again. As it is, I have to travel to the Chicago suburbs to get to the closest Carmax (2 hours away). The same with AutoNation, I’d have to go to Detroit suburbs (~2 hours also) to get to their lot. I’d definitely buy from either one again. I can’t say that about the local dealers here.
Saturn really was interesting, wasn’t it? You’d think GM would have learned a thing or two about how mediocre product can be redeemed by excellent service, and would have applied that to the rest of their brands.
I wonder if Mr. Ewanick is listening?
@psar: I doubt it. I get the feeling that people expect the wunderkind to fart out great ideas. He may be able to do that, but I don’t see the GM bureaucrats as willing to move as quickly as he does. I hope I’m wrong.
One of my personal beefs with the Saturn experiment was all of these neat things that could get people in the door, but only to the Saturn store. If they had only spread that out across the whole of the GM brands… Oh well.
Don’t underestimate the clout that the dealers have with their local and state governments. While the dealer cull was part of the craziness surrounding the bailouts, just wait and see what happens if a Best-Buy type of chain tries to invade upon the dealers sacred ‘hunting grounds’.
This has been the problem behind all kinds of alternate ways to retail automobiles; the dealers have established their ground and will not relinquish control easily. I can’t see them going down without one hell of a fight.
Wasn’t there an electric motorcycle that was sold recently through selected Best-Buy stores?
Yes, the Brammo Enertia was sold at a select few west coast Best Buys.
Most of the mechanical parts in an EV can be maintained or repaired by any competent motorcycle or auto shop. More so on a bike, whose mechanical maintenance is basically limited to brakes, tires, and chain lube. Some electrical components that fail will need trained technicians to diagnose and replace, though most can be swapped out by enterprising owners.
There is not the problem with the trade in.
We’ve had this discussion before, related to dealerships in general. I strongly support an alternate to the dealer, provided there is a means for trade-in and service.
“Personally, I think EVs will share the same future as the Betamax, the Segway, or the Sony Aibo. Let’s hope I’m wrong.”
I agree with you as to the non future of the BEV, but why should I hope you are wrong? Do you think I want to drive around in an oversized golf cart?
So will buying a car from a big box retailer be like buying a scooter or tractor from an import tool store like NorthernTool? So where do you get parts? Where are the mechanics with experience with that brand? I understand that a regular repair shop can work on a Chevy but I’m not going to expect them to have much experience with a vehicle made in China or India until those vehicles or products are widespread.
Call the Maytag guy.
Realistically, I see the ownership experience from a big-box store EV more resembling a washing machine than a typical ICE car.
Picture something along the lines of:
-1 Buy it cheap.
-2 Drive it for 5-6 years with little maintenance besides wiper blades and maybe tires.
-3 Once it breaks down or the battery life is too compromised to use it daily either throw it away, recycle it, or sell to some college student for $500.
-4 Repeat step 1.
If the car costs $5k and lasts for 5 years that’s less than $100 a month with minimal other transportation expenses.
I can see the throwaway car appealing to many drivers. Sure you see near 100% depreciation, but the total depreciation is less than you get with any “real” car over a similar time period, maintenance expenses are nearly zero, and you don’t need to worry about resale or long-term reliability. Like a lease, but without those mileage restrictions.
So when do EVs get $5K cheap?
I expect them to get cheaper than $40K to about $20K like a gas powered Corolla but not $5K cheap.
People aren’t likely to get good with GEM style EVs (those are still $10K) with cheesy bodywork and cheesy doors and cheesy suspensions. They aren’t suited for much more than the 30 mph that they are limited to. People will (I think) switch to little VW turbo diesels like the Polo before they’ll put up with a GEM style EV.
I won’t mind the downsizing of the American fleet that a bunch of GEM or MiEV represents though.
Yes I can imagine the rest of your scenario becoming true though. Use it up and throw it away like a microwave oven or a washer. Nobody fixes those more than about once b/c the cost to buy a new one is relatively low.
What I’d like to see is a car that I can drive 250 miles per charge economically and keep repaired cheaply – including battery replacement. Sort of like a W126 Mercedes or an aircooled VW – cars that can be kept going indefinitely and that I admire. I’d expect rust wouldn’t be an issue with these future cars if carbon fiber or aluminum or some other material than rustable steel was used. Of course nobody would make them that way b/c you want them to wear out or get ugly so folks will want to buy a newer car every decade or less.
I like my old aircooled Beetle but unless the American fleet shrank to Italy proportions I’d rather have something a little safer to drive daily for the next 25 years. I don’t mind the flat door panels or the basic design. Just make sure it has good old style ventilation like vent windows and a big (cloth) sunroof so sans a/c I can stay comfortable. 250 miles is plenty for my family to go see relatives in the big city. For vacation trips to FLA we’d just take our family hauler (wagon, small van or CUV) – gas or diesel powered.
So when do EVs get $5K cheap?
When they start exporting them en masse from a washing machine factory in China.
There is no market for trowaway cars. Building a 5k ICE cars is also possible but there is no market for it
I agree there is no market for throwaway cars. Remember the Yugo? Some people here bought them and were about laughed off the road by people who thought a car had to be expensive to be worthy of any respect. Meanwhile I figured a $5K Yugo was a reasonable way to get around. Hell, it was a reconstituted Fiat Panda and plenty of Italians used them everyday. I drove them many times when I lived there and it wasn’t bad for 45 mph city streets. Not the car I’d want to go cross-country in though. I think too many people thought a $5K car out to be flawless, good looking and luxurious.
I’d be happy with a car reasonably safe, reasonably reliable and cheap to keep on the road. Preferably something I could maintain in my own driveway. I like fancy cars but have no desire to wear them out just going back and forth to work.