In the news that will feel like injustice or schadenfreude depending on how you feel about the traditional dealership model, industry publication Automotive newsbased on data from JD Power, reports that direct sales operations such as Tesla they imposed a large opportunity cost on California resellers – ripping them off $910 million in unrealized profits last year.
Divide that by the state’s 1,303 traditional dealerships, and the lost profit adds up to nearly $700,000 per store.
Tesla, They revive AND Polished all sell directly to consumers, adding up to 12% market share in the state last year.
Some of that wound is decidedly self-inflicted by the dealerships and establishment automakers. Their supply of electric vehicles it’s dripping, which means there isn’t much availability on the car lots, research from the Sierra Club earlier this week showed. Two thirds of the dealers contacted by the club they didn’t have an EV on their lot, and in California, where demand is high, supply has proved particularly low. Meanwhile, Tesla had no such supply constraint; dealerships have pushed some customers into the arms of Tesla.
How JD Power Arrived at the $910 Million Estimate:
- They were 193,707 new vehicle California filings involving Tesla, Lucid and Rivian last year. (188K of these were Teslas.)
- Franchise dealerships’ average gross profit per vehicle transaction last year was $4,700. (This is what bricks and mortar could have done with these lost sales. Tesla’s per-unit profit is believed to be considerably higher.)
- Total: $910.4 million, plus or minus a few million.
This is how things are shaping up in the state where electric vehicles are the most in demand. Traditional retailers elsewhere may want to see this as a sign of trouble to come.
For a deeper dive, check out the full report In Automotive news (subscription required).
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