the-darwinization-of-auto-retail-is-coming

Earlier this year I talked with a longtime vendor to traditional auto dealers. He had recently bought a Tesla. He raved about the car and the online sales process. It was fast and easy. Set price, no haggling.

His story, no doubt, is echoed by thousands of happy Tesla owners out there. The electric vehicle maker outranked every other brand when Consumer Reports asked: Would you buy this car again?

That puts Tesla in a pretty sweet spot, despite having taken hits in some reliability surveys. Every automaker CEO would love to have the cachet that Elon Musk and his car company have.

So what’s a rival to do?

Volvo appears to have an answer: Be just like Tesla. Last week, the Chinese-owned Swedish automaker announced that it’s going all-electric by 2030. And it’s switching to an online sales model along the way.

Of course, Volvo can’t be totally like Tesla. In the U.S., where Volvos have been sold for 65 years, the company has 281 franchises. State laws generally require that vehicles be sold through franchised dealerships. That’s why Tesla can’t sell cars in a number of states and has a restricted presence in others.

Still, Volvo dealers are concerned. And who can blame them? As we point out in a Page 1 story this week, when they signed up to sell Volvos, they expected to control the customer experience. Now they fear they’ll become little more than delivery and service outlets.

That’s a chilling prospect — even before you consider the investments many have made in fancy showrooms and the fact that EVs will require much less maintenance than gasoline-powered cars.

The bigger picture is a dealership model that’s being pecked at before our very eyes. I wrote about this after the Super Bowl, when online used-car upstart Vroom skewered auto dealers with an ad comparing showrooms to torture chambers.

The ad was grossly unfair and largely outdated. But as someone who once begged a car salesman to let me leave, I could relate.

I’m not the only one. I concluded that column with a quote from Brian Benstock, the innovative New York City dealer who took to social media to denounce the Vroom ad.

One member of his LinkedIn community, a Nissan employee, pointed out that there are dealerships like those parodied by Vroom. To which Benstock replied:

“Darwin will take care of this problem.”

That quote set off another response, this one in my inbox.

It came from Stephen Neczypor (Nezza-poor), who wrote, coincidentally, on the same day of Volvo’s EV announcement.

Earlier in his career, he was a traveling salesman who logged 35,000 miles a year in his Volvo 740 turbo wagon. His Volvo dealer invited him to sell cars at his dealership, and Neczypor switched jobs.

He made a career out of it. He retired a decade ago, after 17 years in four stores, selling Volvo and other luxury brands.

All of which gave him the street cred to fire off his note.

“I must identify the elephant in the room,” he wrote. The Vroom commercial hits a nerve with consumers because they’ve “experienced similar actions” or know someone who has.

He added: “I fought those stereotypes with every customer every day.”

The system is skewed, he explained in a follow-up call. Sales managers and salespersons and F&I managers work at cross purposes, because they are rewarded for different things. Factories see customer-satisfaction scores but not what really goes on in some dealerships. Customers lose trust when they find the same vehicles sold for different prices on different sides of town.

Surely much has changed since Neczypor retired a decade ago. The Internet and smartphones have brought a lot more transparency and accountability to the process.

Yet stair-step incentives have been around for decades, and dealers are still justly railing against the damage they cause.

Which leaves us with the odd mix of tales I’ve just outlined. Someone who has made a good living off of the traditional retail system awed by his Tesla experience. Volvo reinventing the sales wheel as it goes electric. Online used-car startups skewering dealers’ sales practices on a gigantic advertising stage. A veteran, respected dealer saying it ain’t so.

And a retired salesman, who is glad dealers such as Benstock are fighting back, saying it too often is so.

“If Darwin is going to take care of this problem, I respectfully submit he works way too slowly,” Neczypor said.

If that’s the case, we’re going to see this drama — who’s fittest and who will survive — play out for a long time to come.

You may email Dave Versical at [email protected]