Is the Direct Sales Model the Future of Buying Cars?

Consumers can buy nearly everything they want or need online and directly from the manufacturer. There are, of course, a few exceptions. For example, you still need to visit a local car dealer to purchase a new ride since it’s virtually impossible to buy directly from dealers Chevrolet, Ford, GMC, etc.

Now that we’re nearly through the COVID-19 pandemic, there are new thoughts about the future of the auto industry. Could direct sales be the future of car buying?

Legal Issues

Car dealer companies are a legal necessity. Nearly every state has some kind of law that mandates that vehicles must be purchased through third parties. The goal is to protect drivers from the big automakers who could try to monopolize and control the market.

The market of today is vastly different than the market when these laws were created. There is much more competition between far more auto producers. The early days of the auto market also didn’t have the internet, which made it easier for consumers to compare prices and research deals before heading into a car dealership. In fact, some might argue that large car dealer groups are more of a danger than manufacturing companies. While there is still plenty of mom-and-pop or family-owned dealers out there, some auto groups are trying to grow well beyond their family-oriented roots.

For the moment, car dealer lobby groups are encouraging lawmakers to keep laws on the books that require third parties to sell vehicles.

Electric Cars Find A Way

If direct sales is a no-no for auto manufacturers, how do companies like Tesla get away with it? Tesla is one of the most well-known electric car manufacturers in the country. Instead of having dealerships, Tesla has car galleries. Gallery employees do not try to sell you a car; they will only talk to you about the benefits of owning and driving one.

Tesla is able to sell cars to people directly in a number of states, like California, Colorado, Virginia, and New Hampshire. States like Texas and New Jersey require dealerships. There are, of course, loopholes that allow people in these states to still get a Tesla; they buy them online.

Is Change Coming?

The COVID-19 pandemic rocked the auto industry through computer chip shortages, shipping delays, and low inventories. Drivers who want to purchase a new car are now pre-ordering their vehicles to ensure they can get one. Most shoppers are finding the process of ordering their car online to be easier and more straightforward than visiting a local car dealer. The market is finding that people enjoy and even prefer buying direct.

Direct sales wouldn’t necessarily kill auto dealerships. People still need a place to take their vehicles for service, obtain parts, and even test drive a car before placing an order. That’s not even mentioning the giant market for pre-owned vehicles. Tesla’s gallery model could certainly catch on.

The reality is that a change to direct sales won’t happen overnight. It might not even happen in our lifetimes. With the car dealer industry pushing for legal protection from direct sales to the slow pace of massive change, dealers are safe for now. Many are even embracing the idea and encouraging shoppers to place orders to reserve new cars.

Whether or not direct sales become a thing is unknown, but it certainly seems like shoppers are leaning in that direction. The real challenge is how car dealers will respond. They can fight the upcoming change or pivot into a better position to succeed.

This post may contain affiliate links. Meaning a commission is given should you decide to make a purchase through these links, at no cost to you. All products shown are researched and tested to give an accurate review for you.

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