Tesla Stores don't hard-sell shoppers; this baffles dealership groups


Tesla Store opening in Westfield Mall, London, Oct 2013

Tesla Store opening in Westfield Mall, London, Oct 2013

Enlarge Photo

Tesla's company-owned retail stores aren't traditional franchised dealerships, and they don't behave like a typical car dealer.

They don't have lots full of inventory to sell, and they're more likely to be located in upscale shopping malls than on busy streets alongside fast-food restaurants or other dealerships.

They're also staffed by employees who prioritize explaining the features of Tesla's electric cars and answering questions from curious visitors than in closing deals that day.

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That makes for a different—and arguably more pleasant—shopping experience.

But it also means Tesla Stores rank low in traditional metrics for dealership sales effectiveness.

In fact, for the third year in a row, Tesla ranked last on the annual Pied Piper Prospect Satisfaction Index for sales effectiveness, reports WardsAuto.

Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

Enlarge Photo

The index is compiled by consultancy firm Pied Piper, which sends mystery shoppers to dealers to gauge the sales skills of their staff.

Looking at retail operations from the perspective of traditional franchised dealers, Pied Piper is apparently baffled by the results it has gotten at Tesla Stores.

Staffers acted like "museum curators," Pied Piper CEO Fran O'Hagan told Wards.

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They talked knowledgeably about the cars and answered customer questions, but were hesitant to try to make sales.

Of course, Tesla Motors has said all along that its stores' primary mission is to educate the public about electric cars as much as it is to sell them.

The company's ability to rake in almost 400,000 reservations for the Model 3, at $1,000 apiece, without showing the car in its final form indicates it may be succeeding at that mission.

Tesla Store opening in Westfield Mall, London, Oct 2013

Tesla Store opening in Westfield Mall, London, Oct 2013

Enlarge Photo

Yet that's not a concept that traditional, sales-driven dealerships are familiar with.

Staff at Tesla Stores were also found to be less likely to ask customers about trade-ins—an important part of most car sales.

Traditional dealers typically sell at least some of the cars they receive as trade-ins on their own used-car lots, one of three profit centers for a dealer along with new-car sales and after-sales service and maintenance.

MORE: Half of car buyers hate haggling, but Lexus dealers resist fixed prices

That's not the case at Tesla Stores, however, which don't offer non-Tesla used vehicles of any sort.

Tesla relies on a third-party firm to sell trade-ins, and its retail stores don't maintain individual inventories of new or used cars.

While they don't operate much like traditional dealerships, franchised dealers still view Tesla's company-owned stores as a threat to their business model.

Tesla Store opening in Westfield Mall, London, Oct 2013

Tesla Store opening in Westfield Mall, London, Oct 2013

Enlarge Photo

Auto-dealer associations and their lobbyists have pushed for bans on direct sales in many states, something Tesla has had to fight for several years now.

In the meantime, the company seems like to continue to use its retail stores to promote itself and electric cars in general.

As long as it does that, it may continue to confuse the auto-sales establishment.

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