Direct sales model does allow higher margins on sales, since they are not wholesaling the car to dealerships like you said.How can you say that manufactures don’t incur cost savings with a direct sales model? The manufacturer doesn’t have to sell the car to a dealer at a lower price (wholesale) and then miss out on the benefit of selling to the consumer at MSRP. This margin the dealer makes, not the manufacturer. If you do direct sales you sell at MSRP and keep the full margin from cost to make the car to sales price, not cost to make the car to invoice price, the price you sell the car to the dealer for which is less than MSRP.
But Tesla still has had to build/lease/staff showrooms and Tesla has to pay, not the dealers.
You missed the facts that the franchised dealership owner has to pay to finance his inventory (carrying costs/interest expense), pay for the lease or mortgage on the property/buildings, make the lease-hold improvements to the properties and pay the employees. None of that is free. The manufacturer avoids incurring those costs/overhead in the case of traditional dealerships.
According to NADA, these are costs of retailing cars and the cost will be incurred by whoever is doing the retailing, whether it’s the manufacturer or a dealership.
By outsourcing the sales part of the process to a dealer, and the local dealers compete with one another, there are incentives to minimize those costs. And in a normal market, heavy discounting contributes to higher depreciation rates and degrades the brand sometimes.
So that's how I can say what I did above. And I doubt anybody here can quantify any small net cost savings when taking into account costs incurred to build/lease/equip/staff showrooms nationwide.
But by now you may have guessed where the real monetary benefit to the automaker of direct sales happens, and it's not from cost savings incurred....
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