For over decades, the traditional buying car process was way easier. Consumers simply go out to visit an actual store, request a test drive of their candidate vehicles before making the decision whether purchasing it or not. The progression probably takes few hour or up to a day to complete signing all the legal paperwork required by the State between the seller and buyer. Elon Musk, chief executive at Tesla, Inc. the world famous electric automotive is aiming on selling their cars over the internet without a test drive, planning to shut down the their stores to cut off price on the Model 3 sedan. His move is to take advantage of the online shopping trend to increase their revenue growth in the upcoming year with larger sales. Unlike other brands, Tesla does not sell their cars through any third-party dealers or franchises but instead at their own dealers. According to the article, AutoNation Inc, one of the largest U.S. dealership, has tested the same strategic as Elon’s ideal in the last few years but they had failed because of the complication from signing paperwork during the online purchase transaction. In contrast, Mr. Musk’s decision was based on 78% of Model 3 users that were placed online. As we all know, Tesla is a high tech car brand that would attract mostly majority users such as millennials. They are willing to do the research and comparison about the vehicle before making the purchase, this will not be a problem to worry about.
This article seems interesting because as a consumer, buying a car that worth more than 30 thousand online without observation and physically experience it. It can become a nightmare if the car does not meet our expectation, or causing a time waste going through the paperwork signing process or vehicle registration with state laws. In this article, Tesla is using the strategic of market-directed economy and Elon had studied off their customers point of view based on the majority of their customers online orders in the past year. This strategy can be beneficial to their company by cutting off cost to lower the price on Model 3 but it can also be more riskier by losing their loyal users by decreasing the value of its products.
Cited/Source:
Higgins, Tim, and Adrienne Roberts. “Tesla Is Betting It Can Sell Cars Online, Without a Test Drive.” The Wall Street Journal,
Dow Jones & Company, 3 Mar. 2019,
www.wsj.com/articles/tesla-takes-new-road-in-pushing-car-sales-online-only-11551620986?mod=hp_major_pos18.
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