“Dealers don’t want to change the model. They want to be the gatekeepers.” That’s according to Daniel Crane, a law professor at the University of Michigan who studies the laws and economics of car dealerships. He’s quoted in a Washington Post article warning that “Electric vehicles are hitting a road block: Car dealers.”
Former Chevy salesman Buzz Smith tells the Post that it can take longer to sell electric cars (with multiple visits and questions about their technology and chargers) — in effect reducing what a salesman earns per hour. But more to the point, “he believes the pay structure of auto salespeople isn’t a good fit for the EV era.”
Electric cars have narrower profit margins, he said, which cuts into the commission a dealer can get. And if a customer returns to the dealership multiple times, salespeople may have to split the commission, again cutting into their take-home pay. At the same time, car dealerships make most of their overall profits from providing service for vehicles — not selling new cars. According to an analysis from the U.S. Bureau of Labor Statistics, just 16 percent of dealers’ gross profits came from new car sales, while 43 percent came from parts, labor and service. (The rest of the profits come from used car sales and financing and incentives…)
That could also discourage dealers from selling EVs. Gas cars have 100 times more moving parts than electric vehicles do, and studies show that EVs have lower maintenance costs. An average gas-powered car, for example, needs an oil change about every six months, or every 5,000 to 7,500 miles. But many electric cars don’t require a major service until around 150,000 miles.
“They’re all terrified of that loss of maintenance,” Smith said.
The Post reports one woman’s complain that after buying an electric car, her salesperson “offered her a plan for oil changes and an extended warranty for a gas-powered car.”
But is there something bigger going on? Since the 1950s dozens of states passed laws protecting auto dealerships, and many of those laws prevent manufacturers from selling directly to consumers. The Post notes that now “many automakers have to sell their vehicles through one of the country’s more than 16,000 franchised auto dealerships. And those salespeople often don’t have extensive training on how to sell an EV or even on the technology itself.”
Frustrated customers told The Washington Post that dealers tried to redirect their attention toward gas cars, or gave incorrect or unclear answers to questions about charging and day-to-day electric vehicle use… Then there is the maze of federal and state tax incentives that can help drivers afford a new or used EV — but only if the dealer and the consumer can understand how they work.
Some dealers, however, don’t seem to want to offer electric cars: According to a survey that the Sierra Club conducted at the end of 2022, 66 percent of dealerships did not have an EV available for sale. That was at the height of EV supply chain problems, but 45 percent of those dealers — or 30 percent of all dealers surveyed — said they wouldn’t offer an EV even if they could. Amid concern over an EV slowdown, electric cars are sitting longer on dealerships’ lots than gas-powered cars. According to data from Cox Automotive, dealerships started the year with a roughly 50 days’ supply of gas cars and electric cars. Now the supply of gas cars is around the same, but the supply of EVs has doubled.
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