Monday, November 30, 2015

On selling electric cars

The following is from the New York Times.  They seem to think the reason more electrics cars aren't being sold is that car dealers don't want to sell them.  Having known car dealers since childhood (a neighbor sold Fords), I have little problem believing these stories because electric cars would hardly be the first that died on dealer's floors for lack of sales enthusiasm.  In 1993, Ford shipped their latest best attempt at a world car.  They had spent over $6billion on this project that included two new blank sheet engines, new transmissions, and new production lines in North America and Europe.

While the new car line was a hit in Europe as the Mondeo, the North American dealers HATED the Ford Contour.  It was almost 30% more expensive than the car it replaced (Tempo), it had all those "pretentious" Euro touches, and it was smaller than the competition—especially the rear seat which was a big factor in a car line aimed at families.  Ford wanted this car to succeed for a big reason besides the $6billion—the four cylinder version got 38 mpg.  Sell a bunch of those Contours and the corporate fuel average would go up.  They spent a pile on advertising.  In the end, nothing worked.  Eventually Ford would almost give most of them away to car rental fleets.  So while Ford was having great trouble selling fuel-efficient cars, they could barely keep up with orders for their overpriced SUVs.  I was quite enthused about Ford's big international project so I went to two different dealers looking to test drive a Contour.  In both cases they had what I was looking for but it wasn't on the showroom floor and the sales staff I talked with both actually asked me, "Why would you want one of those?"

I can easily imagine that buying an electric car from your standard automotive superstore would be my experience with the Contour times 10.  Because buying electric involves at least a little lifestyle adjustment.  Even if you have a private garage you'll still probably have to rewire for 240.  If you already have regular habits you probably don't need help remembering to plug in, but if your car is all electric, not having a full charge can lead to expensive and scary situations.  So someone selling electric cars not only needs extensive product knowledge, they need to know how to help customers figure out the lifestyle changes.

So far, electric cars haven't done well for real reasons.  They haven't been very good, they don't have much range, or they are crazy-expensive.  And lately lower gasoline prices have pretty much destroyed the economic rationale.  But the end of the internal combustion engine is in MANY crosshairs.  So eventually, someone will learn how to sell electric—perhaps by dealerships that sell nothing but electric.

A Car Dealers Won’t Sell: It’s Electric

By MATT RICHTEL, NOV. 24, 2015

More than seven years ago, President Obama called for one million electric cars to be on the road by this year, and the vehicles have gained a large fan club. Environmentalists promote them as a smart way to cut dangerous emissions. Owners love their pep and the gas money they save. Apple and Google have jumped into the race to build next-generation battery-powered cars.

So why are only about 330,000 electric vehicles on the road? One answer lies in an unexpected and powerful camp of skeptics: car dealers. They are showing little enthusiasm for putting consumers into electric cars.

Some buyers even tell stories of dealers talking them into gas cars and of ill-informed salespeople uncertain how far the cars can go on a charge or pushing oil changes that the cars don’t need. And industry officials themselves acknowledge a hesitancy to sell cars that may not suit drivers’ needs.

In a speech this year, the former chairman of the National Automobile Dealers Association, a trade group, said that tougher fuel-economy regulations can mean pushing cars on consumers that are about as enticing as broccoli, when they really want “low-calorie doughnuts” like fuel-efficient gas cars. The former chairman, Forrest McConnell, cited a survey finding that 14 percent of buyers cited fuel efficiency as the most important factor in buying a car.

“That was a nice way of saying 86 percent of them didn’t think so,” he said.

Others disagree that consumers think of zero emissions cars as broccoli. “That would be interesting if it was true,” said Mary Nichols, chairwoman of the Air Resources Board, a California agency that Gov. Jerry Brown has charged with developing policies to spur electric car sales. Ms. Nichols said she believes that consumers want these cars and that they have been dissuaded in part by unenthusiastic dealers and “horror story” sales experiences.

California has 150,000 electric cars, but that figure needs to grow tenfold in the next decade, she said, or the state will not be able to meet its environmental goals. Without the cars, “simply put, we can’t make it,” she added.

Industry insiders and those who follow the business closely say that dealers may also be worrying about their bottom lines. They assert that electric vehicles do not offer dealers the same profits as gas-powered cars. They take more time to sell because of the explaining required, which hurts overall sales and commissions. Electric vehicles also may require less maintenance, undermining the biggest source of dealer profits — their service departments.

Dealers’ caution, whatever their reasons, has created a “reality check to the idealism,” said Eric Cahill, who recently completed a dissertation on electric car sales for the Institute of Transportation Studies at the University of California, Davis. Retailers are a “bottleneck,” his research shows. They may hold the key to growing the niche, but dealers “may have very good reasons for steering a potential buyer away from an E.V.”

The vehicles are not for everyone. They typically go only 80 miles or so before they need to be recharged. While many people charge them at home, public charging stations remain limited, particularly outside California. Air conditioning and heat drain the battery quickly, so weather can affect performance.

But the cars have big selling points. Owners can ignore fluctuating gas prices. Government subsidies can lead to price breaks of $10,000 or more. The cars accelerate quickly, too.

The dealers play an obviously crucial role in the popularity of electric vehicles. Almost all new cars are sold through dealerships. To a large extent, dealers decide which cars they want to stock, and a salesperson can have a big impact on how someone feels about a prospective purchase.

Some electric car buyers have said they felt as if they were the ones doing the selling. For example, Chelsea Dell was in the market for an electric car in Salt Lake City last year, and discovered online that a local Chevrolet dealer had a used Volt.

She made an appointment to test-drive the car. But when she arrived, she said, a salesman told her that the car hadn’t been washed, and that he had instead readied a less expensive, gas-powered car.

“I was ready to pull the trigger, and they were trying to muscle me into a Chevy Sonic,” said Ms. Dell, an account administrator for U.P.S. “The thing I was baffled at was that the Volt was a lot more expensive.”

She asked to see the manager, prevailed, and paid the higher price for the car she wanted. “It was crazy,” she added.

According to Dr. Cahill, a 2013 J.D. Power survey found that electric-car buyers were significantly less satisfied with their car dealer than were buyers of traditional cars. Consumer Reports last year published results from a secret shopper survey in which its representatives visited dealers around the country and found, for example, a Toyota salesperson in Bayside, Queens, who would not even show a Prius plug-in that the dealer had in stock, and a Ford dealer in Manhattan who denied that Ford offered an electric Focus model (not true).

Charge Across Town, a California-funded nonprofit that advocates electric vehicles, organizes events to introduce consumers to dealers, but has had to work hard at times just to get dealers to show up. In August in San Diego, at the first such event, a few dealers showed up, but to the astonishment of the organizers wouldn’t let anyone test-drive or even sit in the cars, said Maureen Blanc, who heads Charge Across Town.

The group saw better dealer turnout at a recent event in San Rafael, with representatives from BMW, Mitsubishi, Mercedes, Ford, Honda and Tesla there. (Tesla stands apart in the conversation about dealers because it doesn’t use them, selling directly to consumers.)

At the event, Kyle Gray, a BMW salesman, said he was personally enthusiastic about the technology, but listed several reasons that dealers may not do more to push the cars: Salespeople who have spent years understanding combustion cars don’t have time to learn about a technology that represents a fraction of overall sales, and the sales process takes more time because the technology is new, cutting into commissions.

Mr. Gray told the story of a couple who came into the dealership to try an electric BMW and, during a test drive, discovered that the braking system felt so different that “the wife was in the front getting sick.”

In the end, though, he said the couple got used to the car and loved it. That’s why, he said, the dealership where he works allows three-day test drives, so that potential customers can get used to the different driving experience.

BMW and Nissan are among the companies whose dealers tend to be more enthusiastic and informed, said Dr. Cahill, the scholar. He estimated that, over all, 10 percent of dealers are “really sharp” on the technology.

Marc Deutsch, Nissan’s business development manager for electric vehicles said some salespeople just can’t rationalize the time it takes to sell the cars. A salesperson “can sell two gas burners in less than it takes to sell a Leaf,” he said. “It’s a lot of work for a little pay.”

He also pointed to the potential loss of service revenue. “There’s nothing much to go wrong,” Mr. Deutsch said of electric cars. “There’s no transmission to go bad.” (As the Nissan website states: “Say goodbye to pricey oil changes and tune-ups. With fewer moving parts than any car you’ve ever owned, the Nissan LEAF is ultra low maintenance.”)

Jared Allen, a spokesman for the National Automobile Dealers Association, said there wasn’t sufficient data to prove that electric cars would require less maintenance. But he acknowledged that service was crucial to dealer profits.

According to the organization, dealers on average make three times as much profit from service as they do from new-car sales. A 2013 J.D. Power survey of car buyers found that about 48 percent of electric car buyers plan to take their car back to the dealer for service, compared with 57 percent for traditional cars, noted Dr. Cahill, from U.C. Davis.

Maybe that helps explains the experience of Robert Kast, who last year leased a Volkswagen e-Golf from a local dealer. He said the salesman offered him a $15-per-month maintenance package that included service for oil changes, belt repair and water pumps.

“I said: ‘You know it doesn’t have any of those things,’” Mr. Kast recalled. He said the salesman excused himself to go confirm this with his manager. Of the whole experience, Mr. Kast, 61, said: “I knew a whole lot more about the car than anyone in the building.” more

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