Tesla’s Unfair Advantage?

by | Jan 6, 2020 | Auto, Podcasts, Service Drive Revolution

I’m not going to lie to you.

If you’re the kind of person who isn’t willing to accept uncomfortable truths, then you’re probably going to hate this week’s Service Drive Revolution. I can admit it– the subject of this week’s episode is going to turn off a lot of our viewers… 

…But it’s the truth. And the truth is the truth, whether you like it or not.

Something that I find very, very frustrating is the use of lip service instead of addressing the elephant in the room. For instance, the last time I spoke at the NADA show, I was given two big notes on my speech by their approval committee:

  1. “Take out the part of the Pet the Dog story where you call your ex-wife Satan,” which is quite frankly the best part.
  2. “Don’t talk about Tesla. It’s not a popular subject with the dealers.”

I don’t understand that last one. My job isn’t to tell dealers what they want to hear, it’s to tell the truth! If the truth is uncomfortable for them to hear, then they need that dose of reality. 

For too long, I’ve been forced by the powers that be to censor myself or ignore the truth whenever I’ve wanted to talk about Tesla. It’s like how people say, “you shouldn’t talk about religion or politics.” I’ve always found that saying funny – I love to talk about religion and politics! You know why? 

Because my opinions aren’t set in stone, and they shouldn’t be! When people open themselves up to a dialogue, and maybe even a bit of a debate about facts, instead of just blindly following something, then they might actually learn something.

That’s why this week’s episode of Service Drive Revolution is all about the ugly truth that the entire automotive industry has been trying their best to ignore:

Tesla is winning.

The fact that we, as an industry, are incapable of admitting or acknowledging this truth is incredibly frustrating, and it’s an attitude that I’ve seen everywhere

For example: A while ago, I was talking to this guy from BMW. The BMW guy says, “We’re number one in the country by a mile. We’re not going to do incentives to try to beat Mercedes like we have in years past.”

Now, he says that they’re the number one luxury car in America, but am I just supposed to take his word for it? Number one in every category? 

So, my immediate thought is to ask, “Well, what about Tesla?”

And he says, “Tesla doesn’t count.”

What do you mean Tesla doesn’t count?? Last I checked, they have four wheels and people are buying them! The people buying Teslas would have bought another car if they weren’t buying a Tesla, so how do they not count? 

It’s important to understand that Tesla has some unfair advantages over everybody else, and in order to understand those advantages, we need to talk about it. 

That’s right – actually talk about it

Not blow it off with, “Tesla doesn’t count,” or, “It’s an uncomfortable subject for dealers.” 

Of course some of the dealers reading this are going to be irritated by the Tesla conversation. But I will tell you, time and time again, that you shouldn’t be – because it’s the truth! The sooner we start accepting the truth, the quicker we’re going to recover and get ahead of it. 

You have to stop living in denial, otherwise you’re going to wind up like Blockbuster Video.

The funny thing is, I’ve been predicting this for a long time. Everyone knew and agreed that new car sales were going to drop, but what they didn’t understand was that Tesla was going to come in and gain market share inside of that smaller pool.

The heart of the matter is that customers are happy when they feel like they’ve been given a good value, which leads me to Tesla’s first unfair advantage…

Tesla went directly to the consumer. 

In North America, you had to sell through a franchised dealer, except in some states like New York. I know, in Manhattan, a lot of the dealerships are owned by the manufacturer because they simply can’t afford the overhead and all that.

What happens when Tesla can sell directly to consumers and bypass dealers? First, the margin that would go to the dealers goes to them instead, and they get to keep more of the profits. The other thing is that they don’t have the overhead of flooring either.

If you don’t know what flooring is, go to chriscollinsinc.com and opt-in when the pop-up comes up. You’ll be granted access to two free videos – in the one titled Why Fixed Absorption is a House of Cards, I explain flooring.  It’s essentially a line of credit for wholesale cars that dealerships pay, and it’s expensive as hell.

The other part of their advantage is software. Inside a Tesla car, you can go into a menu and, say, buy a software update that unlocks extra performance without ever having to go to a dealership. Most other manufacturers receive the information from a satellite, then they call you and tell you you’re due for service. But with Tesla, that satellite literally beams software updates down into the car and avoids service altogether. Any updates – whatever you need – you can do from the comfort of your driveway.

Don’t get me wrong, Tesla has service managers. However, they send out a new memo every two weeks or so and they’re constantly changing directives. If that happened to employees at a dealership, they would go crazy. You know why people at Tesla aren’t going crazy? They’re driving change in the industry, so the employees are a part of this culture where change is expected – and when you’re part of a culture like that, you feel like you’re doing something cutting edge and special. 

Think back to the beginning of last week’s show when we talked about China. By 2026, no combustion cars can be sold there. It kind of counts down every year, but the manufacturers are trying to get ahead of that, right? The keyword is ‘trying,’ because nobody has the batteries, the technology, and the infrastructure like Tesla. They already have the best batteries, and they ones they have coming are supposed to blow away everyone who’s just trying to get to where they’re at.

I’m not going to pretend that I know where it’ll all end up, but there’s a lot to learn by NOT ignoring Tesla. Their success doesn’t mean doom and gloom for everyone else. Whenever industries are turned upside down, there are other opportunities. 

Service isn’t going away. Even on electric cars, you’re going to need tires, brake fluid, etc. – things are always going to break. What’s changing is that you came up through sales and, all of a sudden, sales are going direct to consumer. 

If that makes you not want to own service shops, then maybe it’s just not your passion. Maybe you’re just massaging your ego through however many cars you sell.

That’s what’s interesting about our industry. There’s going to be opportunity even by the time the roads are full of robo taxis, but it’s going to be on the service side and Service Drive Revolution. 

But enough about the “uncomfortable subject” of Tesla. I’d like to wrap this one up with two audience questions:

“I’m new to service advising, but I’m using your channel to learn as much as possible in conjunction with my training I’m going through at the dealership. As a novice service advisor with zero mechanical experience, what are some of the basic questions you get and answer most often?”

Now, that’s a great question… but it’s the wrong question. What you want to understand is that your role as a service advisor isn’t to diagnose anything; it’s NOT. Your role is to make the customer really comfortable so they can explain their concerns with their car, then you let the technician do all the work. 

Think of it this way: the technician’s the doctor and you’re the nurse receptionist. It’s the doctor’s job to diagnose. Yours is to make friends with the patient, get them to fill out the paperwork, and tee up the doctor for success.

The only variable in it would be that you could recommend maintenance when it’s due, but you do NOT need to know anything about the car as much as you need to be really, really good with connecting to customers on a deeper level. The car is a commodity. In fact, 70% of clients end up going to independent shops after their warranty is up, so the car isn’t as special as we think it is – it’s an excuse to make friends with the customer. (I would suggest reading the Millionaire Service Advisor because there are some good stories and analogies in there for you on how to be a service advisor!)

If you’re listening to the podcast, this last question is a doozy so I’ll sum up the important part:

“At my store, our department was paid off of gross but now our pay plan has been adjusted so that we’re strictly paid a percentage based on CSI. It makes us advisors not want to sell as much and focus more on customer satisfaction and retention. In the end, it feels unfair that our pay is based off the opinions of random strangers. What are your thoughts?”

Let me stop you right there. What sticks out like a sore thumb to me is that you’re assuming the customer is a stranger. If you’re leaving your customer as a complete stranger, then that’s your fault.

Think about it – you get more money if you can connect with customers because that dictates how much you can sell. Get the customer to know you on a deeper emotional level and vice versa. Not only will they trust you, but you’ll get the better CSI and you sell more. 

When you look at the big picture, manufacturers want relationships with dealers that can get good CSI. In fact, it’s like a credit score – you might not even be able to buy other dealerships or get hot cars from the manufacturer if you’re not in good standing. 

Take a step back and stop being selfish, because what’s good for the dealership is what keeps us employed… So whether these “strangers” like us is a big deal.

You simply can’t have high sales without happy customers. Countless advisors are great on sales, but risk getting fired over poor CSI. If you don’t have the right system (like the kind you learn through our online training!), you push people too far, and the customer feels taken advantage of. All that’s left to do at that point, assuming you want to keep your job, is to admit you’re going about it the wrong way and CHANGE your approach.

Remember that we have the best OnDemand platform with Service Manager University, where you can get complete customer service training and technician training, available at chriscollinsinc.com. We appreciate everybody reading, listening, and watching, and we hope to see you again real soon!

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