Tesla’s shift to online sales could be model of future
Downers Grove, Ill. — Packey Webb Ford, a 57-year-old car dealer with an old-school jingle, has bet more than $20 million on what it hopes will be the dealership of the future.
With car shopping migrating online and dealerships looking like the next bricks-and-mortar retailer poised to fall, Packey Webb built a gleaming 54,000-square-foot facility on the 10-acre site of a former junkyard in the southwest suburb of Chicago. Opened in late 2017, the dealership features the usual floor-to-ceiling windows with panoramic views — and a surprisingly small showroom.
The service area, however, is a different story.
“You could land an airplane in here,” said Webb Ford sales manager Kevin Schmieder, gesturing to the 32 bays lined up to accommodate what has become the dealership’s undisputed profit center.
“If there are no dealers, you’re still going to have to have these cars serviced somewhere,” said John Webb, 52, a partner in the dealership started by his father, Patrick “Packey” Webb. “That’s where the future is going to be.”
Webb Ford has already outlasted many of Chicago’s plaid-jacketed pitchmen from a bygone era. But surviving in the digital age will take more than a good slogan.
When Tesla recently announced it was shifting all sales online and winding down its stores — it later backpedaled and said it would keep many stores open — the electric vehicle manufacturer sent shock waves through the auto industry, signaling perhaps the beginning of the end for your friendly local car dealer.
No more low-budget TV commercials, no more kicking the tires, no more giant inflatable tube-men beckoning from lots with unbeatable deals.
Touting cost savings and consumer preference, Tesla closed 10 percent of its 100-plus stores before putting the brakes on additional downsizing.
Last year, 4 out of 5 buyers who ordered the Model 3 — Tesla’s lowest priced car — bought it online, without taking a test drive, the company said.
“Customers are becoming increasingly comfortable making purchases online, and that is especially true for Tesla,” CEO Elon Musk said in a Feb. 28 email to employees.
Tesla’s move has fueled broader industry speculation that auto dealers could soon join the growing list of traditional retailers vanquished by a mouse click.
“Don’t count on it,” said Michelle Krebs, an analyst for Autotrader. “I don’t see everybody going to online car sales tomorrow.”
The entrenched interests of the nearly 17,000 new car dealers across the U.S., whose $1 trillion in annual sales are protected by state laws and franchise agreements with manufacturers, will no doubt be hard to bypass.
Even before Tesla’s recent announcement, car dealers have waged a pitched battle in statehouses across the nation — with some success — to prevent Tesla from bypassing franchise laws and selling directly to consumers. Tesla stores and service centers are not permitted in Michigan.