Fisker Combines Dealerships and Direct Sales to face distribution constraints.
Ricardo Oliveira
Boosting EV demand in mass market. Evangelizing AI tools - Futurist with a track record of over 30 years in the automotive industry, pioneering electric mobility and new trends.
The automotive industry is undergoing a significant transformation, with some brands like Fisker adopting the direct sales model for better control and margins. However, this path isn't without its challenges, particularly in achieving high sales volumes without a dealership network.
Fisker, an electric vehicle company, announced adding dealerships to its direct sales model to expand its sales and delivery network. Despite producing over 10,000 vehicles in 2023, it delivered only about 4,700 units due to distribution constraints. This highlights the difficulty of achieving wide territorial coverage and significant sales volumes without a robust dealership network.
Advantages of the Direct Sales Model
The direct sales model offers various advantages, such as more control over the customer experience, potentially higher margins, consistent pricing, and a more direct connection with the consumer. However, it also faces significant challenges:
- Limited Geographical Coverage: Without a dealership network, brands struggle to offer wide geographic coverage, essential for achieving high sales volumes.
- Distribution Challenges: As seen with Fisker, managing logistics and vehicle delivery can become a significant bottleneck, limiting the number of units sold.
- Lack of Personal Relationship: Local dealerships often create long-lasting relationships with customers, encouraging repeat purchases and providing reliable after-sales services.
Dealers' Perspectives
The Agency Model is a concept halfway between traditional distribution and "pure" Direct Sales. A BCG survey of over 400 dealerships in Germany revealed that while dealers who adopted an agency model have a more positive view, many are still concerned about the transition, highlighting issues like insufficient compensation, a lack of details about the new model, and the perception that OEM-established pricing may not be dynamic or demand-oriented. In addition, intense intra-brand competition and the threat of independent platforms continue to challenge the traditional dealership model.
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In summary
Overcoming these challenges requires significant investment, not just financially but also in redefining the customer journey, building trusted relationships, and a smooth transition addressing numerous legal, data and IT integration, and organizational restructuring challenges.
In summary, while the direct sales model offers undeniable advantages, its effective implementation and achieving wide geographic distribution and significant sales volumes require substantial investment and a well-crafted strategy. Fisker's experience serves as a valuable case study for other brands considering this approach.
Ricardo Oliveira
World Shopper | #GetReadyForTheFuture
In content production, we employ generative artificial intelligence to analyze extensive volumes of data.
Senior Executive Automotive Business Professional
1 å¹´Thanks for sharing Ricardo! The OEM ambitions and dynamics in the market will require substantial investments. Changing a business model that has existed over so many years and has proven to deliver, will require all stakeholders in the value chain to join forces and agree on the basics of what value each one creates. We are looking at an experimental stage of a variety of tactics under the strategic objective of improving the bottom line by focus on efficiencies in distribution and cost attached, in which OEMs need to maneuver with a high level of agility, finding the balance between the existing and the direction they intend to go, centered around a more diverse and dynamic consumer behavior, well balanced offer portfolio management and enough flexibility in the distribution model to secure short- , mid- and longer-term business results.
Automotive Executive at VW, Toyota and PSA / Commercial Manager / Sales & Marketing / Dealer Network Development / After Sales / Customer Service
1 å¹´After-sales geographic coverage is also crucial for a new brand to provide services and ensure customers' trust in the brand.
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1 å¹´Will the third time work?