Revolutionizing the Roadside: Tesla vs Traditional Dealerships – A Culinary Comparison

If car dealerships in British Columbia, Canada would be restaurants I would only order from Tesla and eat at home.

A recent experience with the Kot Auto Group , specifically Kelowna Kia , made me think, why are traditional car dealers so good at creating such a terrible customer experience. I was also wondering, is the ecosystem representing that specific brand aware of the damage those dealerships do in terms of brand awareness, reputation and loyalty. Do they even care? Is the industry just stuck in a multi-year transition period or have they given up half-way through (towards what?) because of their inability to change?

Reflecting on what causes this terrible experience for customers led me to believe that it is a combination of structural issues in the manufacturer and dealer network relationship, paired with a total immaturity along the value chain. Based on my recent experience it felt to me that the Order to Cash process for new vehicles is stuck in limbo between the 1950 and 2024. Like working at company that has emails, but instead of transferring them electronically by hitting the send button, they print them from the email application and send them via courier or fax them.

Here I am reflecting on my experience of trying to buy a Kia EV9 in the timeframe from July to Dec 2023 in British Columbia, Canada. A car that no one had seen in person at this point, just like the early days of Tesla cars. It involved a pre-sale online process with about 50,000 users ‘competing’ for about 500 units and subsequent in-person and text interaction with my local dealership in Kelowna, BC. I am German and not used to the idea of ordering a car. We always bought used cars that were on the lot or through private sales. My North American colleagues and friends are more familiar with ordering a vehicle, but this was my first-time and most likely last experience. The corporate marketing of Kia did a fantastic job of creating a desire to want one of those EV9s. I was looking at my gas-guzzling 2001 Toyota Sequoia which we bought for $6k (<200,000 km) when we moved to Canada. Frankly, this 20-year-old truck was the best we could afford at this point to haul the family and dog around. I thought, if there is one thing I want to own as a fully electric family car “this has to be it”. Blatantly ignoring the rationale side of my brain that should have screamed “what is the cost-benefits of such a massive investment”.

Job well done Kia Canada marketing, creating an emotion and desire to own!

Luckily, the interaction with the dealership in Kelowna managed to bring me back to my senses and, while Kia certainly produces great cars, the experience made sure that I will never ever buy anything from them or any of the brands the Kot Auto Group represents. Unless Kia Canada rapidly ramps up their customer experience.

How did I arrive at this trigger point and how can I rationalize through an example what I experienced. More importantly, what can the industry learn from an experience like mine and improve the customer experience? Maybe far-fetched, but I pictured the car-buying experience as a culinary adventure. Where the excitement and the journey are just as important as the destination and result. I started to research who strikes me as innovative with a great customer experience when it comes to buying cars and Tesla popped into my mind. I will most likely never own one, but in comparison, they represent two distinct approaches to this automotive gastronomy.

Picture yourself seeing a new restaurant coming to town. One is called Tesla , which mirrors a modern, tech-savvy café, with minimalist designs and interactive displays that draw customers in for an immersive experience. If you are far away from one of those locations like I am, you can scroll through the menu and see what matches your appetite. All from the comfort of your home, maybe sipping on a drink. You can play with features, safe it for later and when you are ready you customize your order, you see the availability, think about the price, make the reservation and it will be delivered to your home. Done. The process is designed to optimize customer experience, streamlined around a clientele that knows what it wants and most importantly, it is transparent, and the customer controls the ‘upsell’. I have not heard from a Tesla customer that felt they got a bad deal. Buy or don’t by there is no try.

I am a big fan of this self-serve model where customers can explore at their own pace, using innovative technologies to customize their ideal vehicle.

Car dealerships, and this is the main reason why I try to avoid them, often follow a script, akin to a waiter recommending specials. Salespeople guide customers through the extensive offerings, sometimes overwhelming them with information, constantly scanning if they can close a deal or are wasting their time. They are on a clock, at least in the segment that I am shopping in. It is like trying to have a romantic dinner with your significant other where the waiter is constantly hovering around your table. Asking if you finally decided, how you like everything and challenging why you are only going for the sparkling wine and not Champaign – judgingly implying “is he or she not worth it?”. Uneasy, under pressure, no time to digest are feelings that spring to mind.

Now back to Kia Canada / Kelowna Kia , I don’t even know who I am dealing with at this stage. This well-established restaurant in town, offers this exciting and hyped new dish called EV9. The sales location resembles a classic sit-down restaurant, with a showroom and various models neatly arranged inside and outside like an extensive menu. You approach the ‘waiter’ aka salesperson of your choice and ask if they can provide any information on this item – they don’t, but it is obviously in high demand (right to the FOMO). You get a quick rattle down of the general information that you already found online and walk away with the request to register online, get in line and might be able to order one when it is available. You wonder, “why did I come here again?”, but at least you know that the item will be delivered to this location where you must pick it up. Ok, good that I check how to drive here. At this point in time the marketing machine of Kia Canada is in full swing, creating all the excitement, drumming up demand until the EV9 is finally available. Going out on a limb, maybe comparable to the Tesla Cybertruck.

Comparing those ordering processes, I feel that it is fair to say, based on my experience that with traditional dealerships, negotiating prices can feel like a back-and-forth over the bill. Tesla eliminates the haggling, presenting a transparent, fixed-price model akin to choosing a meal with clear pricing on the menu. This straightforward approach fosters a more relaxed buying experience and leaves the customers with the confidence that they paid for what they saw and 50 other customers leaven with them paid the same.

Fast forward - finally, the day has come where a pre-sale order can be placed with the supplier ( Kia Canada ), which is technically only a centralized platform to allocate the vehicles to a customer and dealership. Not that you received any information from the dealer or supplier. Social media is your best bet for these types of hypes. I get in line with approximately 50,000 other users for a chance to catch one of those 500 rare items on the menu. Some, like myself, were ‘lucky’ to make a refundable commitment to buy one. You don’t know the price or exact specs for North America. But hey, emotions and high demand do their part. Others didn’t get a chance, but both parties equally race to social media to share their adrenaline-pumped triumph, comparing trims, colors, or their frustration if they did not make it.

Now here is the major difference - Kia Canada forces you to involve an approved dealer for this process and this is, in my view, where the process breaks, and the frustration starts. As a customer, I should not even have to worry or know about the execution of my order. Like with a purchase on Amazon or my local hardware store where I ask for delivery. It doesn’t matter if Fedex, Canada Post, Intelcom, doordash or any other provider delivers what I ordered. If I get what I asked for in good condition I am fine and if not, I know who to approach. So why does Kia Canada not directly manage the process, allocates a car when ready and includes a transaction fee in the MRSP to give the local dealer something for their service and to cover the risk (unpacking, cleaning, storing on the lost, insurance, etc). In my view there is a clear distinction between a customer that straightforward orders something and expects to receive it versus someone that has a budget or idea what he needs, and the dealer helps this customer to decide on a certain model, new or used, leasing, finance or cash deal. Better advise on the ‘right fit’ than on the best margin for the salesperson.

I perceive those two distinct processes as parallel streams or service areas, but weirdly, they are horseshoed into one.

So, why the frustration. Well, in this process where I did all the legwork and not waste any resources of the local dealership I fell no longer treated as a valued customer that can boost rand reputation and advertise the new model, spreading appetite, but a stupid uninformed someone with a credit card that is so desperate that the dealer can now boost his margin.

Because, you know – supply and demand. Stating the obvious, I was the one that lined up with 50,000 others for the privilege to make a huge investment not the salesperson.

What were the chain of events in my case? Well, firstly I was called into the dealership to physically present my credit card as the wrong amount was taken during the pre-sale (new receipt #1501-5050). Luckily, I knew the way already and who doesn’t need a 30km drive across the city instead of a lunch break. As confirmed with Kia Canada (Case #224-77838) I am now hooked with this dealer, Kia Canada has no influence and interest beyond the point where I made a payment to the dealership. Why is this important, well it looks like the dealership can (and will) now do what they want. I am locked into this restaurant and if I am hungry, they can feed me what they have at the price they set. Alternatively, I can cancel the order, get my refund and let things go.

Remind me again, Kia Canada , why did I follow your process to reserve an option to buy that vehicle?

The day comes where Kia Canada releases trim and prices - CAD $75,345 + $3,049 delivery & destination charges; all in %78,394 + tax, ouch. But back to the emotions, the joy of having made it onto the list of selected 500, subjective long-term benefits comparing to the old truck and having been able to build a credit history – it will be fine.

Yesterday (Dec 13, 2023) I get a text from Kevan Threadgill at Kelowna Kia following the classic sales strategy:

• giving me the cheerful news that he has one car coming in (might be true),
• telling me that I am the first one on his list of 17 in the area (oh-oh, competition, but glad I am special)
• who has been a good customer (no idea why, but flattered and feel even more special) and
• asking if I still want the EV9.

Yes, that was the whole purpose of playing the Kia Canada EV9 lottery in the first place.

However, there are a few items that I had to verify while we are exchanging cheerful notes via SMS. Mr. Threadgill is apparently not familiar with social media. I quickly find and get in touch with another (now former) customer of Kelowna Kia . This person had been offered a white EV9 about a week before me, but due to supply/demand there was a 10% markup (unverified) and this customer canceled the order.

At this stage during our SMS chat I am assuming that Kelowna Kia did not let the dooming arrival of the car (on or before Jan 15, 2024) pass without any actions. I am pretty sure they talked with some of the other, now down to 15 (excluding me) potential margin boosters, offering the same or slightly altered scheme. By the time he got down his list and down to my name, the selling price had changed to CAD $82,780 + tax (compared to $78,394).

• $77,340 selling price
• $749 DRIVE CARE (which is all weather mats, trunk liner, wheel locks, nitrogen, splash guards)
• $100 Air tax (whatever that is)
• $699 admin fee
• $25 Tire tax and, not to forget
• market adjustment of 5% ($3,867 – well demand and supply, you know).

I am now sitting in this restaurant, hungry and curious. As a customer of this place I see the food that I ordered at the price that I saw in the menu being dragged from table to table while the waiter whispers them the adjusted price in their ears pointing around the room showing the line-up for this item. One will bite.

I watched John Kot 's sales training videos that were posted on linkedin. He is the President of Kot Auto Group who owns Kelowna Kia amongst other dealerships from Vancouver Island to Kelowna (list not exhaustive). Interestingly, he talks about hunger for business, familiarity, set backs and his time at Weyburn in 1989. He points out to his sales team that, if you do a good job, customers will come back. Knowing customers is key, they need to like their salesperson and that a satisfying sale brings referral business. So why are margins set as KPI on those direct new orders instead of building trust and building a solid satisfied customer base?

I left this establishment with a sick feeling in my stomach. I also now realized that I should have never participated in the pre-sales of this car. The emotions are gone, and I am back to reality. Scrolling through social media platforms, I see that the frustration with this specific vehicle, the process and markups exists all over Canada. Presumably also in other jurisdictions, but I did not search there as the amount of posts on this topic is overwhelming.

I have to add that there are also a few examples mentioned on those social media platforms that mention 'good' dealers that charge the agreed price and fees. I would have loved to highlight a few of these here, but I could not verify this information.

The question remains, why have car makers in collaboration with dealers not managed to transition to a customer centric, transparent process when it comes to the sale of new vehicles. Looking across different brands I see the same broken process that highly frustrates me. Assuming the role of a customer that knows what he wants and is used to an Amazon-like shopping experience or has seen Tesla’s process, it is really annoying what you have to deal with across all those brands. You can select all the features you want at different automotive brands and configure the car you want and the price you are able to pay, but in the last step, there is no ‘buy now’ or ‘place order’ function. All of them redirected to a dealer “of your choice”, well technically you don’t have a choice in my area, who then calls you a couple of days later, if you are lucky, has no clue what you were looking for and immediately goes into the sales and financing pitch for something completely different. Leaving me wonder, does their sales training interfere with customer requirements? When has customer requirements lost priority in those businesses. Going back to my restaurant example this is like me being the designated driver who wants to have a light meal, lets say fish and salad. However, the waiter keeps ignoring my order and pushes hard to ‘upsell’ me to a heavy burger and an IPA that is on promotion. In parallel he is eying the next group that enters, scanning them with trained eye of the likelihood of selling better is higher with them than me.

Why? What is so fundamentally broken in this process that customer centricity is not even a thing in this industry.

Looking a bit jealous and frustrated at the Tesla webpage I wish that Tesla's seamless and tech-driven approach to the car-buying experience that sets it apart from traditional dealerships, much like a cutting-edge culinary experience differs from a traditional restaurant, would have transpired to other manufacturers as well. By reimagining the process, Tesla has created a model that caters to the evolving tastes of modern consumers, providing a delightful and efficient experience on the road to a sustainable automotive future.

Again, Tesla’s menu is not for me, but I secretly wish I could just order, eat and relax.