Perhaps the head of General Motors Co. (NYSE:GM) has browsed the online storefront of Telsa Motors Inc. (NASDAQ:TSLA), where customers can put a $2,500 refundable down payment on a $71,000 Model S sedan with a credit card and a few mouse clicks.
Check out what Dan Akerson, CEO of the world’s second largest automakers said during Wednesday’s third quarter earnings conference call, responding to a question from Bank of America analyst John Murphy regarding the company’s efforts to expand its IT operations:
“We want people to start buying cars over the Internet. It is a potential half step away from our traditional channels. It doesn’t mean we are going to try and bypass our dealers, but why not in this tech savvy culture we have, this economy we have, for the millennial to come in and say I can shop and I just go down and sign and go. So we are trying to evolve not only from an internal perspective but an external perspective to a more 21st century information based marketing company.”
Dealers, on the other hand, might beg to differ on the idea of General Motors taking something out of Tesla’s rulebook by opening up its own online storefront. Auto retailers in Texas – led basically by two incredibly wealthy merchants – have taken much of the spotlight on the issue, but there are similar laws in almost every state under the auspices of unfair competition, basically they fear manufacturers would put local dealers out of business
GM relies much more heavily on dealers than Telsa (which doesn’t rely on them at all), and Akerson is clearly aware of this, so whatever GM has planned for targeting tech-dependent millennials with an online storefront would have to address dealers’ concerns and state laws. Apple Inc. (NASDAQ:AAPL) has managed to strike a balance – selling directly to consumers through its online business and brick-and-mortar outlets while appeasing merchants that sell Apple product by not undercutting them. But cars are not consumer electronics and auto dealers as a unified front is a powerful force to reckon with.