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In the market for a new car these days? You’re probably keenly aware that prices are at an all-time high.
The average selling price for a new vehicle jumped more than 36% from the end of 2019 through last year—an increase of nearly $13,000. According to Edmunds, there were 18 cars a decade ago with a sticker price lower than $20,000. Today, there are four.
Supply-chain problems during the pandemic reduced inventory nationwide, closing the price gap between used and new vehicles, a trend line that continues to buck conventional wisdom about new cars losing value the minute you drive off the lot.
And, of course, the future is electric, with hefty federal tax credits putting EVs in range for many drivers, and automakers—existing and new—debuting dozens of models in the coming years.
The automobile marketplace is bustling with opportunity and competition. Yet there’s one notable exception. Indiana consumers are stuck using an outdated model to purchase new vehicles: going through an authorized dealer.
The only new car you can purchase without going to a dealer is a Tesla; the company sells its electric vehicles directly to consumers through a network of showrooms in major cities. It has one location in Indiana, on the north side of Indianapolis.
By selling directly to consumers, Tesla streamlines its sales process and saves money on franchise fees and dealer markups. Yes, I’m fully aware Tesla is a luxury brand that’s still out of reach for most folks. Even if you can’t afford a Model X, the Tesla direct-delivery model should be the default, not a deviation.
Before the hate mail comes flying in from every car dealer in central Indiana, it seems unlikely that a direct-to-consumer model would cause much of a market disruption, even among car buyers who’ve grown up with the internet as part of their lives.
A survey released last year by automotive analytics and consulting company CDK Global found that 87% of Gen Z still bought cars in person at a dealership. More than one in five Gen Z buyers reported finding it difficult to buy a car fully online.
But for those of us who’d love to design a vehicle virtually and have it delivered to our doorstep without extra customer service or frills, it would be nice to have options.
Since it began selling directly to customers, Tesla has been fighting with states that want to protect the dealership monopoly on new-vehicle sales, but the company might have found a new way around those restrictions.
Earlier this year, Tesla announced it will ramp up efforts to put showrooms on tribal lands. The automaker will open one with a sales and delivery center this fall in Connecticut. Another is planned for upstate New York in 2025. Because tribal lands are sovereign property, the states’ dealership laws don’t apply.
Elon Musk has his fair share of detractors, but the Tesla co-founder’s business model for designing and selling new cars should become the way of the future, paving the way for a more open marketplace where consumers are behind the wheel.•
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Chartier is a lifelong Indianapolis resident and owner of Mass Ave Public Relations. Send comments to ibjedit@ibj.com.
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