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As automakers go all-in on EVs, will they drop franchise dealers in favor of direct-to-consumer sales?

Consumers today have options at their fingertips and while the automotive purchase process has changed to meet these consumer needs over the past few years, what does this mean for the industry in the long run? Today on Inside Automotive, we’re pleased to welcome Jim Ziegler, automotive retail veteran, speaker, and President of Ziegler SuperSystems, to elaborate on a recent article he wrote called “Are Manufacturers Getting Ready to Dump Their Dealerships?

Ziegler’s article takes aim at Ford Motor Company, General Motors, and other automakers that are going all-in on EVs and changing up their production/inventory strategies. Ziegler recalls back to the beginning of February during Ford’s investors call when CEO Jim Farley, perhaps accidentally, hinted at the EV/ICE split. The split wasn’t formally announced until early March of this year.

This was shocking to Ziegler and started wondering, does this mean possible separate franchises? Does it mean we’re going to sell directly to consumers on the EV side like Tesla does? 

From his perspective, Ziegler explains, “My take on it is that Ford would like to totally do away with the retail dealers…manufacturers do not know how to sell cars. General Motors, everybody else is watching this, and believe me, it’s not just Ford. It’s the deep-rooted, heartfelt desire of every manufacturer.”

Ziegler believes Ford made these changes based on the board’s infatuation with Tesla. But it’s not just Ford. Many OEMs have already started, or are flirting with, restricting production. Ziegler says some automakers are allocating 40 – 60% of their production to direct sales and furthermore, have begun paying salespeople directly for selling build-to-order sales.

However, Ziegler says history has proven that OEMs need their auto dealers. If Ford and GM decide to phase out retailers and pursue direct sales, chances are they will take a huge hit and come crawling back. Only time will tell.

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