Posted by Margins are already low, competition hardens – What to prepare for?
Tesla’s first showroom in Mumbai must not be ignored by Dealers, OEMs & SMEs. Anand Mahindra put a note on competition. He welcomed like a sportsperson going for a boxing fight. But don’t think Anand must be taking Elon non seriously.
But what about Dealers & SMEs? Are they aware? What should they prepare for?
Read – how to digitize, adopt AI – become competitive, increase margins.
Tesla’s Showroom & D2C Model – Lessons about threat from US & Europe
Federation of Automobile Dealers Associations (FADA) has been vocal about the challenges dealers face, particularly shrinking margins and the threat of D2C models.
My friend bought a Tesla in San Francisco. He said – sales process was like “Makkhaan”. From booking test drives, to exploring options to even making payment.
Tesla’s showrooms feel like tech boutiques, not car lots. No haggling, just a digital-first experience where customers configure cars online or with a guide. In 2024, Tesla delivered 1.81 million vehicles globally, maintaining growth despite a Q2 dip (Reuters, 2025). Their D2C model cuts dealers out, controlling pricing and customer relationships.
FADA’s Call and Adopt AI, CRMs, Digitize
FADA’s stance is a rallying : dealers need fair margins & modern tools.
To counter Tesla, VinFast, and the D2C trend. Waiting is not an option—66% of dealers globally worry about Dealers’ margin erosion. Read more – Dealership – Shrinking margin or Growing profits?
Those who adopt AI will engage thousands of customers, streamline operations, and boost profits. Those who don’t will see sales dry up as customers flock to digital-first brands.
- Act now. Explore AI tools like Vaayu’s AI Kavya to personalize customer interactions at scale.
2. Train your team to use tech to enhance, not replace, their work. Upgrade to AI CRMs, AI Marketing, Tools. Read more – AI Employee, CRM & Revenue tools for Automotive
3. Support FADA’s push for 7% margins by engaging with OEMs and investing in solutions that make your dealership future-proof. Tesla and VinFast are here—let’s answer their challenge with smarter, tech-driven dealerships that put customers first
Tesla Showroom & Invisible competitors that Auto Dealers must prepare for
While I was in Germany, with BMW & Mercedes in 2020-21 – we got a market news that Elon is setting up factory in Berlin. I can tell you – managements, dealers had jitters. Elon is that one person – who can move entire country, entire market. Staff gets excited to move.
In Europe, Tesla’s Berlin Gigafactory, operational since 2022, helped them capture 12% of Germany’s EV market by 2024.
VinFast is also eying Indian market aggressively with hybrid model—mixing direct sales with select dealer partnerships—adds more pressure. In India, where Mahindra dominates EVs, Tesla’s planned 2025 entry, backed by favorable EV policies, threatens dealers’ market share (Frost & Sullivan, 2025). FADA’s sounding the alarm: dealers’ margins are shrinking, and D2C models are a big reason why.
Other OEMs are forced to change their model. Eg an OEM may have no choice to increase D2C. Who knows? So a Dealer Principal may not be even aware – that their brand management may be forced to change distribution models to compete.
What can Dealers & SMEs do?
Start taking control. Ultimately it’s the customer, Customer relationships, After Sales which matters
Start taking control. Ultimately it’s the customer, Customer relationships, After Sales which matters.
If customers are with you – you win.
Make Dealers great Again – Urgent need
Let’s be honest. We talked to Dealerships. You can’t just rely on people without Digitizing & AI. You need to own customers, 1000s of customer interactions every month.
Relying just on Walk-ins isn’t enough
See, customer has multiple choices today. If Dealers just relied on walk-ins – Customer may walk in but buy from someone else, if an online insurer gave a discount.
More over how about customers – who D2C channel won & they were taken to other channels. So your invisible competitor that dealer doesn’t even come to know about
Augment staff with AI & Digital tools
Humans have limits. So does AI. Work of management is to use AI & use humans where they fit best. Empower your staff with Digital systems – AI CRMs, AI driven lead qualification, Service appointment bookings. It’s must have. Top management must lead this.
One multi brand dealer told us – We are big. Have sizeable staff. But don’t have as much staff to deal with all enquiries & do follow ups.
We put a tele calling team. But all I can do is – just ask them. If they say – I called customers, but customer didn’t pickup – I have no choice to stop there. .
Customer need follow ups, but need their own space. You call them multiple time – they will put number in Spam.
If you take Tesla lightly, think of Invisible competitors – VinFast’s aggressive entry. A Vietnamese player These players are reshaping how cars are sold, putting traditional dealers under intense pressure.
FADA’s stance shows we need to act fast with AI and tech to stay competitive. Here’s why this matters and how dealers can rise to the challenge.
Changing market makes new kings – Is your dealership that?
A changing market crushes people who don’t change & rewards people who adapt. This is law of nature.
Prepare for changes in market due to Tesla’s, Vinfast entries & emerge as winners. Tools like Vaayu’s AI Kavya can make this real.
FADA’s push for better margins aligns with this: higher profitability gives dealers the resources to invest in tech, while AI ensures we can compete with D2C’s efficiency.
If you are thinking, studying & preparing for new market – please book a gmeet or let’s meet for coffee.