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Car dealers don't solve distribution problems from 100 years ago. They didn't have these sorts of distribution problems 100 years ago, and the first car dealers were simply manufacturer storefronts.

Car dealers solve the risk management function. Selling cars is a risky business. Car makers are in the business of making cars, which is significantly different business activity with a wholly different risk profile and operational needs.

Tesla can sell direct to customers because its small enough now that the localized retail/inventory risks aren't significant. This business model (of manufacturer-owned dealers) simply won't scale to a national level.



Aren't you assuming that the manufacturer needs to store an inventory of cars somewhere? If the manufacturer sells direct and the lead time is short enough there's little to no risk because there's little to no inventory.


You're thinking of manufacturing inventory risk vs hyper-localized inventory risk. They have to manage inventory both ways, but the hyper-localized inventory incurs significant transportation expenses.


Exactly. It's the same as wondering why you can't book a flight directly with Boeing.




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