car dealership

In the property industry real estate agents have been cited as one of the biggest barriers to uptake of sustainable housing and technology such as solar.

Now it seems the equivalent in the car space – the dealer – is actively discouraging uptake of electric vehicles (EVs), according to researchers who went undercover as mystery shoppers.

They found car dealerships posed a “significant barrier at the point of sale”, with many dealers saying that EVs didn’t stack up financially.

The research, published in Nature Energy, found that in 126 shopping experiences at 82 car dealerships across Denmark, Finland, Iceland, Norway and Sweden, dealers were “dismissive” of EVs, omitted EVs from sales conversations, and “strongly oriented” customers towards petrol and diesel vehicles.

The researchers found key reasons for these behaviours were that the vehicles had lower profit margins, there was a lack of knowledge and competence to sell, and there were also extended sales time per EV purchase compared with a standard car.

This translated into some “striking” findings, including that in 77 per cent of car dealerships with EVs, the salesperson did not once mention the existence of the EV models; and dealers displayed little or no knowledge of EVs in 71 per cent of cases.

Misinformation included grossly underestimating vehicle range and operating costs.

Even though the countries the study was conducted in are world leaders in climate and energy policy, the researchers said EV incentives were still less than petrol and diesel incentives, with the exception of Norway.

“Thus, EVs tend to be a comparably less attractive option both for the dealership to sell and the customer to buy.”

As a result, only 8.8 per cent of the encounters resulted in an EV being the preferred option. Outside Norway, which has better incentives for EV uptake, this dropped to just 2.9 per cent.

“Perhaps unsurprisingly, salespeople tended to promote the vehicle that is easier to sell, which, outside of Norway, was undoubtedly not an EV.”

The researchers said that government and industry signalling were likely to be affecting purchasing trends.

“Car dealerships and sales personnel serve as a major obstacle to the uptake of passenger EVs in the Nordic region, which mirrors industry and government favouritism towards conventional cars and lack of substantial or at least effective policies promoting EV diffusion,” the researchers said.

The researchers said a policy and business strategy needed to be development to overcome “non-technical barriers” and support EV uptake, “particularly considering that EVs could accelerate both the decarbonisation of the transport and electricity sectors”.

“Without more progressive action on behalf of industry and government, dealers have little to no incentive to properly sell EVs, even in a Nordic region so steadfastly committed to decarbonising transport.”

Challenges in Australia

In Australia, Electric Vehicle Council chief executive Behyad Jafari says the problem is one of market certainty, with governments needing to intervene so the societal benefits of the technology could be realised.

High prices, poor product range and sparse charging infrastructure are the main reasons there is less demand here, he told The Fifth Estate.

However, he believes the transition to EVs is inevitable, and there is going to need to be a transition in dealership business models.

“It’s a very important point to make that [EVs] are not another car; they’re a new technology,” he says.

“The entire product has different benefits and costs. You can’t replace it like for like.”

For example, maintenance costs are far lower, so if a dealership makes a large proportion of income on after-sale care, that’s not going to be viable in the future.

Dealers that are remunerated by volume sold may be hesitant to learn and explain the benefits of a new technology.

Jafari says “people at the coal face need to be supported to drive the transition” and governments have to step in and direct this.

“How the business model changes to reflect that is up to industry. But industry needs to understand we’re changing to a new technology.”

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