As the automotive industry shifts toward electric vehicles, many companies are considering cutting off vehicle dealers in favor of direct online sales. Hyundai is the latest automaker to join the migration, directing its Australian dealers to redirect shoppers to its website for Ioniq 5 sales.
The South Korean automaker has set a fixed price for its yet-to-be-launched, all-electric model. That means consumers will have to order the
electric vehiclesdirectly from the manufacturer's website, which has a significant effect on the consumer side.
recording significantly high sales with its Santa Cruz model, Hyundai is cutting out dealers for their EV sales. Consumers now have to make non-negotiable online purchases directly from a car company's website.
Hyundai cuts dealers out of Ioniq 5 EV sales
Hyundai is the latest EV manufacturer to join other automakers in the shift to direct online sales. The company has directed Hyundai-branded dealerships in Australia to return any deposits previously received for the new electric 2021 Ioniq 5.
Instead of handling sales by themselves, the dealerships will have to redirect Ioniq 5 shoppers to the Hyundai website.
Drive, Hyundai decided to consider direct-to-customer sales in Australia in readiness for the Ioniq 5's market debut. The directive is also meant to offer a seamless transition to the company's new online sales model.
How will direct-to-customer sales affect shoppers?
The move by Hyundai to sell its 2021 Ioniq 5 EV straight from its website means the first shoppers of the battery-powered vehicles will not have the chance to negotiate the price as in a traditional car-buying experience.
The online prices will be fixed, which will allow the automaker to maximize its revenues. It also comes as bad news to the car dealerships because it narrows down their EV inventory.
While the dealers won't sell EVs, it allows them to have a wide selection of vehicles. Consumers will also have wide-ranging models to choose from.
The Australian Automotive Dealers Association (AADA) did not offer its thoughts on Hyundai's decision to bypass dealerships in its EV sales. However, it acknowledged that the dealers have invested in showrooms, employees, and facilities to sell its cars.
Hyundai joins other EV manufacturers routing direct online sales
Hyundai is not the first car manufacturer to decide to sell its EVs online and direct to shoppers. Other renowned brands, such as Mercedes and Tesla, have adopted the same sales model. It's a shift that threatens the operations and existence of classic car dealerships.
Polestar, a Volvo-owned Swedish EV manufacturer, had already broken away from traditional car-selling experiences in favor of a digital-first model. In a news article on
ABC News, Volvo shook up its selling strategy when it released the electric C40 SUV.
In the US, the adoption of the new direct-to-customer sales model was spearheaded by relative newcomers in the automotive industry: Rivian, Lordstown Motors, Tesla, and Lucid Motors. They are the potential rivals in the EV markets who partnered in early 2021 to push for legislation allowing them to sell online, further extending their industry monopoly.
The only caveat is that most of these companies sell their EVs from self-branded showrooms; they don't have franchises. That might limit their market outreach, considering they only operate from a limited number of states. As it seems, traditional car manufacturers with franchises in all 50 states will emerge winners.
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