When dealers ask Jared Hamilton if Tesla is disrupting the auto industry, the founder and CEO of DrivingSales has a definitive answer.
“Tesla is in no way shape or form the death of the auto industry,” said Hamilton at the second Canadian Dealer Forum in Vancouver, B.C. “I’m not saying Tesla won’t be a viable competitor,” he continued, “but they are not this gnarly disruptor.”
In his keynote presentation that kicked off the conference, Hamilton dissected the term “disruption innovation,” and approached it from an academic perspective.
Hamilton said the word “disruption” is often thrown around, especially by marketers to talk about competitors. But that’s not what true disruption means, said Hamilton.
“A truly disruptive company will lead to the death of the incumbent,” said Hamilton.
Disruptive innovation tends to come from the bottom, entering the lower end of the market spectrum, said Hamilton. Larger companies who may occupy the same market space often ignore them at first.
Hamilton said we’ve already seen countless examples of disruptive innovation in the auto industry.
When Henry Ford entered the transportation industry, horse-drawn carriages were the primary way of getting around. Though Ford did not invent the automobile, he introduced it to the masses with the Model T.
For a while cars and horse-drawn carriages coexisted, but the need for the latter diminished, and then cars took off. They were already entrenched in the marketplace and carriages simply could not keep up.
It was Japanese carmakers that then disrupted the domestic auto industry, followed by Koreans, and then more recently, Chinese and Indian companies like Tata Motors.
Circling back to Tesla, Hamilton doesn’t want to downplay its influence in the auto industry.
But as Elon Musk’s vehicles are not cheap or mainstream, Tesla fails to pass the test of “disruptive innovation,” said Hamilton. Rather, the company is more of a case of “sustaining innovation,” that will shake things up but won’t result in the death of the auto industry.
Hamilton said he hopes dealers can think about these examples and use them as a blueprint to act. “We are being attacked with a lot of sustaining innovation.”
Look for more in-depth coverage of the DrivingSales Canadian Dealer Forum in the August/September issue of Canadian auto dealer.
