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September 23, 2019Cart

Business

by Fairfield County Business Journal
by FCBJ

Tesla shutters Greenwich showroom

Tesla’s Greenwich gallery – long a point of contention for brick-and-mortar car sellers – has closed, at least for now, as the Palo Alto, California automaker considers shifting its focus to selling online.

Tesla opened a showroom at 340 Greenwich Ave., in Greenwich, Conn., in September 2016. Photo by Tyler Sizemore/Hearst Connecticut Media

The 340 Greenwich Ave. location has long been a source of controversy; while billed as a “gallery,” car dealers – led by the Connecticut Automotive Retailers Association (CARA) – maintained that it was effectively being used as a sales tool, something forbidden by the state’s Connecticut Franchise Act.

That law prevents the direct sale of automobiles from manufacturers to consumers. Tesla has maintained that its gallery allowed prospective buyers to look at, test drive and later order a Tesla over the phone or on the internet. Delivery was supposed to take place outside of Connecticut, but CARA and others questioned the semantics involved in that position.

In May 2017, the state’s Department of Motor Vehicles ordered Tesla to “cease all functions” at the Greenwich location, a move affirmed last year by a Superior Court judge. Tesla has filed an appeal in the state’s Appellate Court.

The electric automaker has lobbied for the past several years for the passage of legislation allowing it to work around the Franchise Act, but those efforts have come to naught.

The company has sent mixed signals as to the future of its brick-and-mortar stores. In a March 10 blog post, Tesla affirmed that all sales worldwide will be done online, but added that it planned to keep “significantly more” stores open than had been announced. As a result, Tesla said it will need to raise prices on its costlier models by about 3 percent on average worldwide.

“When we recently closed 10 percent of sales locations, we selected stores that didn’t invite the natural foot traffic our stores have always been designed for,” according to the blog. “These are stores that we would have closed anyway, even if in-store sales made up our entire sales model. A few stores in high visibility locations that were closed due to low throughput will be reopened, but with a smaller Tesla crew.”

Tesla further said that another 20 percent of its locations are under review, and that it expected at least some of those to remain open. Tesla maintains a store at The Westchester in White Plains that is currently open.