New Jersey and Tesla have been squabbling over whether it’s OK for Tesla to sell their cars directly to customers rather than using a dealership as an intermediary. New Jersey has ultimately insisted that cars must be sold through dealerships, claiming that “this is for the protection of the consumer.”
Tesla has callled bullshit on New Jersey and has clearly explained the origin of such laws, i.e. that they were intended to prevent manufacturers from strongarming dealerships.
But here’s my question: given that New Jersey has claimed that Tesla must sell through dealerships “for the protection of the consumer,” what has been their official explanation of how this protects the consumer?
From what I recall hearing a few days ago…lets say I’m in Wisconsin and I buy a Tesla from the plant in California. What do I do if it breaks? I’m kinda SOL. However, if I bought it from my local Honda/Tesla dealership I can get it fixed.
IIRC, that was at least part of the argument. By distributing the cars through a network of dealerships, consumers have some way of getting their cars serviced, maintained, repaired etc. It also gives them someone on the local level to deal with for warranty issues, recalls, complaints.
I’m not saying it’s right or wrong, it’s just one aspect of the reasoning for distributing through dealers.
ETA, even as I typed that it’s pretty easy to see that they could still sell them from the plant and contract out to a dealership (Honda would be my guess) to deal with all the typical post-sale type stuff.
Car dealerships are a powerful lobby in almost every state. If someone can legally get around having to buy a car through a dealer then others will try to do the same, and the dealers will lose a lot of business.
Oh, gahd, do we really need another thread on this?
I’ll note that DMC had hundreds of dealerships, all combined with others in the usual multi-make model, and it didn’t do them or their customers a bit of good.
New Jersey is merely insisting that someone other than Tesla own/operate these facilities. And so my question still stands: how does New Jersey claim this ownership arrangement benefits the consumer? I would ask New Jersey myself, but I’m not sure where to begin.
FWIW, if their dealership/service network seems sparse, try owning a BMW motorcycle.
The organization of car dealers in New Jersey is the New Jersey Coalition Of Automotive Retailers. Their blog suggests that they think the advantage dealers offer consumers is the opportunity to negotiate prices among various dealers.
The ability to go to a local dealer for parts and service does not mean that the local dealer offers reasonable prices or that a manufacturer owned service center is going to be any worse.
It’s a zero sum game with regard to pricing. The average price over the long term can never go below manufacturing cost + sustainable manufacturer profit margin + dealer costs + dealer profit. If you buy from the manufacturer, there’s no dealer profit portion, and the manufacturer can more efficiently run a bunch of dealerships as a single business organization.
There are a gazillion questions of this sort that I’d love to ask my lawmakers, but they are under no obligation to answer them. The only solutions I’m aware of are to either become a big campaign contributor so that they’ll want to keep you happy, or find some way that the news media can embarrass them into answering. The first option isn’t working because the other car companies are richer and more numerous than Tesla. I suppose the second option might work if the Tesla fans make enough noise, but that takes a very long time, and it is a hard battle.
True, but having a local presence does mean the local entity is subject to direct oversight. The issue wrt servicing is not having servicing available. For example, let’s say Ford sold you a car from CA and you live in DC. Ford emails you to tell you there is a recall on a part, and you can get it fixed free but only at certified ford servicing centers, and the nearest in is in NJ. What could a consumer do about that?
This isn’t true. A car is often sold near or below invoice price for a variety of reasons. Dealerships often do that because they can make money in other ways (eg. Financing, servicing, warranties). In theory, independent dealership competition should lower prices more than a direct manufacturer monopoly.
As for the OP, we had a thread I this pretty recently. My take was that these laws are mostly about protecting jobs and revenue, and secondarily about protecting consumers by ensuring competition and eliminating abusive monopolistic practices (in theory). For legislators, it’s choosing “small” businesses (dealerships) over big businesses (manufactures)
And of course the small businesses being protected are actually located in the legislator’s district, city or state while the manufacturers rarely are.
Drive to NJ, since they knew at the time of purchase that was the closest service center.
This is already true for many high-end and specialty cars (and motorcycles, and other vehicles). Tesla is still a specialty maker with specialty products and I doubt anyone just wanders in and decides to take an S instead of a Camry.
Whatever vague intent these laws have of protecting consumers, they are decades out of touch with reality - some rooted in the 1940s and 50s, if not earlier - and those intentions are smothered under business-protection intent anyway.
When the debate was going on in NC, one State Rep stated the reason they wanted to prevent Tesla from selling directly to consumers was that local dealers sponsor little league teams and Tesla doesn’t. More rational members of the state legislature won out and Tesla can still sell direct here.
Well, the consumer could simply use his brain.
And the politicians could let the free market work.
Nobody buys a car if he knows in advance that there is no service available, because every single driver in the world knows that cars need repairs.
Right now, Telsa’s consurmers are Hollywood celebrities and ostentatious millionaires, so it’s not a problem…but if they every want to sell to the mass market, Telsa will have to make sure that there are qualified mechanics in every city.
(Back in 1973 or so, I once met a guy in Ohio driving a Lambourghini, and sure enough, he knew that there was no Lamborghini service available in town. But he didn’t care, because he told me that when he needs service, he just flies his personal mechanic in from Los Angeles to take care of it.
See?–problem solved. )
I am anything but an adamant “free market” type, but a company that sells over two million vehicles a year is not going to leave customers stranded. Laws based on conditions in the 1940s requiring local part, service and maintenance depots are absurdly outdated and no basis for enforcing a “dealer sales” model. Should there be any shift in how automakers position their support network, it will become one more closely-monitored factor in reasons to buy or not buy specific brands or models.
Such “consumer protection” aspects are trivial with respect to the “politically powerful local business asset” ones. Time for the industry to grow up, and the consumer will benefit when it does.
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