# Official reason for requiring car dealerships? **URL:** \ **Category:** Factual Questions\ **Created:** [April 3, 2014, 2:17pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250 "2014-04-03T14:17:35Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Machine\_Elf](https://avatars.discourse-cdn.com/v4/letter/m/82dd89/32.png) [@Machine\_Elf](https://boards.straightdope.com/u/Machine_Elf)\ **Post date:** [April 3, 2014, 2:17pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/1 "2014-04-03T14:17:35Z")
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](http://www.teslamotors.com/blog/people-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? ---
**Author:** ![JerrySTL](https://avatars.discourse-cdn.com/v4/letter/j/e274bd/32.png) [@JerrySTL](https://boards.straightdope.com/u/JerrySTL)\ **Post date:** [April 3, 2014, 2:20pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/2 "2014-04-03T14:20:46Z")
If it’s New Jersey, it’s more about putting money in politician’s hands. ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [April 3, 2014, 2:23pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/3 "2014-04-03T14:23:02Z")
> [@Machine\_Elf](#): > > 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. ---
**Author:** ![dolphinboy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dolphinboy/32/330_2.png) [@dolphinboy](https://boards.straightdope.com/u/dolphinboy)\ **Post date:** [April 3, 2014, 2:33pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/4 "2014-04-03T14:33:27Z")
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. ---
**Author:** ![ThisUsernameIsForbidden](https://avatars.discourse-cdn.com/v4/letter/t/b4bc9f/32.png) [@ThisUsernameIsForbidden](https://boards.straightdope.com/u/ThisUsernameIsForbidden)\ **Post date:** [April 3, 2014, 2:33pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/5 "2014-04-03T14:33:57Z")
I would love to buy a car directly from the manufacturer. Free shipping, free returns, etc. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [April 3, 2014, 2:37pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/6 "2014-04-03T14:37:58Z")
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. ---
**Author:** ![Machine\_Elf](https://avatars.discourse-cdn.com/v4/letter/m/82dd89/32.png) [@Machine\_Elf](https://boards.straightdope.com/u/Machine_Elf)\ **Post date:** [April 3, 2014, 2:47pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/7 "2014-04-03T14:47:22Z")
> [@Joey\_P](#): > > 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. But [Tesla does have a network of local service and sales centers that they own/operate themselves.](http://www.teslamotors.com/service#/tesla-service) In other words, Tesla owners _do_ have someone local they can turn to for service/maintenance/repairs/recalls/complaints. 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. 😃 ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [April 3, 2014, 2:51pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/8 "2014-04-03T14:51:57Z")
The organization of car dealers in New Jersey is the New Jersey Coalition Of Automotive Retailers. [Their blog](http://www.autonews.com/article/20140402/BLOG06/140409943/if-you-like-paying-msrp-then-tesla-apple-is-for-you) suggests that they think the advantage dealers offer consumers is the opportunity to negotiate prices among various dealers. ---
**Author:** ![Habeed](https://avatars.discourse-cdn.com/v4/letter/h/a587f6/32.png) [@Habeed](https://boards.straightdope.com/u/Habeed)\ **Post date:** [April 3, 2014, 3:14pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/9 "2014-04-03T15:14:44Z")
Both arguments are bogus. 1. 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. 2. 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. ---
**Author:** ![Keeve](https://avatars.discourse-cdn.com/v4/letter/k/f07891/32.png) [@Keeve](https://boards.straightdope.com/u/Keeve)\ **Post date:** [April 3, 2014, 4:06pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/10 "2014-04-03T16:06:26Z")
> [@Machine\_Elf](#): > > 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. 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. ---
**Author:** ![brickbacon](https://avatars.discourse-cdn.com/v4/letter/b/898d66/32.png) [@brickbacon](https://boards.straightdope.com/u/brickbacon)\ **Post date:** [April 3, 2014, 4:18pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/11 "2014-04-03T16:18:09Z")
> [@Habeed](#): > > Both arguments are bogus. > > 1. 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. 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? > [@Habeed](#): > > 1. 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. 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) ---
**Author:** ![brickbacon](https://avatars.discourse-cdn.com/v4/letter/b/898d66/32.png) [@brickbacon](https://boards.straightdope.com/u/brickbacon)\ **Post date:** [April 3, 2014, 4:22pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/12 "2014-04-03T16:22:42Z")
This is the old [thread](http://boards.straightdope.com/sdmb/showthread.php?t=718082) btw. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [April 3, 2014, 4:53pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/13 "2014-04-03T16:53:27Z")
> [@brickbacon](#): > > 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. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [April 3, 2014, 4:59pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/14 "2014-04-03T16:59:33Z")
> [@brickbacon](#): > > 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? 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. ---
**Author:** ![brickbacon](https://avatars.discourse-cdn.com/v4/letter/b/898d66/32.png) [@brickbacon](https://boards.straightdope.com/u/brickbacon)\ **Post date:** [April 3, 2014, 6:40pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/15 "2014-04-03T18:40:09Z")
> [@Amateur\_Barbarian](#): > > 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. True, but a change in the law will apply to Toyota as well as Tesla. This isn’t really about Tesla. ---
**Author:** ![Pixel\_Dent](https://avatars.discourse-cdn.com/v4/letter/p/bc8723/32.png) [@Pixel\_Dent](https://boards.straightdope.com/u/Pixel_Dent)\ **Post date:** [April 3, 2014, 6:47pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/16 "2014-04-03T18:47:39Z")
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. ---
**Author:** ![chappachula](https://avatars.discourse-cdn.com/v4/letter/c/d2c977/32.png) [@chappachula](https://boards.straightdope.com/u/chappachula)\ **Post date:** [April 3, 2014, 6:47pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/17 "2014-04-03T18:47:42Z")
> [@brickbacon](#): > > 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? 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. 🙂 ) ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [April 3, 2014, 6:51pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/18 "2014-04-03T18:51:44Z")
> [@brickbacon](#): > > True, but a change in the law will apply to Toyota as well as Tesla. This isn’t really about Tesla. 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. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [April 3, 2014, 6:53pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/19 "2014-04-03T18:53:33Z")
> [@chappachula](#): > > (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. 🙂 ) It’s apparently even more common these days to fly your $500k Porsche back to Germany, or your Koenigsegg back to Sweden, for even routine service. 😃 See? These people really do need the consumer protection of local dealerships! ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [April 3, 2014, 9:41pm UTC](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250/20 "2014-04-03T21:41:56Z")
> [@Amateur\_Barbarian](#): > > … local part, service and maintenance depots … You have local parts? I have a BMW, nothing too complicated or exotic, and about half the parts I need have to be “ordered in”, fortunately overnight. [Next page](https://boards.straightdope.com/t/official-reason-for-requiring-car-dealerships/685250.md?page=2)