I had relatives that worked in car dealerships for decades. The dealership gives a local presence for the car company. A local company has more incentive to create repeat customers by providing good service. They become a trusted and branded name in the community. My uncle was the parts manager at my hometown’s chevy dealership for 35 years. That dealership was run by the same family for over 60 years.
People from 50 miles away bought their cars there because they knew that dealership’s reputation.
I can’t see a factory outlet or service center ever building that kind of reputation in a community.
But that’s what New Jersey just required, not what it banned. Now instead of getting cars from the Tesla store down the street, and going there for maintenance, Tesla-buyers have to go to another state.
I never realized there were laws requiring auto dealerships until this thread.
Auto Dealerships are like fast food franchises. Companies like McDonalds understand they can’t effectively run that many restaurants. Local owned franchises were the solution. AFAIK they aren’t required by law.
Tesla has opened a big can of worms. I’d hate to see local dealerships disappear. They are often family owned and operated businesses. But, I also hate to see dealerships required by law.
Maybe, but I think you are giving the market far too much credit in its ability to achieve optimal outcomes. Even if you are right that this would not be an issue with small and large manufacturers selling directly, changing the law also allows Greasy Joe Automotive to sell cars over the internet. While the market is fairly good at pushing out truly corrupt companies, the damage done is potentially too great to change laws with no guaranteed positive benefit for consumers, and lots of potential downside. For example, say I buy a car at Internet Auto with a promised warranty and financing. Then problems start and Internet Auto stops answering my calls. How easy is it gonna be to rectify my situation if Internet Auto is incorporated in some bottom feeder state like Delaware, and is owned by some shell company in the Caymans? Sure, Internet Auto will eventually develop a bad rap, but what remedy do the people, who have been cheated out of what might be the most expensive thing they ever buy, have?
I am not saying one could never transition to a non-dealer model, but given the likely job and revenue losses, I can see why legislators weren’t persuaded by Tesla’s pitch. There is little reason to think consumers would actually benefit under a new structure. That said, feel free to look at the previous thread on this I linked to. I don’t think this is the forum to have a real debate on the issue.
One thing is that the manufacturer may have many wholesale buyers,
… and the dealers are companies restricted to the retail market.
Dealers often have multiple brands, and so they are encouraging better product by allowing the buyer to test drive two brands sequentially… on the same day… And to direct buyers toward different brands depending on circumstance… (“this is not your car, this is your car”… rightly or wrongly though … )
Dealers can give local knowledge. “This vehicle has been giving trouble in Death Valley, its just too hot there !”.
Several years ago in our state the dealers pushed the legislature to add a ballot measure to ban things like Internet car sales. The papers and everybody had this “You’ve got to be kidding me!” attitude towards the measure. Why would anyone vote for this idiot law? Answer: A majority. Sigh.
In Tesla’s specific case of the here-and-now, what they wanted results in fewer local jobs. Tesla *right now *is a microcosm, no more significant a seller than Ferrari.
I don’t think you ever made a convincing case that widespread "direct sales’ of more mass-market, million-selling makes would change the job or revenue picture at all… because whether they are “independent dealerships” or “company stores,” they have to provide almost exactly the same set of services. No one will buy a Honda or Toyota that can’t be serviced for two states around.
I’m not sure why you are so [del]obsessed[/del] concerned with this issue that you keep jumping from position to position to keep arguing about it.
The main reason being that the price in the invoice is inflated so the dealer can show it to the customer and say ‘look at the great deal we’re giving you…it’s below invoice’. But, as we all know, the invoice doesn’t reflect manufacturer rebates and incentives to the dealer. Basically, the invoice has little to do with what the car actually costs. I assure you, the dealer is still making money on the car. Sure, they plan to make more money along the life of the car and they want you to bring it in for service, but don’t ever think that the dealer lost money on a car just because you bought it at below the number in the piece of paper they showed you.
Incorrect. I have not switched positions in this thread or the other.;
But you cannot make a law for a specific company, and even if you could, it would be grossly unfair.
If that is the case, then the profit and job picture would essentially look the same in aggregate given that revenue is a function of both. Clearly it does not, or else Tesla would not bother fighting so hard to not open dealerships, and multiple states would not have similar laws. Legislators are not stupid. Your supposition makes little sense, and is not supported by any evidence.
There was a TAL episode on this recently. Dealerships often have to sell cars below cost in order to reach certain milestones, or to sell other items. Again, they often lose money on a specific sale in terms the agreed upon price of the car.
The state laws prohibiting the sale of new cars directly from the manufacturer should be repealed. If a manufacturer would like to sell directly to customers and customers would like to cut out a middle man, then the market should be allowed to work.
But Tesla shouldn’t talk out of both sides of their mouth. They want to argue free market principles in this situation, yet they lobby for federal and state subsidies right and left for themselves. This type of corporate cronyism is the opposite of free market principles.
I am more and more convinced that you know absolutely nothing realistic about any part of this industry or its processes, and are occupied entirely with weaving biz-school (and maybe law-school) theoreticals with about half the needed information. You have repeatedly waved away reality and substituted your own imagined situations, based on anecdotal media stories. And whether you’ve specifically contradicted yourself or not, you keep arguing every side against itself as if the argument alone is what matters.
If you ever get near a point that isn’t “but on the *fifth *hand,” make it.
Good point. It’s pretty hypocritical to argue free market principals at the same time you’re lining up for a taxpayer handout. Elon Musk’s other company, Solar City, is entirely dependant on government subsidies. Solar City’s latest financial statement admits this. If/when the subsidies expire, Solar City will cease to be profitable.
As for the car dealership law, I’m of two minds. Part of me thinks that this is just like laws requiring gas station attendants (which only New Jersey & Oregon have). The law is there to make work for gas station attendants. In the other 48 states, full-service stations are a rarity, and these states do not seem to be plagued with exploding gas stations or whatever horror attendants are supposed to prevent.
OTOH, it is nice to have a local source when dealing with car repairs. I don’t care for the idea of having to e-mail some office in California to arrange service for my car.
If that’s the standard, then you’re going to have to condemn pretty much every large company/conglomerate in the US. Some industries are subsidized (to the point of being corporate welfare); others are competitive on their own terms; yet others are competitive in spite of restrictions and burdens. Most larger corporations and congloms combine all three in their mix.
If Musk was asking for subsidies for Tesla and then arguing free-market issues, it might be contradictory… but even then, GM and Chrysler would have to bear the same scarlet letter.
But in buying a Tesla you’d know where the nearest service center is - now - and that would be part of your buying decision. Outlawing such sales for even those who have no issue with nonlocal service and support is 1940s-era thinking. We all have housefuls of products with no local service center - some not even within the US. It’s a purely free-market issue.
Please point out a specific example of anything I have said that is not realistic, where I have contradicted myself, or championed a hypothetical that lack information?
This might shed some light on why some states are fighting direct to consumer sales for automobiles. In this case, a Tesla which would qualify under Wisconsin’s lemon law, may or may not be treated that way due to the customers contract with Tesla.
The article states that there are several consumer protection laws aimed at car dealerships which Tesla can avoid by going direct to consumer.