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NADA Is Terrified of Tesla
cartechboy writes It's no secret that the National Automobile Dealers Association has been trying to block Tesla from selling cars directly from consumers, but to date, it has been defeated countless times in many states. Now NADA put out a release and promotional video touting the benefits of dealer franchises, something Tesla has shunned. NADA mentions price competition, consumer safety, local economic benefits, and added value.
While possibly true, it's complete speculation to tie this to Tesla.
But hey, Tesla gets page views.
There will always be a need for car dealerships, but there is no good reason to ban direct sales. This is pure rent-seeking behavior. The dealerships should position themselves as Tesla's partners in buying/selling used Teslas and in repairs.
Not specifically Tesla, but electric cars don't have alot of things that car dealers make money with (oil changes, engine work, transmission work and on and on). Alot of dealerships make much of their profits from such things, so what Tesla represents is scary change - of course that change is coming whether driven by Tesla or someone else.
So the dealers have alot of money, alot of friends and will do what they can to gum up the works for (or kill) Tesla and what it represents if they can. JMHO...
I believe this has greater significance than merely a turf war in some backwater market. We have a direct connection between development of a new technology and the challenging of a significant evil of the developed world, institutionalized rent-seeking. A similar thing is happening with the ride sharing services challenging taxis and other escort businesses.
But everyone knows what that conveys, even the dealers themselves:
Of course, this divides ranks with the dealership community itself, as the old guys close to retirement are going to continuing milking their cash cow by any means available, as the younger guys start to worry about their long term futures when the backlash strikes, which the old guys are doing nothing whatsoever to abate sooner rather than later.
They say that society is "only" three square meals from anarchy. That's a lot, actually. I estimate that the fraternal order of the car dealership is only two snifters of brandy and one Cuban cigar's worth of suggested forbearance away from king-sized flop house crossfire.
"Local dealers will be there for consumers in good times and bad."
Yep, I bought a car 6 years ago from a dealer. They closed down 5 years ago as soon as the "GFC" hit.
I probably would have been a little sad, except they were ass holes to me as soon as I drove it off the lot.
They'd Apple it up and charge comparatively more, while keeping all the profits to themselves.
Good. Tesla spends far more than most companies on R&D, and healthy profits will allow them to continue doing that.
You are looking at this from the wrong point of view. The way you should be looking at is, if you ALSO had the option of calling up Ford or GM or whoever your car maker was directly, and asking THEM if they could beat the dealer's price, could they? Of course they could, they make the damn car.
The idea that dealers create pricing competition for cars is total baloney because dealers don't make cars in the first place, they just mark them up and sell them. Ford competes with Honda and GM, they don't compete with Honda dealers and GM dealers. The thing that keeps the features and functions progressing for Ford while keeping costs low is not their dealer network, it is competition from other auto makers. The only competition dealers are having is who can mark up your car the least.
'Everyone' hates the car dealership, and I do too. But, in my recent, personal experience, they have provided me the benefit of price competition. I needed to lease a car and found the lowest price I could find. I then simply called the 'Internet Department' at each of the local dealerships for this particular model, and just asked if they could beat that price. One guy said he could, and I went to him. I don't know if this is possible with purchasing a Tesla. Can different dealerships set their own prices, or, since the dealership is the manufacturer, is the price the same across any 'dealership' within a given geographical area?
The problem is, all the different prices you got were different amounts of markup from the manufacturer's price. You settled for the least amount of markup you could find. I suspect that all of them would be more expensive than buying directly from the manufacturer, which in the case of Tesla, you essentially are.
It only seems like a good deal in comparison to worse deals, not because it's actually a good deal.
"You paid WHAT!!" "But it's ok honey, it was 50% off! Think of the money we saved!"
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
Most things are not sold directly by the manufacturer but by retailers. The variety of things that can be bought is too large to have a seperate store for each manufacturer out there, its nice to have product catagories in one place. With smaller objects of lower value, it seems this is strongly preferred. Cars are a very large, expensive item so there is more of a tendancy to have stores that specialize in just them. This sort of reduces the natural retailer/manufacturer seperation.
The fact is dealers do provide added value, however. The value comes from of course, the lot, of being able to actually see a car before you buy it. The cost of running this will be there whether the manufacturer runs the lot, or whether an independent dealer does. The market does operate to regulate prices for dealers, since its a part of the car price, it can be argued that having independent dealers may give people more choice regarding who has a more efficient lot operation.
Many aspects of the dealership people find unpleasant will still be there with a manufacturer run dealership. One of them is the credit checks for the loans. Bargaining is not necessarily exclusive to independent dealers but could also occur at a manufacturer dealer. A lot of the qualities of the independent dealer will still be there with a manufacturer dealer, therefore. Since you have no choice of dealers to work with, it could even be worse.
Maybe people should have the option of a direct buy from a manufacturer, but, a manufacturer locking out independant dealers from providing an alternative is also not a great idea. The vertical integration could be anti-competive and lead to overly monopolistic qualities.