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Court: Car Dealers Can't Stop Tesla From Selling In Massachusetts
curtwoodward writes: Many states have laws that prevent car manufacturers from operating their own dealerships, a throwback to the days when Detroit tried to undercut its franchise dealers by opening company-owned shops. But dealers have taken those laws to the extreme as they battle new competition from Tesla, which is selling its cars direct to the public. In some states, dealers have succeeded in limiting Tesla's direct-sales model. But not in Massachusetts (PDF): the state's Supreme Court says the dealers don't have any right to sue Tesla for unfair competition, since they're not Tesla dealers. No harm, no foul.
Tesla points out that new car companies in the US tend to fail and they blame the dealership system for this because they say they're invested in existing auto companies and brands.
I blame the dealerships too. The last time I went shopping for a car, I told the salesman I was looking to replace my Chevy Malibu, and wanted something small to midize that was good in the snow. Despite the bevy of options on the lot, he walked me over to a Challenger SRT ... a rear-wheel drive boat that most likely isn't even particularly good in the rain. Looking around, though, the dealer had invested in a lot of special edition models of sports cars (2 Mustang Roushes, a GT500, the Challenger, etc) and that was what he needed to sell that day. If I was the guy making midsize sedans, I wouldn't want that guy involved in selling my cars either.
"Because Science" is one step from "Because old book". Try "Because of my experiment testing my falsifiable assertion".
The big car manufacturers have been trying to use the dealership laws to prevent a competitor from bring a product to market, dealerships have been trying to use the laws to force Tesla to cut them in on their sales. This court ruling bloodies both of their noses for their foolishness, now if only more courts follow in this ones footsteps. I wonder how these laws even came into being in a society that claims to embrace free market mentality in the first place. I realize that Ford once tried to bypass the franchise model, but if they were able to provide their product to customers cheaper then what was the issue? Replace "car manufacturer" with any number of other products (corn, light bulb, TV, desk) in these laws and it becomes quite clear how foolish the whole thing is.
You are the one who made the first mistake.
If you do that kind of research by looking stuff up on-line, reading Consumer Reports, and digging up information about the automobiles before you show up to the dealer.... what is the point of the dealer in the first place?
I agree with you so far as that is the best way to avoid getting screwed over by incompetent salesmen, but you can intelligently use sales reps to get more information about their products. This is not strictly about the automobile industry either, and I've done that with electronics, software, and even groceries.
You are right about historical reasons but I believe wrong about the ones you have supplied. I believe the primary reasons are more likely to do with distance and communication.
When you were a factory in the 40s and 50s pumping out cars you were focussed on the manufacturing aspects and your business was located in a single location - ie Detroit. The idea of trying to manage a network of stores across the country when communication was by post or expensive phone calls just simply didn't make sense. It was more cost effective to outsource that work, in exactly the same way it makes more sense to outsource things like accountancy, IT services and legal in many organisations.
Selling cars is a different business to making cars. And there is no guarantee that if you are good at making cars you will be good at selling them. The original idea was that these dealer were to be your customer interface, and ideally do a better job than you could.
The fact that manufacturers obviously decided that wasn't working at some point in the past and tried to open dealer owned stores is a sign that that system broke down.
Today, communication is almost instant, manufacturing processes and methodologies are more flexible than ever before and there is far more information available to your average consumer. A lot of what were "meant" to be the value adds of dealers are gone. Dealing directly with the customer allows you better control of your brand and if done well will increase profitability by removing a stage in the process.
But it can't work for every product. You still won't be buying your softdrinks direct from Coke or your shampoo from Unilever. Because in these situations the dealers (ie supermarkets) still make more sense.
I had a friend who worked in the finance dept of a car dealership. People would spend 2 hours trying to wangle the best possible deal from the salesman, beat him down, get free floor mats, whatever. Then they would walk into my friends office. How does $400 a month sound for payments? OK sure. And in 2 seconds they would agree to a loan at 12% where the banks would have given them 5%. And the dealer would earn an extra $3k on the car loan.
This highlights one of the benefits of the dealer model, there are almost always a *lot* of dealers to choose from and try to get a better deal/experience/vehicle from.
I'm of the opinion that it highlights one of the disadvantages of the dealer model, you often have to go from one dealer to another, haggling and bullshitting, before finally settling on the car you want at a price you feel comfortable with. I'd rather have one place in town that sells what I want, with a clearly marked price, skip the haggling, and do a transaction. Maybe some people enjoy the car buying "experience" but I look at it like any other purchase. I want to do some research ahead of time, walk into the store, buy the product I came for, and leave. It's 2014, it's no longer reasonable to expect consumers to waste an entire weekend trying to buy a car.
Thanks to the War on Drugs, it's easier to buy meth than it is to buy cold medicine!
For those of you old enough to remember a time before Apple had their own stores, the Apple fan would go into most electronics stores and be lucky to find an Apple-related product. Finally, Apple basically told the Cramp-USA's of the world to take a hike and opened their own stores where people could go to get an untainted look at Macs, iPods, etc. The plan worked like a charm. IMHO, Tesla is looking at the market and the fact that many car dealers have multiple brands under the same corporate umbrella and they know they're not going to get the attention they need. Tesla wants a stage that they don't have to share with other cars or even fight for a share of the sales staff.