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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.
I love the courts logic.
Dealer Franchise Laws were prevented to promote the Franchise model.
If a car company sells franchises in the State, it can't then open Company Stores and undercut their Franchises.
But if the Car Company has no franchises, there is no one being hurt.
Car Dealerships can't sue because they don't like a new Car Company's Sales Model.
Reality is the Franchise owners were licking their chops thinking of all the money they would make selling Teslas in their dealerships. They got butt hurt when they found out Tesla wasn't going to sell them Franchises.
If they were offering Tesla what they wanted or needed maybe tesla wouldn't see a need to bypass them.
Tesla for example likes to have their dealerships in normal store fronts where they have ONE car in the middle of the store and a lot of information. They sort of look and feel like apple stores. Very minimalistic, hip, modern. If the dealerships were willing to do that then maybe Tesla wouldn't have needed to do this.
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.
For Tesla to be comfortable the existing dealerships would have to be willing to commit themselves to Tesla in the same way that Tesla's company run dealerships are committed to Tesla.
And even then... Tesla doesn't have to deal with the dealerships. That whole model of sales is obviously going to come under challenge from all the other car companies now that will all ask "why do we have to deal with you when Tesla can do what they want?"
Maybe Toyota or Ford will want to have their own stores. And the dealerships are going to have to justify themselves to those organizations.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
They would have to cancel all their franchises first. The State Supreme Court ruling said they couldn't sue Tesla because Tesla were not franchised Tesla dealerships. So if Ford or Toyota had franchised dealerships- they would have to get rid of them first in order to sell direct.
Tesla could open franchised dealerships and sell in the states they are restricted in. But my guess is that margins are paper thin and they do not think the markup necessary for franchised dealerships would be attractive enough to sell the cars.
Dealers are their own worst enemies.
Recently a co-worker of mine went shopping for a car and the local dealer treated her like shit. (She made the mistake of knowing what she wanted, and what she was willing to pay.) At one point the sales slime flat told her "Can I talk to your husband? I don't think you understand buying cars" - This did not fly well with the single, divorced professional woman who's been buying cars longer than that young prick has been alive.
The above scenario would not fly at a chain owned by a national or international auto outlet. One phone call to a news station and the media would be all over said auto maker for how they treat their female customers. On the other hand, people sort of expect local dealers to be corrupt, sleazy middle men. And they are. They're nothing but entrenched middlemen hiding behind old laws and inherently corrupt local politics. (Car dealers are infamous for greasing the palms of mayors, county clerks, governors, etc)
Apparently that is exactly what happened when Japanese cars first came onto the US market, until some very unsubtle bribes and buyouts changed things. Skills used when doing deals with organized crime such as the Yakuza were applied - that really say something about car dealerships doesn't it? The Japanese treated them as crooks and it worked.
This seems to indicate that the same laws were good then & not good now. How?
Back then, Detroit was trying to pressure their own retailers to sell their cars at a lower markup. The law was Good (TM) for the retailers because it protected them from their suppliers. There were plenty of retailers to drive prices down through competition; they didn't need the suppliers to compete in the retail market.
Now, Tesla doesn't distribute to independent retailers, and they want to keep it that way, because they're not keen on having their products in the same showrooms as retailers showing other products. As far as they're concerned, Tesla is revolutionary, and would look queer and out-of-place amongst other vehicles with internal combustion engines.
Tesla doesn't trust retailers to present their product fairly in this context. And I can see their point: if their only contact with the consumer is the conventional auto retailer, you can bet all the other car manufacturers would freak out at having to share the showroom with Tesla, and would put pressure on the retailers to sing their own song.
In short, Tesla doesn't think the market will be fair to them unless they sell their product through their own stores. And since the retailers aren't selling their product, they're not competing with them, and so the law is an anachronism in this context.
If it weren't for deadlines, nothing would be late.