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Dealership Commentator: Tesla's Going To Win In Every State
cartechboy writes Unless you've been in a coma for a while you're aware that many dealer associations have been causing headaches for Tesla in multiple states. The reason? They are scared. Tesla's new, different, and shaking up the ridiculously old way of doing things. But the thing is, Tesla keeps winning. Now Ward's commenter Jim Ziegler, president of Ziegler Supersystems in Atlanta, wrote an opinion piece that basically says Tesla's going to prevail in every state against dealer lawsuits. He says Tesla's basically busy defending what are nuisance suits. This leads to the question of whether there will be some sort of sweeping federal action in Tesla's favor.
Not unless Tesla can outspend the dealers lobby.
As this is an interstate sale, federal action is actually constitutional. However, I don't see any reason we need Washington to command us how to sell cars; Tesla's approach (common sense and a bajillion dollars) seems to be working.
I buy damn near everything over the internet. I get exactly what I want from a competitive marketplace. Why can't I buy a car to my exact specifications direct from the manufacturer? If Amazon can deliver almost anything to my front door, why can't GM, Ford and Toyota deliver a car to my door?
No company should be prevented from selling their products directly to the public. Land of the free indeed.
Because of this link which is right in the summary: http://yro.slashdot.org/story/...
One thing is that in most states the laws were written to protect franchises against the car manufacturers but in this case there are no franchises to protect to often these laws don't apply.
This podcast gives a lot of insight as to why the dealerships are so anti-consumer blood sucking parasites.
http://www.thisamericanlife.or...
One other thing to keep in mind is that the dealership model has changed significantly. It used to be a bunch of mom and pop dealerships throughout the country. These aren't the dealerships complaining about Tesla. Instead it's the huge dealership conglomerates that have gobbled up and consolidated many of the smaller independent dealerships. These are also huge political donors in many states, getting laws written to protect them, often to the detriment of the automobile manufacturers.
Part of it is the way the car manufacturers have the dealerships competing against each other, giving them huge incentives to sell a certain number of cars by the end of the month, etc. The dealerships also make a lot of their money off of service, whether it be warranty service or just plain service.
Tesla does things differently. The people who work at the showrooms do not earn commissions on cars sold. Their job is to show the car, not play all these silly games pushing cars that people don't want to get their numbers.
Also, Tesla generally does not maintain an inventory of cars. Every car is built to order with only the features the buyer wants. They don't have huge lots of cars that they have to push since every car is already spoken for.
Their service is also different. They have publically stated that their goal is not to make a profit off of service. I have had to have things repaired that were not covered by warranty (I broke some clips). The cost to repair was actually fairly reasonable and was much less than what the cost would have been had the same sort of thing happened to my Prius.
My biggest complaint about service is that there is often a long wait to get an appointment because they're having trouble keeping up with the growing number of cars out there.
Tesla took a cue from Apple with the Apple stores. They want to provide a consistent experience for their customers without all of the hassles and problems often encountered at dealerships. The company has also consistently bent over backwards in favor of their customers. When news of the fires hit they quickly extended the battery warranty to cover fires caused by hitting objects then actively worked on methods to mitigate it. They retroactively increased the drive train warranty to unlimited miles.
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They're afraid that a Fiat or a Mitsubishi coming back to the states without a dealer presence will just use a combination of the internet and maybe some Apple Store-style mall showrooms to eat their lunch, shipping the cars out of central depots, and avoiding all of the overhead of traditional dealerships.
Repetition does not transform a lie into the truth. - FDR
The existing car companies stil are prevented from selling directly, because it's anti-competitive with with their franchises. That's why these laws came about in the first place.
If Tesla can do it why can't other car companies?
Because dealer franchise agreements give individual dealers a defined geographical area in which they are the only sales outlet for that particular model. And that contract language is difficult for manufacturers to break*. Tesla had no such agreements in place.
*Not just manufacturers. We had a road realignment project here in Seattle that was stalled for years by the existence of a Buick (I think) dealership smack in the middle of where they needed to build the new road. Moving it even a few miles would have overlapped another dealership's territory and the value of the franchise was such that it was a show-stopper for the city for quite a while.
Have gnu, will travel.
yes they should, but perhaps they SHOULD be required to maintain physical presence where their products are sold so that the customer does not need to be grossly inconvenienced when trying to obtain warranty service. doesn't need to be as extensive as, say, ford motor company's dealer network, but certainly more than one per state in most cases - especially given the proprietary nature of the product and its parts, and single source availability of them, as well as the lack of availability of necessary service manuals and other documentation needed to properly repair a tesla product in or out of warranty.
essentially that is what the automakers' dealer network is these days with online browsing, pricing reports, and being able to pretty much buy from whichever dealer gives the best price regardless of location --- local warranty service. the local dealer may have overpriced their product so you buy elsewhere, but that local dealer is still obligated to do the warranty service (for which they are paid quite well by the manufacturers).
No company should be prevented from selling their products directly to the public. Land of the free indeed.
So, you are starting out as a small manufacturer. You've got a product you think people would like, but you don't have the money to build a network of your own retail outlets. So you shop around for a general retailer willing to put your stuff up on a shelf.
The minute your product gains any market share, part of that agreement will be that you don't compete with the retailer within a certain geographical area. And when you start moving large volumes of product through a retailer, your cost to get to the equivalent market goes up. So its a barrier to entry.
That's why many manufacturers' outlet stores are way out in the sticks. No existing retailers cover that area, so outlet malls spring up.
Have gnu, will travel.
Tesla isn't bypassing dealerships because no dealerships actually sell Tesla automobiles.
File under 'M' for 'Manic ranting'
Ford, GM, et al would be competing with dealerships that they sold franchises to in the first place, it would be unfair competition.
Tesla hasn't sold any franchises, and doesn't compete with any dealerships.
File under 'M' for 'Manic ranting'
The dealer shill thus spake:
the local dealer may have overpriced their product so you buy elsewhere, but that local dealer is still obligated to do the warranty service (for which they are paid quite well by the manufacturers).
In no other industry is this true. In electronics, white goods, etc, there are "certified warranty service centers" where you can call up and get them to fix your stuff. For example, you don't have to go to an Apple dealer to get your high-priced computer fixed under warranty - you can bring it or ship it to one of many service centers.
https://www.apple.com/lae/supp...
Please note that the requirement to become a service center does not include having to be an Apple reseller.
Ford, Volkswagen, Jaguar, Chevrolet, etc., should be able to certify garages for warranty work. But no, the automobile industry is the only industry where you have to go to a dealer to get warranty work done.
Leeches, all of you. Die already.
--
BMO
I highly recommend to everyone reading this discussion to listen to this 16-minute NPR Money Matters story:
http://www.npr.org/blogs/money...
Them if you have some time, This American Life tells the dealer's side of the story:
http://m.thisamericanlife.org/...
I'll warm you now that your blood may boil, and you may turn into a rage monster thinking about the sheer absurdity and stupidity of the car-buying process.
I'm sorry, but your opinion seems to be wrong.
Citation coming up.
Of course, the AC is wrong in most respects.
1. They're not selling 'carbon credits', they're selling ZEV credits(Zero Emissions Vehicle).
2. The price isn't $30k per car, the penalty itself is only $5k per missed ZEV, so logically Tesla has to sell them for less. Maybe $4k each.
It's not small change, but it's only about 5% of the vehicle.
I don't read AC A human right
Well, if the dealership model really is better for consumers, then the dealerships have nothing to fear. Right?
"they SHOULD be required to maintain physical presence where their products are sold so that the customer does not need to be grossly inconvenienced when trying to obtain warranty service"
Why shouldn't the consumer be allowed to decide for themselves what constitutes "gross inconvenience?" Is your mommy government somehow uniquely qualified to do that?
"National Security is the chief cause of national insecurity." - Celine's First Law
That's a reason why you should protect dealer networks if a company decides to start with that business model.
That's not a reason to protect those dealer networks from an upstart company that never had that business model. Just because GM and Ford made a deal with the devil 50 years ago shouldn't bind a new company to that same business model. Tesla has never had a dealer franchise agreement with anyone, them selling directly does not break any contractual agreement they've entered in to. They have no obligation to respect an agreement Ford or GM made with their dealer network to not compete.
Also as a counter point, Apple sells plenty of things through the half dozen Best Buys in my town. There's also two Apple stores within a 20 minutes drive. Just because a company sells through channel partners doesn't immediately preclude them from selling direct, it depends on the agreement they made with the channel in the first place. Even car dealer arrangements started out with the dealers protected by the franchise agreements themselves, elevating them from simple contract law to specific legislative protections came later.
This
That just smacks of dumb contracting.
Contracts are written by both parties. Don't like the terms? Try asking for something different and see who will sign.
option for renewal
Yes, but who has the option? Most often the dealership, to protect what is to them a large investment. Manufacturers won't be affected by a few dealers coming and going to the same extent.
So, if you want to invest a few million into a dealership, will you sign an agreement that might get you cut off at the end of a term? Interesting note: In the past, dealership franchise contracts prohibited corporate ownership of multiple dealerships. manufacturers didn't want large ownership structures to build up which could challenge them in contract negotiations (divide and conquer). But this was challenged and thrown out by the courts (in the '60s or '70s, I believe).
Have gnu, will travel.