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Tesla Pushes Even More States To Upend Auto Dealer-Friendly Laws (arstechnica.com)
An anonymous reader quotes a report from Ars Technica: Tesla is now pressing ahead with lobbying efforts that would allow it to expand its direct dealerships in two more states: Nebraska and Wisconsin. For now, more than 20 states already allow the California automaker to sell its own vehicles, while others have set up a system that at least partially bans manufacturers from direct sales and effectively protects auto dealers. Those states include Texas, Michigan, West Virginia, and Utah, among others. Last year, court rulings and changes in the law in Arizona, Missouri, Indiana, and other states have paved the way for Tesla to sell directly to the public. In Nebraska, the new bill under consideration is known as LB 830. It has been met with opposition from existing dealers who are concerned that other manufacturers like GM or Ford will want a similar arrangement. Similarly, in Wisconsin, SB 605 would carve out an exception in state law for a "manufacturer [whose] motor vehicles... are propelled solely by electric power."
Will they be charged in court?
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...why do we have laws on the books to being with, that pre-empt car manufacturers from selling direct to the public and require them to go through dealerships?
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
Why wouldn't you want to order a Ford or GM (or Toyota or whatever) directly, instead of having to go through a middleman? Are these laws pure corruption or is there some way to look at them in the best light, where they serve the peoples' interests?
"Believe me!" -- Donald Trump
No where else in the world do these types of protectionist laws for car dealerships exist. They were originally intended to protect car dealers from having to compete with a manufacturer if they wanted to start up their own dealership. Manufacturers were pushing less successful models to their dealers. This was all in the 1920 or 1930's.
Now, the dealerships are using this law as a guise to "protect the consumer", but really it should be transparent that they're doing it because it's easier to lobby and legislate your competition away than to actually compete with them by trying to sell cars.
https://constitutioncenter.org...
I'm not a US citizen so not directly impacted by this specific discussion, but something which interests me about it is the apparent argument [from the dealers] that there is something uniquely special about an automotive purchase that requires that all such transactions cannot happen directly with the manufacturer and must go through the dealer. Why is this?
It can't be simply transaction value: huge numbers of new homes are built every year, many sold by agents and not by the builders.
It can't be because it's a mechanical device or has an engine in it: motor boats and motor yachts are sold every year - many for prices far higher than cars - without enforcing dealership based purchase.
Maybe it's because the dealers can continue to gouge their clients for years and years - on servicing and a raft of other things. Maybe it's because it allows for artificial control of used vehicle pricing.
Bottom line is: there doesn't seem to be any established or practical precedent that explains *why* motor vehicle dealers think they have such a unique use case as to grant them this special dispensation.
Or are they just being precious?
Obviously setting up a dealership network is a huge barrier to entry to new innovation and disruptive technologies. This is just a feature of crony capitalism.
Last time I was in the market for a car the first place must have caught a wiff of "fell off the turnip truck." I test drove one vehicle, didn't really like it. The salesman hands me a document acknowledging I'd seen the carfax report. Right after that with a casual "and can I get you to sign this?" he pushes the bill of sale in front of me with an absurd 20% interest rate. I tore it up, stood up and started to walk out. Apparently the salesman and manager had planned this in advance because the manager approches me as I'm leaving and shakes my hand and saying "congratulations" as I was leaving. Congratulations on walking out of a dealership? I wonder how many people that trick works on. I'll bet it's more than 0.
The place I did get my car from wanted to charge me *more* for not using financing. They wanted to tack on around $2,500 to the asking price for paying cash. I was like "no" but I've never had to try so hard to get someone to take thousands of dollars from me on the spot. It was totally insane. I didn't have to pay that added price but I had to make a scene to get it.
In conclusion, fuck the dealerships. Their sole job is to fuck over consumers in new and creative ways just on the bleeding cusp of legal.
Most dealerships, surprisingly, have a willingly captive audience.
I live in a moderately sized city where "small town" attitude runs rampant, and the prevailing attitude here is that it's one's civic duty to shop locally - even if that means getting screwed over. There's a dealership in a neighboring city that advertises along my commute with billboards to the effect of "drive 50 miles, save thousands" but many locals are reluctant to travel even to the next county.
So, although it's widely known that most of our local dealerships are extremely shady, the locals don't care. I even once had a salesman, when I said that I had found a better price across the state, reply that why would I drive three hours away instead of supporting a local business... you know what, taking my business elsewhere is exactly what I'm going to do.
If you're willing to travel, you can actually find some reputable, honest dealerships out there. We use USAA's car buying service to shop for the best price, and some dealerships are surprisingly much more willing to work with you if they know that you're not geographically limited. If I don't like what I'm hearing over the phone, I can hang up and you've lost any chance of a sale. Last time we bought a car, we drove all the way to South Carolina, and saved several thousand dollars. Before that, we drove to Ohio. Each time did cost us a weekend, but we got two decent road trips out of it... and one manager actually walked in after we had closed the sale and handed us an envelope with $300 cash, for travel expenses, to thank us for driving out of state to give them business.
Dealerships make their money with service and financing and parts, not by selling cars. They know many people think they have to go to the dealership for service and milk that for all they can. They also make money selling extras like extended warranties and add-on features.
In terms of service, Elon Musk stated his goal is for service not to make a profit. This is the exact opposite of dealerships where one of their main revenue sources is service.
I can give an example of this. I damaged one of the roof panels on my Tesla model S. The roof panel is painted with a clear-coat. The cost for the part was $175. I spoke to a friend of mine who used to work at a Lexus dealership. He told me the same part would have cost many times that amount. The labor to replace it was also fairly reasonable. By comparison, my experience with Toyota with my previous car, a Prius, was far higher.
For example, shortly after the 3 year/36 month warranty ended (but within the 7 year 100K mile warranty), the HID headlights went out. This was a well-known problem with the Prius. The headlights were not designed to be easily replaceable since HIDs are supposed to last a very long time. Anyway, Toyota wanted $200 per bulb and $140 in labor to replace it. I went online and found the same exact Sylvania bulb for under $50. I ended up going to another dealership to have the work done (having bought my own bulbs) and they replaced it under a "good-will" warranty (which my local dealership did not want to do).
In another case, after I sold my Prius to my parents, the touchscreen stopped working. This is caused by a known design defect where a solder connection breaks over time. Toyota wanted $5000 for a new touchscreen and $2000 in labor to fix it. I removed the touch screen in under 5 minutes. I found a place online that repairs them with a lifetime guarantee for $400 and had that done then spent under 5 minutes re-installing the touchscreen. $2000 in labor is utterly insane. I basically undid one screw, popped a few panels and undid a couple of bolts and that was it. $5000 for the touchscreen is also insane. It probably cost Toyota no more than $300 to make and probably well under that.
Another thing the dealership wanted $1800 for the extended warranty. I went online and bought the same factory extended warranty for $1000. Anytime I needed a part, Toyota would charge outrageous amounts of money for it.
Oh, and Toyota would always try and push a bunch of unnecessary maintenance but give me trouble for known issues that would come up (like a water pump that went bad twice).
I later got a notice over the headlights that there was a class-action because dealerships were charging people to replace the ballasts when there was nothing wrong with them when the HIDs died (Toyota had a bad batch of bulbs). Many people were charged a lot of money to replace the ballasts which were never the problem.
My experience with Tesla has been very different. They never pushed me to buy add-on options or extra service. The service costs were also generally reasonable, though some things like tires are cheaper elsewhere (I like Tirerack). This is what the dealerships fear. My car needs service once a year or every 12.5K miles. A Tesla tech told me that the electric motor is lubricated for 12 years. There's no transmission or regular oil changes needed and even the brakes get a lot less use. There is far less to go wrong mechanically. Even the battery will last a very long time. I'm coming up on 5 years 60K miles and haven't noticed any reduction in range. This is not what dealerships want to sell. Hell, Tesla will even honor the warranty if you don't service the vehicle every year.
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