Auto Dealers Claim Electric Car Company Is Illegally Selling Straight To Customers
Auto dealer associations are bent out of shape because Tesla – a much-maligned electric car company that has gobbled up lots of taxpayer subsidies while producing hugely expensive and thoroughly unreliable cars – is opening stores to sell the cars directly to consumers.
The auto dealers note that there are laws in place which prohibit manufacturers from direct sales, mandating a middle man between the consumer and manufacturer:
The Massachusetts State Automobile Dealers Association, among others, is waving around a decades-old law as it calls the Silicon Valley automaker’s network of “Tesla stores” illegal. Dealership associations have long lobbied to make it illegal for automakers to sell cars directly to consumers. The idea behind the protectionist law is to prevent automakers from killing competition and driving independent franchises out of business.
The most recent example of independent dealers flexing their muscles involved a flagship dealership Chrysler owned in Los Angeles and sold to a local franchise to avoid endless lawsuits.
Tesla argues that they’re not really selling cars at the store. Rather, they’re simply showcasing the cars, and giving those interested in purchasing one the opportunity to order and pay through their website.
That seems pretty weak, but it really shouldn’t matter. Why can’t manufacturers sell directly to consumers if that business model works for them?
That’s what Apple does with their Apple Stores (one of brains behind Tesla’s stores used to work for Appple).
One might presume that manufacturers could give consumers a significant savings if there weren’t a dealer, or middleman, to cut in on the transaction. Whatever else you may think of Tesla and their cars, if the company wants to direct sell they should be allowed to.
The alcohol industry, too, suffers from this same sort of protectionism. Alcohol producers, with some small exceptions, aren’t allowed to direct sell to alcohol customers. Historically this is a leftover from the prohibition days when the government didn’t want organizations set up by the gangsters to simply move in and dominate legitimate booze sales.
In modern society, however, it’s ridiculous that alcohol producers can’t sell directly to consumers. Mandating a middleman is good for the middleman, and pretty much nobody else.Tags: protectionism, tesla, vertical integration