Ohio Auto Dealers Want Laws to Keep Tesla from Selling Cars Online

[Zaap]

^Plenty of people certainly do bitch about McDonalds. 80% of their stores are independently owned franchises (basically small businesses) and yet the bitching never ends.

 

[Mr.IncrediblyBored]

^Plenty of people certainly do bitch about McDonalds. 80% of their stores are independently owned franchises (basically small businesses) and yet the bitching never ends.

That is exactly my point. Franchises coexist with corporate owned stores in virtually every retail industry. The model works. Why should cars be any different? Laws protecting dealerships are stupid.

 

[Zaap]

That is exactly my point. Franchises coexist with corporate owned stores in virtually every retail industry. The model works. Why should cars be any different? Laws protecting dealerships are stupid.

No argument here.

I guess the counter argument is that the auto industry is set up differently, requiring the auto makers to use independently owned dealerships rather than be able to sell direct. So they want to keep Tesla from skirting that, so that the larger makers don't follow suit.

I can see that argument since there seems to be a unique situation in the auto market.

Personally, I feel any such requirements on the automakers should go away. They can achieve competitive practices by competing with EACH OTHER, not just forcing privately held dealers to compete. Really, if the big makes can't find a way to take people's 20/30/40+K with a decent deal and decent quality, I'm sure someone who can will step up.

 

[smackababy]

No argument here.

I guess the counter argument is that the auto industry is set up differently, requiring the auto makers to use independently owned dealerships rather than be able to sell direct. So they want to keep Tesla from skirting that, so that the larger makers don't follow suit.

I can see that argument since there seems to be a unique situation in the auto market.

Personally, I feel any such requirements on the automakers should go away. They can achieve competitive practices by competing with EACH OTHER, not just forcing privately held dealers to compete. Really, if the big makes can't find a way to take people's 20/30/40+K with a decent deal and decent quality, I'm sure someone who can will step up.

the RIAA was making the same arguments when the music industry distribution model was changing. They want to cling to the old ways and, eventually, they will be dead.

 

[1prophet]

They're not afraid of Tesla.

They are afraid of Ford, GM, Toyota, selling directly to consumers putting them out of business.


Look at the main street of your small hometown and all the empty storefronts thanks to Amazon.

I'm not saying Amazon is evil, I am saying Amazon is more efficient, and empty storefronts and fewer jobs are the natural result.

If you ran a business that employed two dozen workers, puts food on the plates of the families of those two dozen workers, some have worked with the dealership for decades, wouldn't you fight to protect that if the opportunity were there?

Isn't going to happen, the dealers are the greatest subsidy to the automakers and also insulate them from many liabilities and costs of sales, service, and repair.

The last thing the current gas automakers want is a manufacturer owned store with employees that work directly for them and costs coming out directly from their pocket and also allows them to move product off their books.

I'll give you examples, OSHA comes into a chevy dealership, the dealer is responsible for any fines and compliance costs, mechanic does improper repair causing someone to get killed, the dealer is responsible not GM,
employee has a problem with working conditions, pay or benefits it's the dealers problem not GM.

Real world example, Ford dealer sued for improper tire repair not corporate ford.

http://www.tirereview.com/Article/85680/228_million_faulty_tire_repair_entirely_avoidable.aspx

 

[MagickMan]

Times change, this is the new economy. I've bought (used) cars online without ever having seen them in person (I collect them), that's the way the entire model is going, and if dealerships can't keep up, then they'll be left behind and forgotten.

 

[compuwiz1]

They should have done that a long time ago.

So you're one of those idiots that think the government should be running everything?

 

[cubby1223]

I'll give you examples, OSHA comes into a chevy dealership, the dealer is responsible for any fines and compliance costs, mechanic does improper repair causing someone to get killed, the dealer is responsible not GM,
employee has a problem with working conditions, pay or benefits it's the dealers problem not GM.

Real world example, Ford dealer sued for improper tire repair not corporate ford.

http://www.tirereview.com/Article/85680/228_million_faulty_tire_repair_entirely_avoidable.aspx

Independently owned dealership puts the wrong floor mats in a Toyota Prius, yadda yadda yadda Toyota is out an estimated $2billion. As far as I know, no defect was positively identified in the vehicles.


You may be right that they are shielded from liability, but it still all gets factored into the purchase price of the vehicles and the labor costs of the mechanics.

It all comes down to what consumers will buy, and consumers are fairly predictable - consumers like cheap. Why are so many Kia's on the road? Because they are cheap. If a manufacturer has to make a decision between sales and reduced liability, they better choose sales, because reduced liability means jack if few are buying your product.

 

[Fenixgoon]

Isn't going to happen, the dealers are the greatest subsidy to the automakers and also insulate them from many liabilities and costs of sales, service, and repair.

The last thing the current gas automakers want is a manufacturer owned store with employees that work directly for them and costs coming out directly from their pocket and also allows them to move product off their books.

I'll give you examples, OSHA comes into a chevy dealership, the dealer is responsible for any fines and compliance costs, mechanic does improper repair causing someone to get killed, the dealer is responsible not GM,
employee has a problem with working conditions, pay or benefits it's the dealers problem not GM.

Real world example, Ford dealer sued for improper tire repair not corporate ford.

http://www.tirereview.com/Article/85680/228_million_faulty_tire_repair_entirely_avoidable.aspx

so why does it matter if tesla wants an alternate business model? if anything, tesla would be assuming risk that traditional makers wouldn't, correct?

why can't buy something directly from any entity? why does there have to be a middle man? that decision (direct sale vs. distribution) should be left to the manufacturer, not the government, IMO.

 

[rudder]

How do you know that they're republican?

Do you really believe that all people who own a business are republican?

That's absurd.

Fern

This is what I was thinking... One of obama's first scandals was to purge dealership owners who had not donated to democrats.

And car salesman are like realtors to me.... I just need them to hand me the keys so I can check out things for myself. I would not be upset at all if both groups faded away into the history books.

 

[DominionSeraph]

Another chain mail moron.

 

[Exterous]

I'm pretty sure we've had this thread before.

There are a lot of good reasons to prevent auto manufactures from selling online.

E.g.: IIRC Tesla is located in CA. I live in NC. An auto is generally your second most expensive (asset) purchase. If I do business with Tesla, who aren't licensed in NC and have a problem I'm pretty much helpless. My state (NC) has no jurisdiction over Tesla.

It works the same way for health insurance and many other products.

I think HI is a different beast as your health is of much more importance to your livelihood and is less easily replaced than a car.

Also - at a certain point we really should look into the idea that the government cannot protect us from everything. I would rather be given the opportunity to purchase a Tesla online and 'buyer beware' than the government to decide that I cannot buy a car that way

 

[TechBoyJK]

They should have done that a long time ago.

Yes, for Tesla. Because Tesla is better at everything they do. Production, design, support, sales, etc.

I used to like the idea of buying a new car, but at this point I can't ever consider it until I can afford to buy a Tesla. It's the only pricey car I'd consider buying at this point.

I mean, if you can afford one and the car is anything close to what you need (sedan), you're kind of ignorant for choosing any other expensive car. At least for a daily driver (unless you drive 1000 miles a day).

 

[TechBoyJK]

I don't get why auto dealers are so afraid of Tesla.

Simple. Tesla makes a better car that's easier to buy.

 

[Zaap]

Simple. Tesla makes a better car that's easier to buy.

Well, like you say, easier to buy IF you have 80-100K laying around.

But I agree with you, if I were going to spend that kind of dough on a car (not happening anytime soon!) it'd be for a Tesla. (I'm drooling over the Model X - can't wait to see one.)

My only chance to scope an S close up has been at work, where we have free charging stations (pure awesomeness!) and I often charge my Ford C-MAX Energi next to a couple of Model S's. (By the way, my fuel costs since December for my car= $0. Projected costs until about August of this year =$0. Also pure awesomeness.)

Everything about the Model S is just so freakin' nice. Most other so-called luxury makes are boring as fuck in comparison, IMO. Virtually everything else makes me yawn (especially in a car-pretentious city like LA) but a Tesla makes me turn my head and think "now there's someone who has some taste!"

Supposedly Tesla is developing and will eventually make available electric cars in the $40K range, and if so, I would own one in a heartbeat. THAT'S when the dealers can really start quaking in their boots! I for one welcome it- let Tesla and other push the envelope, and let everyone else play catch-up.

 

[smackababy]

There is a Tesla store at the mall near my house and I see quite a few driving around town. I am not a huge fan of the styling (from the rear it might as well be <insert generic Ford here>), but the inside is nice. The major problem around here is unless you have a house, there is nowhere to charge that I know of.

If Tesla can get their price down to the $30-40k range, I'd have no problem buying one, even if I had to go a bit out of my way to charge it.

 

[z1ggy]

There is a Tesla store at the mall near my house and I see quite a few driving around town. I am not a huge fan of the styling (from the rear it might as well be <insert generic Ford here>), but the inside is nice. The major problem around here is unless you have a house, there is nowhere to charge that I know of.

If Tesla can get their price down to the $30-40k range, I'd have no problem buying one, even if I had to go a bit out of my way to charge it.

I believe the new Tesla X had that price point in mind. Not sure if they made it there though.

And as far as I'm concerned, dealers make cars more expensive for consumers, they don't give us better deals. They have to turn a profit, therefor charge me a higher price than what they paid the manf.

If I could simply go to a manf and buy the car direct, I'd likely pay a very small margin on top of the manf. cost for the car, and I wouldn't have to deal with some a$$hat salesman.

Essentially, I am perfectly ok with Tesla's business model and I could only hope for every other major car maker to change to this method. It will never happen but it would be awesome.

 

[smackababy]

Yeah. The thing is, Tesla built their manufacturing around that business model and the rest of the companies didn't. If they decided to cut out the dealers altogether, they'd have to severely ramp down production. If they had a model that allows you to build, pay, and ship to circumvent the dealer, while keeping existing procedures in place, I could see that working for a couple years. While, dealers wouldn't be happy, that is where the market is going. Dealers would convert more to used car sales and service centers, which are probably better for their margins anyway.

 

[z1ggy]

Yeah. The thing is, Tesla built their manufacturing around that business model and the rest of the companies didn't. If they decided to cut out the dealers altogether, they'd have to severely ramp down production. If they had a model that allows you to build, pay, and ship to circumvent the dealer, while keeping existing procedures in place, I could see that working for a couple years. While, dealers wouldn't be happy, that is where the market is going. Dealers would convert more to used car sales and service centers, which are probably better for their margins anyway.

I'm no economist, but why would they ramp down production? They supply cars to dealers based on supply and demand. They supply more cars when the dealer demands more because they sold them. Same principal would apply. People shouldn't be demanding less cars simply because the dealerships were no longer in use.

But I suspect in the end, it's cheaper for car companies to use dealerships because it lowers their costs, which the savings would then be (hopefully) passed to us.

I just hate dealing with dealships in general. Such a pain in the ass.

 

[Fern]

So what would be the problem with Tesla being licensed to sell Autos in NC directly to the consumer? Just require the company to be licensed if there is concern about consumers having problems. From what I have been reading the Dealerships don't want Tesla to be able to sell directly period regardless if they are licensed in the state or not. The States that don't allow Tesla to be licensed to sell cars are forcing Tesla to sell the cars online to people in the state without being licensed. Is this like one of the things when somebody creates a problem and then complains about the problem they just created?

I don't care who owns the dealership. Tesla can own it. Why not?

My impression from the OP is online sales with no presence or license in a state. Sounds like a bad idea to me. Where do go if there are problems? What do you do if there's a recall? What about having the car serviced? Repairs? etc.

I think people mentioning TV etc in this conversation are too young to drive and/or own a car. TV's etc don't have legal titles, registration etc.

Fern

 

[Fern]

Christ, a couple of you are dense. Tesla has showrooms all over the country already.

http://www.teslamotors.com/findus

What is the difference between a dealership and a Tesla showroom? Ownership. The same number of people are employed in either case.

Tesla needs direct sale stores to better control the sales experience. It keeps them from getting marginalized in a huge showroom with a bunch of competing brands.

Fern, do you bitch about Apple stores? What about McDonalds? Thousands of manufactured products are available through corporate owned stores. Cars should be no different.

So buying and owning a car is just like a cheeseburger?

Cheeseburgers don't get recalled, need serviced, require a a legal title, require registration and licensing.

We don't have unfair consumer legislation for cheeseburgers. Nobody needs a state agency if there's a complaint about the cheeseburger. Cheeseburgers don't get repossessed.

They're nothing alike.

Fern

 

[Tom]

Even though I know you're not serious, I'll respond anyway.

Tesla's aren't sold in any dealership. Allowing them to continue their business model doesn't take jobs away from dealerships already operating. I suppose you could try and make the argument that forcing Tesla to have dealerships creates jobs, but it also raises prices and forces them to go from a JIT production model to a inventory based (I am only guessing they are a JIT model).

The current dealership model is a bad model anyway, at least for new cars. Car manufactures produce hundreds of thousands of cars that just sit there. Having a Chevy (or whatever brand) showroom with one of each current model to test drive and then you "order" your car makes a lot more sense. They can keep some inventory on hand for those that require a sign and drive "deal", but for the rest of us, finding that perfect car and getting it sent to us in a few weeks is fine. Also, that entirely eliminates natural disaster damage. How many dealerships "lost" inventory due to Katrina, or more realistically, how many people bought flood cars without knowing?

And how would you know a new car purchased over the web wasn't in a flood ?

 

[Fern]

That is exactly my point. Franchises coexist with corporate owned stores in virtually every retail industry. The model works. Why should cars be any different? Laws protecting dealerships are stupid.

Jeebus, hamburgers again?

The current system was set up long ago and to just blithely advocate for such a broad and substantial change is, IMO, pretty thoughtless.

(I'm seeing two different changes recommended here: (1) internet sales by out-of-state manufacturers and (2) dealerships owned by manufacturers. Each needs to be addressed separately.)

The foundation of the system rests upon regulation by the state. That needs to be well thought out - how can a state regulate an out-of-state manufacturer - before changing. Under our current legal system of jurisdiction etc I don't readily see it.

And as regards to manufacturers being now allowed to own dealerships - you guys are also failing to consider anti-predatory business practices, among other thiongs. My understanding is that independent dealers enterd the business under a certain set of rules: No direct sales by manufacturers. They've made multi-million dollar investments based on those rules, seems to me to suddenly switch the rules on them in mid-game is unfair.

All the good territories were long ago taken by independent dealerships. How are the manufacturers going to build a parallel distribution system without destroying existing dealerships? Since Tesla doesn't have any now that wouldn't be a direct concern. But IMO no way you can allow Tesla to have dealerships yet not other manufacturers.

You allow the manufacturers to own dealership and they're going to find ways to squeeze out existing dealerships and take over their businesses.

You're protecting the little guy from the big guy.

Buying a car is not like buying other consumer goods like a PC. FedEx ain't just dropping off a package to your house with a car in it.

You wanna allow internet sales from out-of-state manufacturers you're going to take away state control and it'll be transferred to the federal govt. IMO, that's the last thing we need.

You wanna allow manufacturers to own dealerships and you'll be presiding over a big mess as dealerships transition from independent dealers to manufacturers. You'll be refereeing fights and legal battles. The dealerships are currently businesses owned by US citizens. What would you say if a good chunk of them ended up in the hands of foreign owned corps like Honda, Toyota, etc.?

And for what? A slightly cheaper product? Same thinking that outsourced our manufacturing companies and jobs.

This needs a lot of consideration before just knee-jerk dumping a long established and fairly successful business model. Where is it going to end and at what cost?

Fern

 

[Zaap]

And how would you know a new car purchased over the web wasn't in a flood ?

How do I know anything I purchase over the web hasn't been in a flood?

 

[Tom]

How do I know anything I purchase over the web hasn't been in a flood?

I asked first so why are you asking me ?