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tesla's real impact - breaking the car dealer monopoly

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Old 07-09-17, 11:56 AM   #1
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Default tesla's real impact - breaking the car dealer monopoly

i had suspected until reading an article that tesla had made no headway in being able to sell cars directly to the public through their own dealers (store fronts). but apparently only 6 states have blocked it! but those 6 include biggies (economically) like texas and connecticut with their powerful dealer lobbies

this is a giant win for the consumer, as dealers add no value in the sales process, from uneducated sales people, to harassing and drawn out sales processes, to bullying into buying things consumers don't need and don't want, to corrupt over msrp markups, and on and on.

from the nyt article...

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the Connecticut Automotive Retailers Association, which represents 270 car dealerships and led the charge to kill the Tesla bill, claimed that allowing direct sales would mean “10 percent of employees at dealerships could lose their jobs.”

But after reviewing employment figures for car dealerships in Massachusetts, New Jersey and New York, the Acadia Center, a nonprofit focused on creating a clean energy economy, concluded that “there has been no negative impact on auto dealer job levels or trends” in neighboring states that allow direct sales of electric vehicles.

Using a different argument, the National Automobile Dealers Association claimed franchise laws “keep prices competitive and low.” However, a 2009 paper by an economist at the Justice Department’s Antitrust Division instead concluded that “car customers would benefit from elimination of state bans on auto manufacturers’ making direct sales to consumers.” The paper pointed to a study by a Goldman Sachs analyst in 2000 that found that direct manufacturer sales could lower costs by 8.6 percent, with most of the savings resulting from more efficient matching between consumer demand and supply, and a subsequent reduction in inventory.

No wonder the Federal Trade Commission has criticized franchise laws as a “special protection” for these dealers — “a protection that is likely harming both competition and consumers.”

The battle between Tesla and car dealers is echoed in other industries. The hotel industry has started a “multipronged, national campaign” to counter the short-term rental company Airbnb, which now has a valuation on par with Marriott International. And, facing stiff competition from Uber and Lyft, taxi associations are suing to block their ride-hailing rivals.

The failure to legalize direct sales by Tesla is a testament to how archaic laws stifle entrepreneurship and limit consumer choice. If America wants to combat climate change, it needs to take on bottleneckers and change its climate for innovation.
https://www.nytimes.com/2017/07/07/opinion/connecticut-tesla-dealership-laws.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-right-region&region=opinion-c-col-right-region&WT.nav=opinion-c-col-right-region&_r=0

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Old 07-09-17, 12:20 PM   #2
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Eliminating dealers is not good for lower prices. Competition is good. If there were no dealers, we would see higher prcies.
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Old 07-09-17, 01:34 PM   #3
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Eliminating dealers is not good for lower prices. Competition is good. If there were no dealers, we would see higher prcies.
What an odd statement. Dealers don't create competition; car manufacturers do. Dealers are just middlemen.
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Old 07-09-17, 01:39 PM   #4
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wait til you see what your govt's do with electric cars...tesla could be big hit some places and big losers others. I refuse to rely on electric in usa until all gas stations have a charger
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Old 07-09-17, 01:43 PM   #5
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Originally Posted by bitkahuna View Post
i had suspected until reading an article that tesla had made no headway in being able to sell cars directly to the public through their own dealers (store fronts). but apparently only 6 states have blocked it! but those 6 include biggies (economically) like texas and connecticut with their powerful dealer lobbies

this is a giant win for the consumer, as dealers add no value in the sales process, from uneducated sales people, to harassing and drawn out sales processes, to bullying into buying things consumers don't need and don't want, to corrupt over msrp markups, and on and on.
Some have argued before, here in Car Chat (though I don't necessarily agree with them), that over-MSRP pricing, with a second price-sticker (usually labelled ADP or ADM), is simply a way of the law of supply-and-demand evening itself out in the real market. In other words, more demand, less supply, higher price. In my book (and in my personal morals/religion), that may (?) be the sin of profiteering, but I can understand it from a purely business point of view, which is the way that much of the auto industry operates.

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this is a giant win for the consumer
It will only be a win for the consumer if Tesla doesn't fold or go out of business. Right now, especially in the auto-producing part of their business, they are not on particularly stable ground.
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Old 07-09-17, 01:52 PM   #6
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What an odd statement. Dealers don't create competition; car manufacturers do. Dealers are just middlemen.
Multiple dealers of the same make certainly compete for my business, sales and service.
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Old 07-09-17, 01:54 PM   #7
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Multiple dealers of the same make certainly compete for my business, sales and service.
Middlemen can only create competition in the tiny margins on top of the products produced by others, and all while injecting their own cost into the distribution chain. It's only the producers of the products that can generate any meaningful competition for the consumer.
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Old 07-09-17, 02:07 PM   #8
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Multiple dealers of the same make certainly compete for my business, sales and service.
That's how Fitzgerald (and the Fitz Way) got started, out there in the MD suburbs where you are. You yourself apparently don't mind haggling (you've discussed that before), but many people do. Saturn, of course, first streamlined the process by pricing their vehicles competitively (at a reasonable price) to start with, and then selling everything at list.....no markups, no discounts. Fitz, IMO, went even one better....discounting from list and then offering one of two Internet no-haggle prices.....a lower one with no added service, and a slightly higher one with some perks like added free maintenance. It works great for a lot of folks there in MD, but for people in VA, there is the added complication of having to have their cars state-inspected before they can register them in VA. MD dealerships cannot apply VA inspection-stickers.

I've met the old man, BTW, a couple of times, while shopping with other buyers. He's really getting up there now in years......that's probably why you don't see him on the tube much any more.

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Old 07-09-17, 02:08 PM   #9
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Originally Posted by gengar View Post
Middlemen can only create competition in the tiny margins on top of the products produced by others, and all while injecting their own cost into the distribution chain. It's only the producers of the products that can generate any meaningful competition for the consumer.
I suppose that remains to be seen.
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Old 07-09-17, 02:10 PM   #10
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That's how Fitzgerald (and the Fitz Way) got started, out there in the MD suburbs where you are. You yourself apparently don't mind haggling (you've discussed that before), but many people do. Saturn, of course, first streamlined the process by pricing their vehicles competitively (at a reasonable price) to start with, and then selling everything at list.....no markups, no discounts. Fitz, IMO, went even one better....discounting from list and then offering one of two Internet no-haggle prices.....a lower one with no added service, and a slightly higher one with some perks like added free maintenance. It works great for a lot of folks there in MD, but for people in VA, there is the added complication of having to have their cars state-inspected before they can register them in VA. MD dealerships cannot apply VA inspection-stickers.
We've discussed Fitzgerald before, its just a scam.

1. I can easily beat their prices elsewhere, with a simple email and no effort.

2. They actually WILL haggle. I have helped friends negotiate deals and I have definitely negotiated Fitzgerald down from their "FitzWay" price.

All just a game.
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Old 07-09-17, 02:11 PM   #11
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I suppose that remains to be seen.
It's self-evident in every business model and retail distribution model in existence in the free world. Why you so stubbornly reject that boggles the mind.
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Old 07-09-17, 02:14 PM   #12
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We've discussed Fitzgerald before, its just a scam.

1. I can easily beat their prices elsewhere, with a simple email and no effort.

2. They actually WILL haggle. I have helped friends negotiate deals and I have definitely negotiated Fitzgerald down from their "FitzWay" price.
Sure you can, if you are determined enough.....but most shoppers don't want to spend all afternoon doing that (time, for them is often money). And, of course that ultimately depends on supply and demand. And, unlike Tesla (where we still don't know), most of the Fitz shops will probably still be in business a few years from now, unless the old man (who I've met a few times) passes away and the chain gets sold.
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Old 07-09-17, 02:19 PM   #13
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It's self-evident in every business model and retail distribution model in existence in the free world. Why you so stubbornly reject that boggles the mind.
I just disagree with you, sorry. I can do that without being disrespectful or rude towards you I don't understand why you can't pay me the same courtesy.

I have seen enough variation in pricing amongst competing dealerships, and I have used competing dealerships enough times to negotiate multiple thousands of dollars off of car purchases for myself and others that I am not at all convinced that doing away with dealerships would reduce prices for the consumer.

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Sure you can, if you are determined enough.....but most shoppers don't want to spend all afternoon doing that (time, for them is often money). And, of course that ultimately depends on supply and demand.
A simple email. Didn't take "all afternoon". One email.

If you buy a car from Fitzgerald you won't get totally screwed, but you will pay more than you had to, and more than you would have with a little comparison shopping. Their "no haggle" is BS too because like I said, they will haggle. Try it.
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Old 07-09-17, 02:36 PM   #14
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I just disagree with you, sorry. I can do that without being disrespectful or rude towards you I don't understand why you can't pay me the same courtesy.

I have seen enough variation in pricing amongst competing dealerships, and I have used competing dealerships enough times to negotiate multiple thousands of dollars off of car purchases for myself and others that I am not at all convinced that doing away with dealerships would reduce prices for the consumer.
Because quite frankly, it's so self-evident that the mere fact that we continually have to talk about this just serves to degrade the quality of discussion on these forums.

To restate, middlemen don't produce anything. Middlemen can only take goods that have been produced by others and resell them - and that introduces the cost of the middlemen into the distribution. So the only competition on price that can exist between middlemen is how little of that additional cost they pass on to the end consumer. This is not meaningful competition, because the middleman isn't saving the consumer anything. A middleman can't magically make a produced good cost less to produce.

I just don't know how I can explain it any simpler than that.
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Old 07-09-17, 02:37 PM   #15
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I'll stop voicing my opinion as soon as you stop voicing yours. I think it will increase cost to consumers, not decrease costs. I don't trust automakers to pass that savings on to consumers, not for one instant. At least as it is now I can negotiate some of it back by having individual dealers compete for my business. Without dealers, if I want a "Lexus" this is what I have to pay, no leverage to apply to pay less.

Sorry if you feel differing viewpoints from yours "degrade the quality of the discussion on the forum". I can't believe a moderator on this site would be so rude and dismissive to a member for having an opinion contrary to their own, that's a shame.

Last edited by SW15LS; 07-09-17 at 02:41 PM.
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