Tesla, the electric car manufacturer that hasn't been making the papers by going bankrupt (despite a huge influx of taxpayer financing) has found other ways to make waves.
Tesla's found themselves-- usually not by name, mind-- in state legislatures around the country. The problem, it seems, is that they don't have independent dealers; all 37 Tesla stores are owned directly by the company itself.
This isn't the way it works for other manufacturers. Cars, at least here in the United States, are sold by independent dealers. The dealership has Ford or Chrysler or Mazda logos all over the place, but they're not actually owned by Ford or Chrysler or Mazda. The person you talk to in the showroom or in the service bay gets a paycheck from a company entirely unrelated to the badge on the nose of the car.
Tesla wants to change all that-- they want to own their own dealerships. They want to own their own service garages.
The folks who own automotive dealerships think this is a pretty ridiculous state of affairs-- and who can blame them? If we could buy cars on a website, why would we waste our time with dealers? If Tesla's allowed to own their own dealerships, why wouldn't Honda? Or Mercedes? Or Fiat? Well, maybe not Fiat, they'd be broke without Chrysler keeping them afloat right now.
The auto dealers have some allies. The commonwealth of Virginia denied Tesla a license to open a dealership in the state.
The North Carolina Car Dealers association gave the largest contribution allowed by state law to state Senator Tom Apodaca, so I'm sure it's no surprise that he sponsored a bill that, while not targeting Tesla by name, made it illegal for auto manufacturers to interact directly with consumers using computers or other communications facilities. From the looks of it, I have to assume this one will be struck down. I'm not a lawyer, mind, but it reads like Cadillac can't have a website that's available to North Carolina residents. Do you need to call the Volkswagen regional service manager because the local shop can't fix your problem? Too bad, North Carolina, they're not allowed to talk to you.
It's not all good news for the dealer networks-- similar initiatives were voted down in Massachusetts, Minnesota, and New York. There's a bill going through process in Texas right now, where the dealer can't currently deliver a car to you. Aside from North Carolina, you can order a Tesla anywhere in the US. You may have to visit another state to actually pick the car up, though. The bill in Texas would allow Texans to have their Teslas delivered direct to their houses.
In the interests of "fair competition", though, auto dealers are against direct sales.
And I hope they lose.
"Fair competition" usually doesn't require you to pass a law to ensure the way you do it is the way it gets done. Competition means you do it your way, they do it their way, and the best way is the one that sticks around. Fair competition doesn't require courtrooms or legislatures. If there's underhanded dealing, sure, then get courtrooms involved-- but I find it hard to argue that it should be illegal for a car manufacturer to sell directly to the consumer when it's not illegal for anybody else to sell directly. Does the State of North Carolina have a problem with Apple owning Apple Stores, too? I hope not, they gave Apple a huge tax incentive to build a data center there...
What's more, the independent auto dealership is, in my opinion, a huge problem in buying automobiles today. Don't get me wrong-- I'm not saying there's no point in having a local place to buy or service a car. The fact that they're independent, though, causes a few problems.
The first is that they're inefficient. When I ordered my BMW, I'd been to two different dealerships on three separate occasions to test-drive them. I wanted to drive both a 128i and a 135i to determine how much I wanted the turbocharger. I wanted to drive the six speed traditional manual and the 7-speed dual-clutch manual. I wound up at two different dealerships to find the combinations of car I wanted to test to see what I liked.
BMW, the manufacturer, was doing a rebate through my insurance company, USAA. In order to qualify for the rebate, I had to use USAA's car buying service. USAA's car buying service wound up pointing me at yet a third (and fourth) dealership, and the one that earned my business wasn't either of the ones I drove cars at.
This is a problem, because it means I wasted those other two dealerships' time. If they were all owned by BMW, then my money would've gone into the same account that paid the other two dealerships-- but that's not how it works. The folks I bought the car from profited from labor done by two completely different companies.
Another reason that independent car dealerships are a problem is that the oversight from the manufacturers is apparently minimal at best. Most people I know dread buying a car. Most of them (my wife being an exception) don't hate the test driving, the researching, the finding out what's out there or even choosing between them. What most people hate is actually completing the deal. There are huge websites out there trying to teach you how not to get screwed by an auto salesman. They go over the "tricks of the trade". At most dealerships, the actual purchase feels more like going into battle than buying something we want to enjoy.
This has brought about an industry of car-buying services, which hope to get us the best price possible. Saturn came about with no-haggle pricing, but couldn't survive. CarMax has done something similar with their dealerships, and I wish them all the luck in the world. Most dealers, though, employ salesmen on commission whose job is to soak you for as much as they think they can get.
But imagine if you can actually order any car online, like the Tesla model. Tesla's web site doesn't go drawing four quadrants on a piece of paper and try to plow over you with numbers. It doesn't have to waste your time by bringing in the sales manager to vet a deal both you and the salesman know is reasonable. It simply asks you what options you want and presents you with a price.
If manufacturers own their own dealerships, like Tesla, and allow online ordering, then the local dealer can't try to screw you. There's no arcane mystery to getting the best price when you buy a car, unless it turns out you get a few bucks off by waiting for Black Friday or something. Your ability to get a fair price is no longer directly correlated to your ability to negotiate.
Now, in your local auto dealer's defense, they're not all like this. Both Amy and I bought new cars this year, and we both worked with dealerships that made the transaction almost entirely painless. I'd recommend the dealerships we worked with to anybody. (In fact, I'll do just that, because an exception to the "auto dealers are slugs" rule deserves a quick plug: If you're looking for a Toyota, talk to Steve Yang over at the Laurel CarMax. If you want a BMW, chat with Mark White at Passport down in Suitland (er, Marlow Heights). Neither dealership steered us wrong, and both salesmen/client advisors/whatever-they're-called-this-week knew a good bit about their product.) The entire industry shouldn't be painted with the same brush.
We'll still need local dealers. There's no amount of online research that's going to tell me how the car drives on the other end of a computer-- and this is coming from someone with a steering wheel attached to his computer. People who aren't me need to be able to talk to someone who knows more about the car than they do so they can get educated about it and make a wise decision.
Good luck, Tesla. You're still outside my price range, but you build an interesting car, and your electric cars may not just change the way cars are powered in the future-- you may well change the way cars are sold, as well.
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