4 ms·

> Dealer protection laws are there because manufacturers have a long history of trying to steal from dealers, cheat them, and put them out of business at whim.

by rlpb 11y ago

> Dealer protection laws are there because manufacturers have a long history of trying to steal from dealers, cheat them, and put them out of business at whim. That doesn't justify them. I thought the US is supposed to be anti-regulatory? Why didn't dealers handle this by becoming primarily multiple-manufacturer and thus able to switch to or favor a different manufacturer at whim?

bgribble 11y ago
That was the normal case in most of the US until pretty recently. Now manufacturers don't want competing brands in the same building. They want a uniform branded buying experience. So they make it very hard to transfer franchises if the new franchisee sells other makes at the same location. The manufacturer has refusal on the sale of the franchise, which is most of the dealership's value.
adventured 11y ago
The US is quite regulated overall and is anything but anti-regulation at this point. It has more laws governing its economy than any other nation, and adds thousands to that tally annually. It's not an exaggeration to say that nobody can keep up with it all, and that's before getting to the insane tax code. It hasn't been a classic free market of very low regulation, in nearly a century. George McGovern - politician turned entrepreneur - wrote one of my favorite articles on the subject in 1992: http://www.wsj.com/articles/SB10001424052970203406404578070543545022704 http://www.wsj.com/articles/SB100014240529702034064045780705...
jameshart 11y ago
Right. The historical reasons for these laws seems to be because the US is actually 50 competing state economies, and 49 of those states do not contain Detroit. Dealer protection laws are state protectionism. The fact that states outside California did not go to war to save their local Best Buys when Apple started selling direct, or states other than Washington go to bat for their local Borders bookstores when Amazon appeared (though there has been some rejigging of state sales tax laws around that) suggests that if the same situation were to occur today, in a less regulatory minded era than the early 20th century, states might be less concerned about trying to prevent Michigan car companies from driving their local dealers out of business.

by rlpb 11y ago

bgribble 11y ago

That was the normal case in most of the US until pretty recently. Now manufacturers don't want competing brands in the same building. They want a uniform branded buying experience. So they make it very hard to transfer franchises if the new franchisee sells other makes at the same location. The manufacturer has refusal on the sale of the franchise, which is most of the dealership's value.

adventured 11y ago

The US is quite regulated overall and is anything but anti-regulation at this point. It has more laws governing its economy than any other nation, and adds thousands to that tally annually. It's not an exaggeration to say that nobody can keep up with it all, and that's before getting to the insane tax code. It hasn't been a classic free market of very low regulation, in nearly a century. George McGovern - politician turned entrepreneur - wrote one of my favorite articles on the subject in 1992: http://www.wsj.com/articles/SB10001424052970203406404578070543545022704 http://www.wsj.com/articles/SB100014240529702034064045780705...

jameshart 11y ago

Right. The historical reasons for these laws seems to be because the US is actually 50 competing state economies, and 49 of those states do not contain Detroit. Dealer protection laws are state protectionism. The fact that states outside California did not go to war to save their local Best Buys when Apple started selling direct, or states other than Washington go to bat for their local Borders bookstores when Amazon appeared (though there has been some rejigging of state sales tax laws around that) suggests that if the same situation were to occur today, in a less regulatory minded era than the early 20th century, states might be less concerned about trying to prevent Michigan car companies from driving their local dealers out of business.