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I think I understand the motivation for having a law prohibiting auto makers from selling straight to consumers. I’m sure it has more to do with money than ethi

by pugets 5y ago

I think I understand the motivation for having a law prohibiting auto makers from selling straight to consumers. I’m sure it has more to do with money than ethics. My question: Why autos, but not other consumer goods? Should I be restricted from buying an iPhone from an Apple store, rather than Greg’s Phone Emporium?

fred_is_fred 5y ago
It's very clear - because Greg's Phone Emporium does not hold local political power like car dealers do. They excel at it.
Zigurd 5y ago
Regulations on various types of alcohol distribution are pretty interesting, too. https://en.wikipedia.org/wiki/Three-tier_system_(alcohol_distribution) https://en.wikipedia.org/wiki/Three-tier_system_(alcohol_dis...
xGrill 5y ago
The biggest reason has to with cost. The average consumer does not need to take out a loan to buy a phone, but most do for cars. Cars are seen as a large investment that needs added protection, and instead of doing it at the auto manufacturer level, they added dealerships to serve as middlemen to bargain with auto makers on your behalf.
KingMachiavelli 5y ago
Back in the day, a vehicle was a pretty big purchase so you wanted to know that you could get service & maintenance throughout the life of the vehicle. If the dealership is nothing more than a front for the manufacturer then they might move the store if business is slow, etc. Forcing the use of franchised stores meant that the dealerships are owned (always?) by local people so they can't just move away. Now days other laws pretty much make this a non-issue although you could argue that the repair/service process for Tesla's is exactly what these laws were intended to prevent; who would want to own a Tesla dealership if you can't get the parts to fix your customers's cars? e.g. Your son's basketball coach is going to keep calling until you get his car fixed. In your example, you would be restricted to buying from Greg's Phone Emporium because Greg is thought to care more about repairing your phone than Apple. Edit: The biggest issue with the current dealership system is that it, of course, just evolved into rent seeking and over-complicated purchase process. The auto companies have systems to make sure dealers sell cars no matter what and the dealerships have ways of extracting extra profit from their customers.
- mjevans 5y ago
  The local franchise doesn't cover you either. They get resold and can even close down if an area just isn't profitable. I have seen this happen within my lifetime but don't want to provide a citation as the situation might still be rare and thus could dox myself.
- 908B64B197 5y ago
  > Forcing the use of franchised stores meant that the dealerships are owned (always?) by local people so they can't just move away. Just like foreign countries levying fines on "evil foreign tech companies", it was an older attempt at rent seeking from the "foreign" faraway auto manufacturers.
- xyzzyz 5y ago
  > Forcing the use of franchised stores meant that the dealerships are owned (always?) by local people so they can't just move away. Local people close down their local businesses all the time, though. In fact, the manufacturer, because of vertical integration, is more likely to make profit than independent dealer, and so less likely to close down.
- asdff 5y ago
  The reason why direct sales are illegal has nothing to do with that, it's because dealerships lobbied for a law that would preserve their industry and got it.
lmm 5y ago
> My question: Why autos, but not other consumer goods? Should I be restricted from buying an iPhone from an Apple store, rather than Greg’s Phone Emporium? Given how bad Apple are about third-party repairs, yes. This law should extend to anything that's complex enough that it can only be repaired by a specialist.
notatoad 5y ago
spend some time in a small town. specifically a small town in farm or oil country, where trucks are an essential work vehicle, and everybody buys a new one at $70-80k every 5 years. the guy who owns the local car dealership runs the town. he's got money unlike anybody else in town does. some towns have rich farmers, or rich people who've made their money elsewhere, but unlike them the guy who owns the car dealership knows that his revenue stream depends on maintaining a good relationship with the town, and so he spends money like nobody else does. every local event, sports team, church function, whatever, it's always sponsored by at least one car dealership. and every congressperson who represents one of those districts knows that they really don't want to get on the wrong side of the car dealers. Apple only dreams of having as much distributed local political power as the car dealers do.
asdff 5y ago
Like most laws its not rooted in logic but a byproduct of historical business decisionmaking. When car companies got their start, it was difficult to scale what we know dealerships do today: advertising, service, sales, inventory management, order management. It was cheaper for ford to use a dealer and have them worry about these things, than to perform their own local market analysis for things like advertising and operate their own dealership. Eventually, dealerships saw that the writing was on the wall, and that one day these auto manufacturers would become large enough to operate their own dealerships themselves. They ended up lobbying for a law that made direct car sales illegal, and won, codifying their industry into law.

by pugets 5y ago

fred_is_fred 5y ago

It's very clear - because Greg's Phone Emporium does not hold local political power like car dealers do. They excel at it.

Zigurd 5y ago

Regulations on various types of alcohol distribution are pretty interesting, too. https://en.wikipedia.org/wiki/Three-tier_system_(alcohol_distribution) https://en.wikipedia.org/wiki/Three-tier_system_(alcohol_dis...

xGrill 5y ago

The biggest reason has to with cost. The average consumer does not need to take out a loan to buy a phone, but most do for cars. Cars are seen as a large investment that needs added protection, and instead of doing it at the auto manufacturer level, they added dealerships to serve as middlemen to bargain with auto makers on your behalf.

KingMachiavelli 5y ago

Back in the day, a vehicle was a pretty big purchase so you wanted to know that you could get service & maintenance throughout the life of the vehicle. If the dealership is nothing more than a front for the manufacturer then they might move the store if business is slow, etc. Forcing the use of franchised stores meant that the dealerships are owned (always?) by local people so they can't just move away. Now days other laws pretty much make this a non-issue although you could argue that the repair/service process for Tesla's is exactly what these laws were intended to prevent; who would want to own a Tesla dealership if you can't get the parts to fix your customers's cars? e.g. Your son's basketball coach is going to keep calling until you get his car fixed. In your example, you would be restricted to buying from Greg's Phone Emporium because Greg is thought to care more about repairing your phone than Apple. Edit: The biggest issue with the current dealership system is that it, of course, just evolved into rent seeking and over-complicated purchase process. The auto companies have systems to make sure dealers sell cars no matter what and the dealerships have ways of extracting extra profit from their customers.

mjevans 5y ago
The local franchise doesn't cover you either. They get resold and can even close down if an area just isn't profitable. I have seen this happen within my lifetime but don't want to provide a citation as the situation might still be rare and thus could dox myself.
908B64B197 5y ago
> Forcing the use of franchised stores meant that the dealerships are owned (always?) by local people so they can't just move away. Just like foreign countries levying fines on "evil foreign tech companies", it was an older attempt at rent seeking from the "foreign" faraway auto manufacturers.
xyzzyz 5y ago
> Forcing the use of franchised stores meant that the dealerships are owned (always?) by local people so they can't just move away. Local people close down their local businesses all the time, though. In fact, the manufacturer, because of vertical integration, is more likely to make profit than independent dealer, and so less likely to close down.
asdff 5y ago
The reason why direct sales are illegal has nothing to do with that, it's because dealerships lobbied for a law that would preserve their industry and got it.

lmm 5y ago

> My question: Why autos, but not other consumer goods? Should I be restricted from buying an iPhone from an Apple store, rather than Greg’s Phone Emporium? Given how bad Apple are about third-party repairs, yes. This law should extend to anything that's complex enough that it can only be repaired by a specialist.

notatoad 5y ago

spend some time in a small town. specifically a small town in farm or oil country, where trucks are an essential work vehicle, and everybody buys a new one at $70-80k every 5 years. the guy who owns the local car dealership runs the town. he's got money unlike anybody else in town does. some towns have rich farmers, or rich people who've made their money elsewhere, but unlike them the guy who owns the car dealership knows that his revenue stream depends on maintaining a good relationship with the town, and so he spends money like nobody else does. every local event, sports team, church function, whatever, it's always sponsored by at least one car dealership. and every congressperson who represents one of those districts knows that they really don't want to get on the wrong side of the car dealers. Apple only dreams of having as much distributed local political power as the car dealers do.

asdff 5y ago

Like most laws its not rooted in logic but a byproduct of historical business decisionmaking. When car companies got their start, it was difficult to scale what we know dealerships do today: advertising, service, sales, inventory management, order management. It was cheaper for ford to use a dealer and have them worry about these things, than to perform their own local market analysis for things like advertising and operate their own dealership. Eventually, dealerships saw that the writing was on the wall, and that one day these auto manufacturers would become large enough to operate their own dealerships themselves. They ended up lobbying for a law that made direct car sales illegal, and won, codifying their industry into law.