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This is just what I read off of the internet, but IIRC at the time the reasoning was in part because opening any is business is somewhat risky. Thing was that
by somerandomqaguy 5y ago
This is just what I read off of the internet, but IIRC at the time the reasoning was in part because opening any is business is somewhat risky.
Thing was that by allowing dealers to open the business first, manufacturers could entirely offload that risk of opening a location that wasn't profitable, and watch the orders from the dealers. Anywhere that sold well, just open up your own store and undercut the dealer until he goes out of business and then return prices to what the dealer was originally selling for.
Putting in laws was meant to put a stop to that practice. Like I said, it's just something I vaguely recall reading on the internet so take it for what it's worth.
- mint2 5y agoInteresting, what you describe as the motivation of the law sounds suspiciously familiar to what Amazon does to 3rd party businesses.
- HelixEndeavor 5y agoAmazon needs regulation, severely, before it becomes a genuine monopoly. It's already at the stage of effective monopoly, but competition still exists, technically. It won't be long before they're driven under or bought out too though. But I wouldn't bet on it, since Amazon already has all the people capable of doing anything in their pockets anyways.
- tshaddox 5y agoIf the dealership entrepreneurs were savvy enough to predict this then why wouldn’t they simply not open dealerships?
- beambot 5y agoBecause regulatory capture created viable, local small businesses for decades...
- HelixEndeavor 5y agoThat sounds like a very interesting hypothetical. Was there any legitimate basis for this fear though? Was this a tactic that was ever provably executed by a manufacturer? Or was it just a made-up scenario by dealerships to push these laws that massively benefit them?
- PaulDavisThe1st 5y agoThis is a tactic still used by e.g. Amazon today. Let 3rd party entities establish a viable online market for niche items, then start selling them "directly", undercutting 3rd parties. Amazon of course denies that it does this, but the anecdata seems irrefutable to me.