6 ms·

I'm prepared to entertain a defense of a ban on direct-to-consumer auto sales but have not yet seen a compelling one. Did such a ban make sense in the past?

by pbreit 13y ago

protomyth 13y ago
Here are two interesting papers: http://www.justice.gov/atr/public/eag/246374.pdf http://www.justice.gov/atr/public/eag/246374.pdf http://faculty.som.yale.edu/FionaScottMorton/documents/StateFranchiseLawsDealerTerminationsandtheAutoCrisis.pdf http://faculty.som.yale.edu/FionaScottMorton/documents/State... My only comment is that if Tesla gets to do direct selling then Ford should also be allowed.
- bryanlarsen 13y ago
  Dealerships generally have exclusive rights to a region. In a state with these laws, this exclusivity may have been implicit rather than explicitly in the contract, which does make things tricky.
  - protomyth 13y ago
    If Ford was forced into dealerships then any relief for Tesla should include relief for Ford, etc.
- pbreit 13y ago
  I could sorta see that at car price points there could be some structural advantages for the manufacturers over the dealers that might benefit from some protection. But it does seem like little more than local political power here in 2014 USA.
  - protomyth 13y ago
    If the law were changed overnight so the manufactures could sell direct, then I would expect the number of surviving dealerships to be very low. I would imagine it would be dealers in used and exotic cars that survive or rural areas that do multiple manufactures. It is a local power thing, and I don't agree with it, but I also don't think anyone should get an unfair advantage just because they are new. That doesn't promote competition.
gamblor956 13y ago
In the past it wasn't a ban so much as an enabling law that allowed car dealer franchises to exist. Car makers had a sordid history of letting car dealers dip their toes in the water and then swooping in once the first unlucky souls had proven the viability of a market.
- caf 13y ago
  You've got to wonder why, once this sordid history had become well known, prospective franchisees didn't start to insist on non-compete clauses in their contracts.

I'm prepared to entertain a defense of a ban on direct-to-consumer auto sales but have not yet seen a compelling one. Did such a ban make sense in the past?

by pbreit 13y ago

I'm prepared to entertain a defense of a ban on direct-to-consumer auto sales but have not yet seen a compelling one. Did such a ban make sense in the past?

protomyth 13y ago

Here are two interesting papers: http://www.justice.gov/atr/public/eag/246374.pdf http://www.justice.gov/atr/public/eag/246374.pdf http://faculty.som.yale.edu/FionaScottMorton/documents/StateFranchiseLawsDealerTerminationsandtheAutoCrisis.pdf http://faculty.som.yale.edu/FionaScottMorton/documents/State... My only comment is that if Tesla gets to do direct selling then Ford should also be allowed.

bryanlarsen 13y ago
Dealerships generally have exclusive rights to a region. In a state with these laws, this exclusivity may have been implicit rather than explicitly in the contract, which does make things tricky.
- protomyth 13y ago
  If Ford was forced into dealerships then any relief for Tesla should include relief for Ford, etc.
pbreit 13y ago
I could sorta see that at car price points there could be some structural advantages for the manufacturers over the dealers that might benefit from some protection. But it does seem like little more than local political power here in 2014 USA.
- protomyth 13y ago
  If the law were changed overnight so the manufactures could sell direct, then I would expect the number of surviving dealerships to be very low. I would imagine it would be dealers in used and exotic cars that survive or rural areas that do multiple manufactures. It is a local power thing, and I don't agree with it, but I also don't think anyone should get an unfair advantage just because they are new. That doesn't promote competition.

gamblor956 13y ago

In the past it wasn't a ban so much as an enabling law that allowed car dealer franchises to exist. Car makers had a sordid history of letting car dealers dip their toes in the water and then swooping in once the first unlucky souls had proven the viability of a market.

caf 13y ago
You've got to wonder why, once this sordid history had become well known, prospective franchisees didn't start to insist on non-compete clauses in their contracts.