30 ms·

Here's how we got here: 1) Money buys political influence (duh!) 2) Most cities have small tax bases, where car dealerships are a very large part of the tax b

Here's how we got here: 1) Money buys political influence (duh!) 2) Most cities have small tax bases, where car dealerships are a very large part of the tax base. City managers want a larger tax base to help fund their plans. 3) Thus, car dealerships & local politicians have aligned incentives. 4) So, local laws (zoning, advertising, etc) favor car dealerships. 5) Higher offices are filled from the pool of local politicians, as they move up the food chain. 6) Those politicians remember their contacts @ the dealers, who helped fund/launch their careers, & they remain aligned with them in passing laws empathetic to dealer's interests. Of course, legitimately, car dealerships have HUGE capital investments (fast aging inventory, large chunks of prime real-estate, staffing costs). Would YC ever want to get into the traditional dealer space? No friggen way. Too risky & doesn't scale. And, nobody really buys a car without a test drive/showroom. So, nearly any "online" sale is cannibalizing the dealer's investments. So, we need to have some kind of online buying system where you MUST enter in a dealer showroom code before buying, & they get some commission, as they DO offer real value here folks. IMO, the whole consumer retail system is going to evolve into "showroom + online buying" in a fair system soon.

greggman 13y ago
I'm not sure I understood your point. But..., HUGE capital investments does not seem like a valid reason to protect a company. Should we protect Walmart from Costco or Costco from Target?
- johnvschmitt 13y ago
  To clarify: No. A businesses costs shouldn't become our costs. I'm just saying that it's a fallacy to think that an online sale is wholly responsible for the sale. They do rely on those huge investments by showrooms/dealers. So, in a "right evolution", I envision smaller showrooms, wide variety + low inventory per unit. (Yes, like an Apple store). Similarly, if stores like Best Buy died, Amazon sales of consumer electronics would fall. So, Amazon would likely buy up 1/2 the brick & mortars, to create showrooms. But, until Best Buy dies, Amazon is happy that they provide free showrooms that everyone hates, but still uses & abuses.
MBlume 13y ago
Hmm, Apple does this just fine, but Apple isn't franchising the stores, they just comfortably run them at a loss. The fact that the dealerships have independent owners may make that more complicated. Your system seems reasonably sensible. And you wouldn't have to enter a dealer showroom code, your dealer would just give you a code for a "special discount" -- this is how businesses already track which of their ad campaigns are paying off.
- ak217 13y ago
  Do you have a source for Apple running their stores at a loss? I doubt that actually happens.
  - tjl 13y ago
    They don't run them at a loss. They're the most profitable retail stores in the US (on a per square foot basis). At least they were in 2012. Since sales haven't really gone down much, that's probably still true as Tiffany's (next best) was about half of Apple's.
- tjl 13y ago
  Why do you think Apple runs their stores at a loss? In 2012, they were nearly double the profit/square foot that Tiffany's had (I haven't found more recent data on the profit/sq.ft metric) at around $6,000/square foot. In Q1 2013, they were well over $10 million (closer to 15) in average revenue per store.
ballard 13y ago
Lessig / rootstrikers are working on the meta issue of campaign financing. Direct crowdfunding is part of it, the other part is holding reps accountable for their votes.
baddox 13y ago
Another aspect to consider is that big car manufacturers themselves probably support these laws, because even if they could more efficiently sell cars without the current dealership environment, mandating the dealerships vastly increases the barrier to entry from competing car manufacturers.
wmf 13y ago
So, nearly any "online" sale is cannibalizing the dealer's investments. I suspect that Tesla would actually prefer to sell cars at dealers (that are owned and operated by Tesla); their online sales are just a hack to get around the fact that their dealerships are banned. So any concern about conflict of interest between the dealer and manufacturer seems like it does not apply to Tesla.

greggman 13y ago

I'm not sure I understood your point. But..., HUGE capital investments does not seem like a valid reason to protect a company. Should we protect Walmart from Costco or Costco from Target?

johnvschmitt 13y ago
To clarify: No. A businesses costs shouldn't become our costs. I'm just saying that it's a fallacy to think that an online sale is wholly responsible for the sale. They do rely on those huge investments by showrooms/dealers. So, in a "right evolution", I envision smaller showrooms, wide variety + low inventory per unit. (Yes, like an Apple store). Similarly, if stores like Best Buy died, Amazon sales of consumer electronics would fall. So, Amazon would likely buy up 1/2 the brick & mortars, to create showrooms. But, until Best Buy dies, Amazon is happy that they provide free showrooms that everyone hates, but still uses & abuses.

MBlume 13y ago

Hmm, Apple does this just fine, but Apple isn't franchising the stores, they just comfortably run them at a loss. The fact that the dealerships have independent owners may make that more complicated. Your system seems reasonably sensible. And you wouldn't have to enter a dealer showroom code, your dealer would just give you a code for a "special discount" -- this is how businesses already track which of their ad campaigns are paying off.

ak217 13y ago
Do you have a source for Apple running their stores at a loss? I doubt that actually happens.
- tjl 13y ago
  They don't run them at a loss. They're the most profitable retail stores in the US (on a per square foot basis). At least they were in 2012. Since sales haven't really gone down much, that's probably still true as Tiffany's (next best) was about half of Apple's.
tjl 13y ago
Why do you think Apple runs their stores at a loss? In 2012, they were nearly double the profit/square foot that Tiffany's had (I haven't found more recent data on the profit/sq.ft metric) at around $6,000/square foot. In Q1 2013, they were well over $10 million (closer to 15) in average revenue per store.

ballard 13y ago

Lessig / rootstrikers are working on the meta issue of campaign financing. Direct crowdfunding is part of it, the other part is holding reps accountable for their votes.

baddox 13y ago

Another aspect to consider is that big car manufacturers themselves probably support these laws, because even if they could more efficiently sell cars without the current dealership environment, mandating the dealerships vastly increases the barrier to entry from competing car manufacturers.

wmf 13y ago

So, nearly any "online" sale is cannibalizing the dealer's investments. I suspect that Tesla would actually prefer to sell cars at dealers (that are owned and operated by Tesla); their online sales are just a hack to get around the fact that their dealerships are banned. So any concern about conflict of interest between the dealer and manufacturer seems like it does not apply to Tesla.