4 ms·

Can someone with more knowledge of the (outdated) franchise law explain why Tesla can't/hasn't created their own dealerships (that officially aren't Tesla owned

by Oculus 13y ago

Can someone with more knowledge of the (outdated) franchise law explain why Tesla can't/hasn't created their own dealerships (that officially aren't Tesla owned), but sell only Teslas?

sliverstorm 13y ago
I believe the answer is, because they don't want to do that.
dangrossman 13y ago
Because, under the same state laws, that's illegal as well. "It shall be unlawful for any franchisor to ... acquire any interest in any motor vehicle dealer in this state ... or to use any subsidiary corporation, affiliated corporation, captive finance source or any other controlled corporation, partnership, association or person to accomplish what would otherwise be unlawful conduct under this article" -- NY Vehicle and Traffic Laws, Article 17A, Franchised Motor Vehicle Dealer Act, S 463 Unfair Business Practices by Franchisors There'd be little point to having the rest of the law on the books if it were so easy to work around. Note that "franchisor" as defined in that law includes all manufacturers, whether they sell franchises or not. IANAL.
- deleted 13y ago
  [deleted]
woodchuck64 13y ago
Maybe they would prefer to kill dealerships (saving customers $2,225 average per new car according to a 2000 report). Lord knows, I've never had a good experience with a dealership, let 'em die! http://www.washingtonpost.com/opinions/charles-lane-tesla-takes-on-car-dealerships-in-a-fight-to-the-death/2014/03/12/2956a9f2-a9ff-11e3-8599-ce7295b6851c_story.html http://www.washingtonpost.com/opinions/charles-lane-tesla-ta...
- sp332 13y ago
  But if manufacturers have no competition for dealerships (because they own them all), what would keep them from jacking up the prices?
  - michaelt 13y ago
    If Tesla want to increase the price of Tesla cars for end customers, why would they need a dealer monopoly?
  - dangrossman 13y ago
    Manufacturers set the prices they sell their vehicles to the dealerships for, don't they? Unless the dealerships are going to start taking a loss on every sale, they aren't providing any restraint on manufacturer pricing. What keeps Ford from jacking up its prices is the Nissan lot next door, the year older Ford on the used lot, and the regional rail station down the street.
    - bwilliams18 13y ago
      This American Life did a great story on car dealerships[0]. Basically, dealers have a number they have to hit every month, and they're basically incentivized to sell cars and be willing to take thousands of dollars loss to hit the number because if they get below the number they don't receive any bonuses, and the bonuses are the principal form of cashflow to both the dealers and salesmen. [0]http://www.thisamericanlife.org/radio-archives/episode/513/129-cars http://www.thisamericanlife.org/radio-archives/episode/513/1...
      - revelation 13y ago
        Obviously, no matter what perverted incentive/bonus system you have in place, the essence of selling cars to a manufacturer and by extension to a dealership is to charge more than it cost you to make or acquire the car in the first place. Just because manufacturers can average it out across all dealerships doesn't make it less true, and obviously dealerships can never make a car cheaper, all things considered.

by Oculus 13y ago

Can someone with more knowledge of the (outdated) franchise law explain why Tesla can't/hasn't created their own dealerships (that officially aren't Tesla owned), but sell only Teslas?

sliverstorm 13y ago

I believe the answer is, because they don't want to do that.

dangrossman 13y ago

Because, under the same state laws, that's illegal as well. "It shall be unlawful for any franchisor to ... acquire any interest in any motor vehicle dealer in this state ... or to use any subsidiary corporation, affiliated corporation, captive finance source or any other controlled corporation, partnership, association or person to accomplish what would otherwise be unlawful conduct under this article" -- NY Vehicle and Traffic Laws, Article 17A, Franchised Motor Vehicle Dealer Act, S 463 Unfair Business Practices by Franchisors There'd be little point to having the rest of the law on the books if it were so easy to work around. Note that "franchisor" as defined in that law includes all manufacturers, whether they sell franchises or not. IANAL.

deleted 13y ago
[deleted]

woodchuck64 13y ago

Maybe they would prefer to kill dealerships (saving customers $2,225 average per new car according to a 2000 report). Lord knows, I've never had a good experience with a dealership, let 'em die! http://www.washingtonpost.com/opinions/charles-lane-tesla-takes-on-car-dealerships-in-a-fight-to-the-death/2014/03/12/2956a9f2-a9ff-11e3-8599-ce7295b6851c_story.html http://www.washingtonpost.com/opinions/charles-lane-tesla-ta...

sp332 13y ago
But if manufacturers have no competition for dealerships (because they own them all), what would keep them from jacking up the prices?
- michaelt 13y ago
  If Tesla want to increase the price of Tesla cars for end customers, why would they need a dealer monopoly?
- dangrossman 13y ago
  Manufacturers set the prices they sell their vehicles to the dealerships for, don't they? Unless the dealerships are going to start taking a loss on every sale, they aren't providing any restraint on manufacturer pricing. What keeps Ford from jacking up its prices is the Nissan lot next door, the year older Ford on the used lot, and the regional rail station down the street.
  - bwilliams18 13y ago
    This American Life did a great story on car dealerships[0]. Basically, dealers have a number they have to hit every month, and they're basically incentivized to sell cars and be willing to take thousands of dollars loss to hit the number because if they get below the number they don't receive any bonuses, and the bonuses are the principal form of cashflow to both the dealers and salesmen. [0]http://www.thisamericanlife.org/radio-archives/episode/513/129-cars http://www.thisamericanlife.org/radio-archives/episode/513/1...
    - revelation 13y ago
      Obviously, no matter what perverted incentive/bonus system you have in place, the essence of selling cars to a manufacturer and by extension to a dealership is to charge more than it cost you to make or acquire the car in the first place. Just because manufacturers can average it out across all dealerships doesn't make it less true, and obviously dealerships can never make a car cheaper, all things considered.