4 ms·

It is protectionism for the dealerships. Historically Dealerships were mom and pop shops up in less-populated towns, employing a decent number of people. So t

by pdq 12y ago

It is protectionism for the dealerships. Historically Dealerships were mom and pop shops up in less-populated towns, employing a decent number of people. So they lobby the government that unless you protect us from the dealers, they will undercut our prices by selling directly to consumers, and we will have to lay off some of our employees, or go out of business. Then our small town won't have said dealerships anymore. Especially now that we have the internet, these policies are antiquated and end up hurting consumers, by driving up prices. Without the middle-man, cars could be sold at lower prices.

msandford 12y ago
There's also the way the business evolved. Manufacturers don't have unlimited funds to: 1) design cars 2) design factories 3) manufacture cars 4) retail cars So somewhere along the line someone figured out that cars are somewhat commodity, same as clothing or food. A grocery store sells several brands of food and department stores sell several brands of clothing. Cars could be done the same way. Manufacturers liked it because it allowed them to grow much faster by selling franchise licenses and use that money for design of cars, factories and to actually build cars. It's an all around win. But eventually manufacturers grow to the point where they aren't starved for capital anymore, have good market penetration and growth starts to slow. So a natural next step is to cut out the middlemen (the dealers who have paid franchise fees) and start direct-to-consumer sales efforts. This idea didn't sit well with the dealers who had paid those franchise fees and might have assumed they could amortize them over many years. So laws got passed preventing manufacturers from competing with the dealers that they had sold franchises to. But Tesla has never sold anyone a franchise ever. They're not doing naughty things to their former customers (the dealers) because they've never had dealers. REQUIRING them to sell only to dealers doesn't make sense unless you're worried about Ford doing some kind of shady restructuring to get themselves out of all their dealer contracts and to start selling direct to consumers.

by pdq 12y ago

msandford 12y ago

There's also the way the business evolved. Manufacturers don't have unlimited funds to: 1) design cars 2) design factories 3) manufacture cars 4) retail cars So somewhere along the line someone figured out that cars are somewhat commodity, same as clothing or food. A grocery store sells several brands of food and department stores sell several brands of clothing. Cars could be done the same way. Manufacturers liked it because it allowed them to grow much faster by selling franchise licenses and use that money for design of cars, factories and to actually build cars. It's an all around win. But eventually manufacturers grow to the point where they aren't starved for capital anymore, have good market penetration and growth starts to slow. So a natural next step is to cut out the middlemen (the dealers who have paid franchise fees) and start direct-to-consumer sales efforts. This idea didn't sit well with the dealers who had paid those franchise fees and might have assumed they could amortize them over many years. So laws got passed preventing manufacturers from competing with the dealers that they had sold franchises to. But Tesla has never sold anyone a franchise ever. They're not doing naughty things to their former customers (the dealers) because they've never had dealers. REQUIRING them to sell only to dealers doesn't make sense unless you're worried about Ford doing some kind of shady restructuring to get themselves out of all their dealer contracts and to start selling direct to consumers.