GM Sides Against Tesla in the Direct Retailing Dispute

[38P]

GM head of public policy Selim Bingol sent a letter to the state lawmakers and Ohio Gov. John Kasich saying GM believed Tesla should have to use independent dealers just like any other automaker, and that an exemption amounted to "a distinct competitive advantage."

http://autos.yahoo.com/blogs/motoramic/in-tesla-sales-fight--automakers-take-the-dealers--side-213905585.html

We've discussed Tesla's attempt to circumvent more than a century of state dealer franchising laws before . . . . http://www.bangshift.com/forum/forum...-in-new-jersey . . .

GM's lobbying may stoke the fire of some about an oily conspiracy against new-age Reddy Kilowatt rides . . . . And it will spin up a certain subculture who sees "multinational corporate evil" at every turn . . . .

[1970camaroRS]

Well, of course GM is against it. They have a long-existing already paid-for distribution system that has been shaped and regulated by law which means they can be somewhat hands-off. If the laws were to go-away, the existing manufacturers would be forced to compete with cars that no longer carry the roughly $2,000 extra price incurred via middle-men. That means they would have to hire more workers, open store-fronts and figure out a delivery system which would cause short-term profits to go down because of direct costs that would be incurred by the manufacturer. Tesla is ahead of the game because they are starting from scratch anyway, so their costs are in-line with a normal start-up. And they can afford to make short term losses in profit in order to get the business running.

[NewEnglandRaceFan]

tesla should just sell them through best buy..

[38P]

Tesla should just follow the law . .. and not lobby for laws and regulations that only apply to them.

[JOES66FURY]

The Cliff Notes.....We dont want to compete with a superior electric car maker.

[William Wilson]

The Cliff Notes.....We dont want to compete with a superior electric car maker.

That would be true if GM was trying to ban their sale.

It reads to me that GM wants Tesla to play the same selling game as all of the other auto makers which in a regulated system is fair.

Now if GM gets the ruling it wants and then turns around and does its best to stop Tesla from setting up a dealer network then I have an issue.

Besides Tesla is poaching buyers from Prius and high end European car sales which helps GM more then it hurts it.

[38P]

If your competitor gets a special legislative exemption from laws that you have to follow, is it really fair competition?

Tesla also benefits from favorable tax credits (read: corporate welfare) that it sells for revenue (http://www.forbes.com/sites/joannmul...mpanies-arent/ ), scored a billion-dollar assembly plant for about four cents on the dollar, and benefits from huge tax subsidies on its retail sales ( http://www.teslamotors.com/incentives/US )

That's not exactly laissez-faire capitalism . . . .

[BKBridges]

If your competitor gets a special legislative exemption from laws that you have to follow, is it really fair competition? Tesla also benefits from favorable tax credits (read: corporate welfare) that it sells for revenue (http://www.forbes.com/sites/joannmul...mpanies-arent/ ), scored a billion-dollar assembly plant for about four cents on the dollar, and benefits from huge tax subsidies on its retail sales ( http://www.teslamotors.com/incentives/US ) That's not exactly laissez-faire capitalism . . . .

Knowing Mr Musk's drive and successes at hitting his target,I wouldn't bet on the franchise system holding together for very long unless he thinks he needs it. I bet against Space X and lost, and that was a MAJOR undertaking that I think only Elon could have pulled off in the period of time that he did. And Im sure GM has never been the recipient of the Federal Gummint's largess...

[SpiderGearsMan]

Worked in car dealers for 30 years ..i would love the dealer system to crumble as muchbas the next guy ..but PayPal satan and tesla scammer Elon Musk is too much ofa weenie ..and democrat scammer to pull it off

[1970camaroRS]

The dealership system, as protected by laws, is a farce. The simple fact that they need laws to protect their racket is particularly telling. There is no need in any way, shape or form for the existence of that business model. They are actually anti-compete laws that go against sensible free-market enterprise. And Tesla is specifically lobbying for a law written just special for only them. It's aimed at destroying the old, unfair system that's designed to protect the middle man and keep competition out. Everyone, except the dealerships, will benefit from open, free, fair-market competition.

Why, exactly, is the dealership system a good thing for the end-user: the consumer?

[Loren]

Seems to me the dealership distribution thing was originally the way to get new cars in front of the population of every town, a manufacturer in the business of building and running production lines would have trouble with that and need the help of the locals. Early car ads often had calls for dealership inquiries right there with the product claims, they needed folks to come in with their own capital and team to sell/service at ground level.

Then markets and businesses evolve, and laws along with them...and whenever there gets to be big money in something, some of that money will be going to the pockets of lawmakers to see that the guys raking it in are "protected". Actually it's not completely unfair, it has worked pretty well for the customer too. We just dealt directly with a manufacturer, circumventing any traditional dealer network, to get this Dell computer I'm typing on, and do you think we're happy with it, and got what we wanted? No. If this came from a guy on the corner selling computers, with a franchise and a license and a set of rules he had to abide by, he could have set us up far better/easier, and it would have been worth his cut.

BTW notice that GM's case in that letter above did not fail to emphasize their position in the economy of the state of Ohio. A little food for thought, for the people it was written for...those guys who have pocketed so much GM money over the years.

I don't like car dealers any better than anyone else (actually probably a lot less), but I can't see dropping your car in a box and shipping it back to the manufacturer when the check "motor" light comes on. I'm sure Tesla has it's strategy for that but we will see.

[Russell]

On a side note in NC once beer makers produce over a certain amount they are required to use a distributor. The micro brewers that are not so micro anymore are fighting. Something about not wanting to give the gravy away?

[38P]

The time-tested dealership franchise system protects against manufacturer price fixing. One would have to be naive to think that OEMs could provide the same level of service any cheaper or would cut retail prices in the long term. There would be NO competition for the price of a manufacturer's own products . . .only competition among different brands. An OEM monopoly on retail distribution would quickly become a centralized, bureaucratic "profit center." And the OEMs would quickly abandon most small and medium-sized communities.

Dealers are also the most powerful outside advocates for better products. For example, there would never have been a 428 Cobra Jet without dealer lobbying.