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Bill sponsor received $8,000 in campaign donations from the North Carolina Automobile Dealers Association

Living in the Research Triangle Park (RTP) area of North Carolina, which I nickname Silicon Valley East, I quite frequently see Tesla Model S sedans and Roadsters silently cruising down city streets and interstates. However, the North Carolina Senate Commerce Committee unanimously approved a measure that would make it illegal for Tesla Motors to sell vehicles directly to customers without the ever-present "middleman" in new car transactions: car dealerships.
 
Not surprisingly, the NC Automobile Dealers Association (which represents North Carolina's franchised car dealership) is behind this latest stab at Tesla. But according to NC ADA President Robert Glasser, this isn't an attack specifically aimed at Tesla. Glasser notes that the precedent Tesla has set for direct sales could set into motion a chain of events that would topple the entire dealership model of business.
 
“We care about the franchise system,” said Glaser. “The whole point of the retail system is to protect the consumer.”
 
Of course, Tesla Motors sees things quite differently. “They’re trying to insulate the dealer franchise model from any competition,” said Diarmuid O’Connell, Tesla’s VP of Corporate and Business Development. “It’s a protectionist move to lock down the market so we have to go through the middleman – the dealer – to sell our cars.”

And here's an interesting tidbit that shines a whole new light on the story. Slate reports that Sen. Tom Apodaca, the Republican sponsor of the bill, received $8,000 in campaign donations (the maximum allowed by state law) from the NC ADA.
 
It's pretty clear to see why dealerships are shaking in their boots at the prospect of Tesla (and other auto manufacturers) selling directly to customers. Tesla managed to deliver a whopping 4,750 Model S sedans to customers during the month of April. Compared to other luxury sedans that also dance in the $70,000 to $100,000+ price range, the Model S outpaced monthly sales of the Audi A8 (1,462 units), BMW 7-Series (2,338), Lexus LS (2,860) and Mercedes S Class (3,077).

 Tesla Model S
 
Tesla has sold 80 Model S sedans in North Carolina and has an additional 60 orders in queue from residents. The overwhelming majority of those sales have come via the internet.
 
And one could argue that an electric vehicle like the Model S needs less attention from dealerships due to the much lower maintenance needs of the electric motor and battery pack. Quite simply, there is potentially less to go wrong with a Model S compared to BMW 750i with its twin-turbocharged V8 and 8-speed automatic transmission.
 
Despite this new speed bump in Tesla's road to electric vehicle proliferation, the company has been showered with a wealth of good news in the past week. Last week, Tesla reported its first profit in its ten years of existence and Consumer Reports gave the Model S a near perfect rating: 99 out of 100 possible points.
 
Tesla's stock is up 57 percent since its quarterly earnings were released last Thursday to just under $90/share.

Sources: News Observer, Slate



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RE: lolwut?
By tayb on 5/14/2013 2:24:53 PM , Rating: 2
quote:
Competition vs Monopoly sales of vehicles in an area. If the manufacturers were doing sales locally they could undercut the price the dealerships and after the dealerships fail they could increase the price to an unreasonable amount.


You have this whole thing backwards, actually. We currently have a monopoly and allowing direct sales to consumers would break the monopoly.

Dealerships buy cars from the manufacturers and mark them up any % they want. Consumers can't do much about it beyond shopping at a different dealership with a lower markup. Dealerships currently have a monopoly on car sales. This would be similar to saying that Dell isn't allowed to have an online store and they must only sell through authorized retailers. We wouldn't accept that. You have your monopolistic worry flipped upside down.

Allowing manufacturers to sell direct to consumers would force dealerships to actually provide a desirable service above and beyond what a consumer would receive by going to Ford.com and ordering a Mustang. It would also force dealerships to compete for sales which would certainly lower prices.

Would this spell the end of new car dealerships? Probably, but the business will be replaced with something else. The majority of car buyers sell their old car at the time of purchasing the new car. Someone or some business is going to have to handle this transaction.


RE: lolwut?
By Spuke on 5/14/2013 4:09:52 PM , Rating: 2
quote:
Someone or some business is going to have to handle this transaction.
It's called Autotrader.


RE: lolwut?
By Reclaimer77 on 5/14/2013 7:56:42 PM , Rating: 2
Monopoly?

I don't think you're using the right word here. There aren't any monopolies in the car business.

Exclusivity yeah, monopolies no.


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