UPDATE: FTC Backs Up Tesla, Says States Shouldn’t Block Direct Auto Sales
April 25, 2014 3:34 PM
comment(s) - last by
FTC states that dealerships are scared of competition
It looks as though
and the auto company he helms, Tesla Motors, just gained a few new friends. In a new blog post, the Federal Trade Commission (FTC) came out with guns blasting against states that have rallied around automobile dealers in an effort to
prevent Tesla from directly selling vehicles to consumers
The blog was written by Andy Gavil, the FTC director for Office of Policy Planning, Debbie Feinstein, director of the Bureau of Competition, and Marty Gaynor, director of the Bureau of Economics.
The blog post pointed out that times are changing and it’s no longer the 1900s. The officials point to the fact that just as consumers used to buy directly from local stores only to then move to mail-in order catalogs and now internet shopping, that businesses must adapt to survive.
Tesla CEO Elon Musk and President Barack Obama
“For decades, local laws in many states have required consumers to purchase their cars solely from local, independent auto dealers,” noted the FTC officials. “Removing these regulatory impediments may be essential to allow consumers access to new ways of shopping that have become available in many other industries.”
“In this case and others, many state and local regulators have eliminated the direct purchasing option for consumers, by taking steps to protect existing middlemen from new competition. We believe this is bad policy for a number of reasons.”
The officials also pointed out that Tesla poses no serious threat to auto dealers seeing as how it
only managed to sell 22,000 cars
compared to the 15 million total sold in the U.S. in 2013.
Tesla Model S
More poignantly, the FTC officials asserted, “These protections expanded until in many states they included outright bans on the sale of new cars by anyone other than a dealer—specifically, an auto manufacturer. Instead of ‘protecting,’ these state laws became ‘protectionist,’ perpetuating one way of selling cars—the independent car dealer.”
In the end, the FTC officials warned that dealers (and their lobbyists) should welcome competition in the auto sales space, and should not keep barriers to competition as the status quo, stating, “Our point has not been that new methods of sale are necessarily superior to the traditional methods—just that the determination should be made through the competitive process.”
“We hope lawmakers will recognize efforts by auto dealers and others to bar new sources of competition for what they are—expressions of a lack of confidence in the competitive process that can only make consumers worse off.”
Updated 4/25/2014 @ 3:34pm
The National Dealers Association (NADA) has responded to the FTC officials
with the following statement
“For consumers buying a new car today, the fierce competition between local dealers in a given market drives down prices both in and across brands – while if a factory owned all of its stores it could set prices and buyers would lose virtually all bargaining power,” said Jonathan Collegio, NADA vice president of public affairs. “And buying a car isn’t like buying a pair of shoes online. Cars require licensing to operate, insurance and financing to take home, and contain hazardous materials, so states are fully within their rights to protect consumers by standardizing the way cars are sold.”
This article is over a month old, voting and posting comments is disabled
4/25/2014 6:23:12 PM
You aren't very familiar with dealerships then, they share the podium with ISPs for the most anti-competative practices out there.
In many parts of Texas for example all the dealerships with different names are all actually owned by the same parent company. The different names are a disguise to make it seem like there is competition. When in reality there is no such thing.
In larger metropolitan areas like Houston where there are potentially 3 auto groups with hundreds of dealerships, the relationship between the companies is much more akin to ISPs than to actual competing businesses. There is no actual competition going on.
When you work for a dealership selling cars, your only objective in selling cars is to "protect the cheese", or in layman's terms: Sell the car for as high a markup as you can maintain, selling the car at MSRP is not an option. Everything else like customer service is lipstick on a very ugly pig.
4/25/2014 7:14:38 PM
Great arguments. Because I'm sure companies using direct sales don't care about making a profit either. Hell they just can't wait to GIVE the cars away I bet!
4/26/2014 12:53:42 PM
How is it, that I can leave anantech for 6 months and Reclaimer is still trolling these boards with nonsense. Do you really not get how rich white guys have been influencing local policy for years.
"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive
As Sales Level in the U.S., Tesla Model S Charges Ahead in Europe, China
April 24, 2014, 9:58 AM
Texas Gov. Rick Perry Would Take Another Look at Anti-Direct Sales Rules for Tesla's $5B Gigafactory
March 24, 2014, 6:59 PM
Tesla CEO Elon Musk Attacks New Jersey Gov. After Direct Auto Sales Ban
March 17, 2014, 12:50 PM
Tesla’s Elon Musk Says that Fully Autonomous Vehicles Are Still at Least 5 Years Away
September 19, 2014, 9:48 AM
Quick Note: Kia Soul EV Priced from $33,700
September 11, 2014, 5:32 PM
Production Infiniti LE Electric Sedan Leaked in Patent Drawings
September 9, 2014, 10:32 AM
"Decepticon" Driver Triumphs Over Cops in Massachusetts Court
September 5, 2014, 12:07 PM
Tesla Motors Confirms Nevada Gigafactory Deal, Will Receive $1.25B in Tax Breaks
September 4, 2014, 8:24 PM
Mazda Unveils the 2016 MX-5 Miata, Drops 220 Pounds and 3" in Length
September 3, 2014, 8:59 PM
Most Popular Articles
HTC Preps Nexus 9 With Nvidia K1 64-Bit "Denver" SoC, Android L Onboard
September 10, 2014, 10:21 PM
Apple iPhone 6, iPhone 6 Plus Reviews Roll In
September 16, 2014, 9:13 PM
Dell Announces "World's Thinnest" Tablet: The Venue 8 7000 Series
September 11, 2014, 8:51 AM
Samsung Calls Out “Copycat” Apple for 5.5” iPhone 6 Plus in New Ads
September 14, 2014, 11:06 PM
Confirmed: Next Generation of Windows to Be Announced on September 30
September 15, 2014, 4:43 PM
Latest Blog Posts
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information