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The FTC takes another stand against "harmful" laws forbidding direct-to-consumer auto sales

It looks as though Tesla Motors has some friends in high places. Just last month, three Federal Trade Commission (FTC) directors wrote a blog post in which they blasted states that have implemented laws to forbid Tesla from selling cars directly to the public.
“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,” wrote the directors in April. “We believe this is bad policy.”
Now the FTC staff has issued a press release that singles out Missouri and New Jersey for their bans on direct-to-consumers auto sales bans. The FTC’s Office of Policy Planning, Bureau of Competition, and Bureau of Economics note that both states “operate as a special protection for [independent motor vehicle dealers] – a protection that is likely harming both competition and consumers.”
The FTC singles out the abuse of Tesla in particular, stating:
The prohibitions on direct sales in Missouri and New Jersey particularly affect Tesla Motors, a relatively new entrant in the auto market that has been prevented from selling directly to consumers, the staff comment states. But their effects are likely more far-reaching.
The FTC goes on to conclude that the legislatures for the states of Missouri and New Jersey should “permit manufacturers and consumers to reengage the normal competitive process that prevails in most other industries.”

We have the feeling that National Auto Dealers Association (NADA) won’t take too kindly to the strong wording from the FTC. When the FTC’s pro-Tesla blog was posted last month, the NADA responded by claiming that “the fierce competition between local dealers in a given market drives down prices both in and across brands” and that “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.”
The NADA, which represents nearly 16,000 auto dealerships and 32,000 franchise locations, will likely also respond to the latest comments from the FTC, and we will provide you with an update once a statement is provided.

Source: Federal Trade Commission

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FTC defends Tesla sales model
By RobertFahey on 5/20/2014 10:00:06 AM , Rating: 2
The consumer angle is nonsense. The real reason dealers are afraid of Tesla's business model is the fact that only 15 years ago, Ford and GM tried to muscle in on dealer turf and sell cars themselves. It didn't work out, but that kind of thing leaves lasting jitters!

RE: FTC defends Tesla sales model
By Azethoth on 5/20/2014 10:28:24 PM , Rating: 2
Good link. Ok, so the dealer overhead is 24% of the cost of the car. I would like to see Tesla being able to chop that down by running their own dealerships in whatever way they see fit.

Even if they drop it down to 14%, keep 5% and I get 5% that's a win for me and every other Tesla buyer. If they keep it all, I still do not care, it makes them able to survive downturns better than competitors. If it removes the overcharging for repairs incentive, or just making up fake ailments for the car part, I win.

I really do not care about dealerships. I just know too many that commit actual fraud. I mean, I actually know of one that got busted by the FBI because a family member complained about billing irregularities which lead to their insurance fraud ring getting discovered.

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