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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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This article is over a month old, voting and posting comments is disabled

By Solandri on 5/20/2014 11:56:50 AM , Rating: 5
The point is, the argument between you two can't be settled in a web forum. It's pointless to even be having this argument in text postings because it can't settle the matter.

Just allow dealerships and direct sales to customers. Let people buy from whichever one they decide they like better. That will settle the issue once and for all.

I suspect the direct sales model will be better for consumers because dealerships are seeking to outlaw it. If dealerships were truly better, the NADA wouldn't be trying to prohibit direct sales. They'd be saying, "Pshaw, allow direct sales if you want. It will fail in the market because dealerships are better. Bring it on!"

The only reason dealerships were mandated in the first place was because automakers, by virtue of having a monopoly on their products, could effectively outlaw dealerships without any consumer input. A law meant to prevent one extreme, is now being used to enforce the opposite extreme.


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