Print 32 comment(s) - last by mars2k.. on May 26 at 3:27 PM

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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RE: to the NADA, Thanks but no thanks
By Reclaimer77 on 5/20/2014 3:14:44 PM , Rating: 0
Permitting direct sales would put Ford in the position of competing on both product and services directly against GM, Chrysler, Toyota and others, with much stricter control of the end to end experience. A crappy experience could not be written off to the 'dealer' but instead would be a black mark against the automaker itself. That's huge.

That's irrelevant, because the average American probably has no idea what the NADA actually is, or what they do. When they walk into a Ford "dealership", they assume it's ran and managed by Ford or that Ford has a large part in their day to day operations.

As I, and many others I know always say, the worst part of buying a car is the dealer.

I agree. AGAIN, I'm not arguing against that. But that doesn't mean the experience is going to be any better with the direct sales model.

RE: to the NADA, Thanks but no thanks
By Reflex on 5/20/2014 4:32:49 PM , Rating: 2
I do not know anyone who assumes when they buy a Ford it is from Ford directly. Honestly, who believes that? And how are they not confused as hell when their Ford dealer also sells another major brand alongside Ford like some of the mixed dealers I've seen selling new cars from multiple majors on the same lot?

That assertion really makes no sense at all, sorry. I am pretty certain most people know when they go to a dealer they are buying from the dealer, not the OEM.

RE: to the NADA, Thanks but no thanks
By Reclaimer77 on 5/20/14, Rating: -1
RE: to the NADA, Thanks but no thanks
By Reflex on 5/20/2014 5:58:16 PM , Rating: 5
Huh? I don't know how informed you have to be to read the sign out front that says "Lithia Chrysler-Jeep-Dodge" with the sign right next to it that says "Lithia Nissan".

Seriously, in your world does everyone have an IQ of 80 or is it just you?

By maugrimtr on 5/21/2014 8:50:33 AM , Rating: 2
Why is this even an argument?

In order for dealers to make profits, they need to buy cars at cost, and sell them to consumers with a mark up, i.e. dealerships make cars more expensive. This is basic economics.

Dealerships also homogenize cars. If a dealership is selling >1 brands then, all other things being equal, they have no motivation to promote one over the other.

If you eliminate dealerships, then the market is suddenly open. Manufacturers will have to compete for business, standardised fixed pricing on a national basis will become normal, consumer guesswork will be eliminated, and basically this makes competition far more likely since every consumer can quickly assess the standard fixed prices and compare them across all manufacturers.

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