FTC Comes Out Swinging in Defense of Tesla Motors; Singles Out Missouri, New Jersey
May 20, 2014 9:00 AM
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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
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.
Federal Trade Commission
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RE: to the NADA, Thanks but no thanks
5/21/2014 12:22:56 AM
You're very lucky to have never purchased a car from a dealer, because that is hands down the
part of buying a car.
There is only one dealer sales department that comes to mind that I've ever had a good experience with. The dealership owner was also a military man and made a point to hire veterans over civilians, I liked that. I continued to bring my car back there for years (it was a Ford dealer) for service and being an ex-Ford engineer (something only the parts guys knew) they were completely honest again and again.
It was actually hard not to buy another Ford because of my experience with them. I now drive a Mazda, which will probably be for a very short time, because the dealer network is as shady as it gets. One dealer told me I will
void my warranty
putting a seasonal winter set of tires and wheels on my CX-5 because it "wasn't made for them" and another dealer has tried to correct my alignment, per a service bulletin, 3 times. The dealer I bought the car from is unfortunately the shadiest of them all (which is why I go to the other two shady dealers) especially after ejecting me from the showroom after presenting a discrepancy in the financing they finally had to own up to after I hired a lawyer. After a BBB complaint and small claims battle, they were forced to credit my Chase loan and pay all legal fees. Unfortunately they may have a decent service department, but I will never set foot back there.
In nearly all circumstances, I think most people would agree dealers make purchasing, owning, and maintaining a vehicle more stressful. All they are good for is recall repairs, something Tesla, so far, hasn't had to bother themselves with since other than the under-armor plate upgrade that can be installed at the request of the owner, and some camber issues with front tire wear, their vehicles have been nearly flawless.
“We do believe we have a moral responsibility to keep porn off the iPhone.” -- Steve Jobs
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