New Jersey Auto Dealers Don't Want to Face Tesla 342
cartechboy writes "It feels like this story is becoming repetitive: X state is trying to ban Tesla stores, or the ability for an automaker to sell directly to a consumer. Either way, it's all aimed at Tesla. Now it's New Jersey's turn as a hearing today could end up banning Tesla stores in the state. Naturally Tesla's displeased with this and is crying foul. A rule change that is expected to be approved today would require all new-car dealers to provide a franchise agreement in order to receive a license from the state. Obviously Tesla (the manufacturer) can't provide a franchise agreement to itself (the distributor). The proposed rule would also require dealers to maintain a 1,000 square foot facility, the ability to show two cars, and service customer cars on site. Tesla doesn't meet that last requirement at any of its galleries, and most of the Tesla stores are located in shopping malls which mean they are smaller than 1,000 square feet. Tesla's arguing the New Jersey Motor Vehicle Commission is overstepping its bounds. Will Tesla be able to defeat this new rule in New Jersey as it has overcome issues in many other states?" (Also covered by the Wall Street Journal.)
Feds... (Score:5, Insightful)
Many members of Congress own car dealerships (Score:5, Interesting)
Many members of Congress own car dealerships or are closely associated with those who do.
Being protected monopolies, they are very profitable.
Surely you've noticed that all the products of technology get cheaper every year except cars?
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Many auto manufacturers own members of Congress it seems. Tucker already tried busting into this business ages ago by out innovating the established companies and he got stepped on. I can't see Tesla succeeding here either. It'll be one rule or regulation after another until they are buried.
Re:Many members of Congress own car dealerships (Score:4, Interesting)
Surely you've noticed that all the products of technology get cheaper every year except cars?
After adjusting for inflation, a 1970 VW Beetle with optional AC is about the same price as a 2014 Nissan Versa or Chevy Spark (both come standard with AC).
That's 34 years of technology (including air bags, ABS brakes, and traction control) for almost exactly the same price as a 34 year old car.
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Translation:
Much like houses, cars have gotten fancier as opposed to cheaper. We could make a beetle analog with modern technology and have it be extremely cheap, but instead people have decided that they prefer buying more car.
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We could make a beetle analog with modern technology and have it be extremely cheap, but instead people have decided that they prefer buying more car.
Yes and no. I recently bought a new car after 15 years in my old one. I really like the tech. BUT, I'd also love the option of buying a 40 year old car (yes, I'm that old) at a 40 year old adjusted price. No more mandated safety and mileage features than were current then, bumper welded to the chassis like the '46 Dodge truck I drove around the country in the '70's, etc. I might not buy one now at this stage of life, but I wish my kids at least had the option.
And yes, before the flames start, I DO believe
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Re:Feds... (Score:5, Informative)
A company based in CA selling cars in NJ most certainly is interstate commerce.
Re:Feds... (Score:5, Funny)
Oh look another moron that doesn't understand what in there state commerce clause means.
Oh look another moron that doesn't understand the difference between their and there.
Re:Feds... (Score:4, Insightful)
I'm pretty sure he meant to say "the interstate" rather than "in their state." What on earth did you think he meant to say?
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You are arguing over the exact meaning of an AC's deranged ranting. Your username is oddly appropriate.
Re:Feds... (Score:5, Insightful)
Interstate commerce means any work involving or related to the movement of persons or things across state lines. If you make a car in CA and take it to NJ, that's clearly interstate commerce, and the Federal Government is granted constitutional authority to regulate it. Maybe you are confused about what it means?
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Is that what happens? Or do you order one online that is made in CA?
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AFAIK Tesla has show rooms that have an online kiosk that allows you to order the car online yourself. They don't do traditional auto dealer style business.
Re:Feds... (Score:5, Informative)
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They seem to be influential in most countries. The part I cannot fathom though is why?
A car dealer is nothing more than a middle-man/sales-man. This dealership is literally a gift of the car company, which can be revoked at nigh any time. His capital base is pretty small next to even a moderately sized small business, he's very sensitive to shocks, and if he's in the used business he's deeply mistrusted and unpopular.
So where is this influence coming from? The cars
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Foreign seller is a term usually misunderstood, in New Jersey, Tesla a car company incorperated in a state that is not New Jersey is a foreign corporation, wouldn't be surprised if Tesla was incorporated in Delaware. Foreign Corporations often have serious legal disavatages in a State's courtrooms so local legal representation is necessary.
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I think if they wanted something so specific they would have written it that way. But if they'd done that a state could make a loophole by requiring the foreign seller to sell through a local dealer who pays taxes to the state.
They were pretty specific about the whole thing. There are also notes from the debates during the convention when the clause was put into the document known as the Constitution, not to mention things like the Federalist Papers (and the Anti-Federalist Papers) where the merits of various parts of the Constitution were debated in terms of encouraging or discouraging people in various states to ratify the Constitution when it was going before each of the 13 original states.
A broad reading of this clause was n
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Teslas would cost too much if they were made in New Jersey. You think $108,000 is too much for a car? If they were made in NJ, expect them to cost at least $200k. California is a much cheaper place than NJ, as strange as that sounds.
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After reading this article, there can be little doubt as to why doing things in NJ is so expensive.
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Oh look, another idiot who knows his grammar as well as he knows the law.
For instance, Swift v. United States [wikipedia.org]
Even though the slaughterhouse supposedly only dealt with intrastate matters, the butchering of meat was merely a "station" along the way between cow and meat. Thus as it was part of the greater meat industry that was between the several states Congress can regulate it.
Seriously, if they keep pulling this shit enough until it eventually hits the Supreme Court, it could possibly be the end of the whole cushy dealer thing.
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I go to my local pharmacy to fill a prescription -- it is treated as interstate commerce for the purposes of legislation. How is it different?
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No, Tesla wants to open a showroom in New Jersey to show the cars. All Tesla cars are sold through their web site. I should know, I went through the process. The people at the showrooms do not make commissions. Their job is to show the car and answer questions. The only things they sell are things like accessories, shirts, hats, jackets, that sort of thing. They do arrange test drives however.
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The other automakers didn't like it either but they have too much invested and too much to lose.
Tesla is the only new major automaker in decades anyway, and therefore the only one without existing dealer relationships which would be at risk.
Who? (Score:2)
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Don't go there. It's not about politics it's about money. I'm as far right as anyone around but I can't see where it's any government's business to regulate to this level. The only possible purpose this law has is to squeeze one business out to protect the established ones. I'm tired of these so called "conservatives" pushing more government regulation. He's not conservative he's a monopolist.
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TIL that it's illegal to do something that the state hasn't made illegal yet.
Don't get it (Score:5, Insightful)
The right wing should be opposed on free-market principles. The left wing should be opposed on environmental grounds. So which politicians should be in favour of this regulation again?
Re:Don't get it (Score:5, Insightful)
The right wing should be opposed on free-market principles. The left wing should be opposed on environmental grounds. So which politicians should be in favour of this regulation again?
The pragmatists & cynics who need local, wealthy donors to bankroll their campaigns.
"Network" movie: the world is a business (Score:5, Interesting)
The right wing should be opposed on free-market principles. The left wing should be opposed on environmental grounds. So which politicians should be in favour of this regulation again?
The pragmatists & cynics who need local, wealthy donors to bankroll their campaigns.
From the movie:
There is no America. There is no democracy. There is only IBM, and ITT, and AT&T. And Dupont, Dow, Union Carbide, and Exxon. Those are the nations of the world today [in 1976]. What do you think the Russians talk about in their councils of state? Karl Marx? They get out their linear programming charts, statistical decision theories, minimax solutions, and compute the price-cost probabilities of their transactions and investments just like we do. We no longer live in a world of nations and ideologies Mr. Beale. The world is a college of corporations inextricably determined by the immutable by-laws of business. The world is a business Mr. Beale. It has been since man climbed out of the slime.
https://www.youtube.com/watch?v=zI5hrcwU7Dk&t=2m15s
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Please mod parent up! Network (1976) is a great commentary on Capitalism
Two other great clips:
"I'm as mad as hell and I'm not going to take it anymore!"
https://www.youtube.com/watch?... [youtube.com]
Network (1976) "Mind Control Speech"
https://www.youtube.com/watch?... [youtube.com]
Re:Don't get it (Score:5, Insightful)
Free market principles? How about plain old freedom?
How about the enlightenment principle that government can't simply make up whatever laws it wants. There is no such thing as liberty if a local dictator can tell you what lightbulb to make or how to sell cars.
Why not force the regular car dealers to also bundle horse buggy whips with all car purchases to protect the horse-buggy-whip establishment.
This is another uber ridesharing story with different players. North Korea only has one dictator at a time. In the US we have thousands, spread across 4+ levels of government.
Re:Don't get it (Score:4, Insightful)
Contrary to some economists' arguments, free market originated from freedom. We didn't become a capitalist country, because it was an efficient way to run economy. We've developed the free markets, because we were free — one's only obligations were those, that were spelled out in the contracts one entered into voluntarily (plus family relations and patriotism).
Sadly, those freedoms have been chipped at for over 100 years now... Today we must feed all the hungry (without subjecting them even to the "indignity" of the Pauper's Oath — forget about disenfranchising), we must pay for other people's education. And shelter. And healthcare. And telephone service...
Freedom, you say?..
Re:Don't get it (Score:4, Interesting)
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So which politicians should be in favour of this regulation again?
The ones in favor of requiring that drivers move towards the left lane when passing roadside maintenance vehicles. From one of the links:
However, instead of putting the language on the Senate floor as a standalone bill, the ban was inserted as an amendment to Senate Bill 137--an unrelated bill that required Ohio drivers to move to the left while passing roadside maintenance vehicles.
Sleazy politics at play. Either they're vilified for hampering Tesla or they're vilified for being against safety measures. These shouldn't be an either/or, but the auto dealerships have made it one.
Re:Don't get it (Score:5, Insightful)
Stop with the hyperbole (Score:2)
Common mistake. You have been used to the "truth in labeling law" "truth in advertising law" etc for so long, you have assumed it applies to everyone. Sorry my dear friend, the politicians are exempted from those laws. They can label themselves "free market loving libertarian right wingers" or "mother earth worshiping tree hugging beer-can-recycling post-cosumer-waste-reconsuming environment loving left wingers". But there is absolutely no guarantee the politician you find under those labels are truly what the label says.
That's because you're making two straw men and knocking them down. I guarantee you that folks like Alan Greyson on the left and Rand Paul on the right would support Tesla here and they're not the most extreme on either end - however, we're talking about super-corrupt NJ who still think bridgegate-Christie is a decent governor. You know, the one that gave out pieces of the 9/11 wreckage as political gifts to crony mayors (both Dem and GOP)?
Yeah, that's one corrupt state. I'm certainly not surprised they'd
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Boy (Score:3)
Sure would be great if I can make a law that bans competition from out of country, out of state, or whomever I do not want to compete with me when I negotiate a contract job.
What I could charge? The sky would be the limit.
Of course that is evil damn socialism for me and we can't have that now can we? But if some businesses or corporations do the same thing. Then it is for the good of the economy and ok etc.
hehe (Score:5, Insightful)
Since we are constantly regaled how awful the Tesla is. - They all burn up, they are stupid, They are too expensive, I can't drive the Trans American Highway in one, electric cars suck - why don't we just let the free market do what it always does, eliminates bad products.
I'm pretty sure at other times, car dealership owners are all about the free market, competition, and the heartbeat of America.
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- why don't we just let the free market do what it always does, eliminates bad products.
Yeah, that really worked well with Microsoft.
Violates the ZOI Rule (Score:4, Interesting)
The number two is ridiculous [wikipedia.org] and can't exist.
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Why can't they make an independent dealer company? (Score:4, Interesting)
The solution is to bitch publicly like this for now, but the reality is they need a workaround. They need to set up a separate company much like Coke had a separate bottler. Have them do local service and be the jiffy lube of Tesla and join/kiss ass of all these regional moderately powerful/rich douche bags.
Re:Why can't they make an independent dealer compa (Score:5, Informative)
Laws in Texas for example:
http://www.statutes.legis.state.tx.us/Docs/OC/htm/OC.2301.htm#2301.4671
(c) Except as provided by this section, a manufacturer or distributor may not directly or indirectly:
(1) own an interest in a franchised or nonfranchised dealer or dealership;
(2) operate or control a franchised or nonfranchised dealer or dealership; or
(3) act in the capacity of a franchised or nonfranchised dealer.
it's not the Tesla (Score:2)
Rename it .... (Score:5, Funny)
Because so many states are disallowed.
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Because so many states are disallowed.
Partner with Koingesseggessegesgeg... Because eventually they'll have to fill out a form to block them and no-one will be able to spell it.
bridge (Score:4, Funny)
Why can't the Governor of New Jersey act as a bridge between the two parties?
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ZING!
Way to go, lawmakers. (Score:2)
So what? (Score:3)
Re:So what? (Score:5, Insightful)
Since when does the quality of customer service become the purview of law? There are no dishonest dealings going on. Customers enter into these purchases fully aware of the requirements of ownership. No one expects Walmart to provide a service center for the electronics they sell, nor a seamstress for their clothing.
This is protectionism and corrupt politics as can only be done at the local level pure and simple.
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It's a little more complex than that.
The Auto sales industry has a long long history of abuses, so some regulation came about because of those abuses.
Although, if Tesla will come to your door and pick it up, then this isn't an issue.
People's Republic of New Jersey Strikes Again (Score:2)
NJ has demonstrated time and again that corrupt politics rule the day. The state car dealer association controls a substantial amount of kickba...er...political contribution budget.
Hopefully, Tesla doesn't knuckle under and just encourages NJ purchasers to head over to NY or PA and buy their cars there.
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--You may have something there. If politicians can show "attack ads" during elections, Tesla should be able to air commercials detailing EXACTLY what is going on - and encourage people to buy their cars in !Jersey. More than one way to skin a cat, so to speak.
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Companies do not like change and competition.
Once a company gets large enough, they hate the free market, and will do anything to destroy it.
That's the problem now. The biggest proponents of the free market are also the biggest proponents of the industries that want it destroyed.
Mischaracterization (Score:5, Interesting)
This is a complete mischaracterization of what's going on. It's not that they don't want to compete with Tesla, it's that they want a cut. Right now, it's illegal for automakers to own car dealerships in most states, because when cars were in early adoption the state government didn't want to allow a situation where a car manufacturer pulled out of a state completely because it was unprofitable, leaving the citizens of that state unable to buy cars easily. So dealerships are independent from the manufacturers. Tesla is bypassing this 100 year old, out of date system, because it no longer makes sense, but the dealers aren't afraid of electric cars, they just want to make Tesla "play by the rules" and let the dealers sell (or not) the Tesla cars, so that they an make a profit off them like they do every other car manufacturer.
Re:Mischaracterization (Score:5, Interesting)
This is a complete mischaracterization of what's going on. It's not that they don't want to compete with Tesla, it's that they want a cut. Right now, it's illegal for automakers to own car dealerships in most states, because when cars were in early adoption the state government didn't want to allow a situation where a car manufacturer pulled out of a state completely because it was unprofitable, leaving the citizens of that state unable to buy cars easily. So dealerships are independent from the manufacturers. Tesla is bypassing this 100 year old, out of date system, because it no longer makes sense, but the dealers aren't afraid of electric cars, they just want to make Tesla "play by the rules" and let the dealers sell (or not) the Tesla cars, so that they an make a profit off them like they do every other car manufacturer.
If you follow the logic a bit further, what the dealers are truly afraid of is that if Tesla gets an exception, the other manufacturers will also want the same exception. Once Manufacturer's own showrooms and sell online they will be able to undercut dealerships, putting them out of business. Either they stand up for the current rules that created their business market or it dies.
Comment removed (Score:5, Interesting)
What's the problem? (Score:2)
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"Are the dealers afraid that the majors are going to copy Tesla's model and cut them out of the business?"
Yes, precisely. Just as Amazon reduced the number of bookstores by a pretty wide margin. Dealerships suck up a lot of the profit, GM could sell direct for a lot less than current prices *and* make more $$.
The "term of art" for this is disintermediation. And the dealers are well advised to fear it. But its unclear to me why in the world government should protect them from it. Customers outnumber dealers
Tesla is making everybody else look bad (Score:5, Insightful)
The real story here is Tesla success is making everybody else look bad.
They are a threat to much more than the car dealers. They are a threat to the innovate at a snails pace mantra of Detroit. They are a threat to big oil companies. Electricity is about 1/4 the cost of gasoline mile per mile (even comparing a Model S with a Prius, even considering the Model S is a large premium sedan, versus the Prius being a mid size). And they got this far in less than two years of Model S sales. Give them another 5 years and the auto industry will be undergoing an earthquake of innovation with Tesla at the forefront and few companies with enough agility to try to follow.
It won't take long until a few of those state representatives don't get re-elected for their Tesla actions.
Tesla adoption is spreading like wildfire. If Tesla had twice the li-ion battery supply, they would be delivering twice as much.
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Stupid, yes.
How much of an obstacle?
The most difficult requirement is the franchise agreement. Maybe if Tesla split itself in to 2 companies, one for manufacturing, the other for retail and service operations, they could satisfy this requirement.
A 1000 sq ft "show room" in a mall is possible. Every Apple store I have been in has had at least 1000 sq ft of sales floor, plus back room space.
On site servicing could be possible depending on how strict the definition of "on site" is. Example, when Circuit City s
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Great except that I doubt you would be able to find any mainstream (read: affordable to normal people) car that isn't sold by at least one dealer who is anti-Tesla. (whether in New Jersey or Texas or Ohio or elsewhere)
Car manfacturers are are Tesla's side, quietly (Score:2)
The car manufacturers are at the mercy of the dealers and dealer associations. In their heart of hearts, some would like to pursue Tesla's strategy or at least compete with the dealers.
You can punish the manufacturers but they can't do anything back.
Vehicle dealers and real estate developers are reliable large contributors to local politicians.
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So then - when everyone does that - the car companies will have to be bailed out again?
Re:Why dealerships get a free ride (Score:5, Insightful)
You're making it more complex than it is.
You can get parts for anything and still get it fixed. If there is a market. You have no point.
There are no laws that require dealers to stock 20 years old parts. You have no point.
Tesla doesn't ban service on their cars. You have no point.
If many Teslas are sold, there will be a market for parts. You have no point.
If you buy a Tesla and there are a million of those Teslas sold, you will be able to get service. Even if it's not from Tesla. You have no point.
Now yes (Score:2)
I don't trust Tesla not to drop me like a rock when it's no longer profitable to support me...
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Yes, dealers are one channel for authentic parts, but it's the manufacturer that's required to make them (the people who sold you the car aren't building parts in their back lots); lots of places would be willing to sell them (because selling parts and repairing vehicles is obviously profitable). And even with dealers and 1st party hardware, 3rd party produced parts are extremely common - right now - easy to get, and usually cheaper.
Your theoretical problem has proven not to be one in reality.
In reality, t
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but the dealers run the parts network
Because, thanks to laws like this one, it's illegal for the manufacturer to run the parts network.
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Yes, quite true. I'll just run down the road to my local (California) MG dealer to get parts for my '71 MG...... Oh wait!
Guess what, parts for my MG usually cost less than than equivalent parts on new cars.
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Yes, I can come up with a thousand free market answers. And yes, that pretty much answers your question.
Would you buy a vehicle from any company whatsoever if you knew that parts were difficult to acquire? A manufacturer can play a game with parts availability only if they don't plan to stay in business.
Maybe we should go back to renting our phones from ATT as well.
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In the "old" days (way back in the 60's and early 70's), your phone bill came with an extra charge that was MANDATORY called "phone rental." You were required to pay for renting the actual phone that sat in your house. You were barred from using any phone that was not provided by the phone company. There were lawsuits, and it was eventually ruled that a common carrier could not tether their service to rental of equipment that only they were all
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Gouged in ways you can't imagine?
Try this one on for size. I drive a 2003 Acura TL. Several years ago, one of the headlights failed. I took it to a shop where I was told that it needed $700 worth of electrical parts from the factory. Not knowing better, I paid the bill.
Last year, I had the exact same problem with the other headlight, only now, I'm being told that it will cost over $1000. I finally did the right thing and asked for help online. I was directed to a company that had after-market parts dr
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I find it hard to believe that dealers are stocking parts for every single model and year ever made. Can you really walk into a dealer and pick up a part for a '94 Honda right now?
I have an 07 and have been told "X is broke. We need to get you a new one and it's going to take us Y time." Fortunately most parts are standard so you don't need to special order an oil filter. Things like oil filters, control arm brackets, and hoses don't exactly change much year over year.
There are also a number of shops an
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If we remove the dealer who is going to stock parts, deliver them, and install them?
The Tesla service center. Owned and operated by the manufacturer but not necessarily co-located with the sales showroom.
There are federal regulations mandating service and spare parts availability. I see no problem with Tesla (or any other manufacturer or dealer) devising alternate support infrastructures for their products. So long as they meet the needs of the customer.
Tesla might actually provide better service than the average dealer. I bought a Toyota years ago from a dealer some distance from my re
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So the only reason for dealers to exist is to replicate the functions of an auto parts store and UPS? And that's why Tesla can't sell cars to people? That's absurd.
My buddy had to get his '95 Honda Accord repaired recently. The process for that (admittedly in Canada) was, take car to mechanic, mechanic orders parts online, parts are shipped to mechanic, mechanic installs parts. What exactly is the huge problem with that process that justifies making selling cars illegal?
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I'm sure you can come up with a thousand free market answers
So why did you post? There are tens of thousands of free market answers - businesses of all sorts to provide the parts or the repair service.
This isn't the first time that someone has defended a rent-seeking activity on the shady grounds that a widely available service market might not exist otherwise. I suspect most of these laws date from the last time this was tried wholesale in the US, during the Great Depression. I believe such things were a large part of why the Great Depression was so severe and l
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Anyone who does their own work on their car generally acknowledges dealerships as a complete ripoff and somewhere no one who cares at all about their wallet should ever step foot in (besides, I guess, to buy a car). The colloquialism on car forums is "stealership."
NAPA, AutoZone, Advance Auto Parts, O'Reilly, etc etc provide a distribution network for parts. In fact, for an older car, you are generally more likely to find the part in stock at your local autozone than your local dealership parts counter. And
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Dealers stock parts and provide a distribution network for said parts. This is why my '94 Honda Accord still runs
As someone who has spent quite a bit of time keeping older cars on the road, I feel compelled to ask: what [jcwhitney.com] in [autopartswarehouse.com] the [autozone.com] WORLD [napaonline.com] are you talking about?
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Um? An auto parts supply company? The distributors of the manufacturer?
| I'm sure you can come up with a thousand free market answers, but the fact is running that sort of business is _expensive_. Most of the obvious solutions become races to the bottom. Eventually either you stop getting parts and service for cars after 5 years or your start getting gouged in ways you can only imagine.
How would the economic incentives be
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thought I'd chime in on why dealerships are getting a free ride before the thread is choked with constitutionalists :P.
If we remove the dealer who is going to stock parts, deliver them, and install them?
I didn't see the story where Tesla is trying to make dealerships illegal.
Don't forget that a internal combustion engine business has to stock one each shitload more parts than a company making a total EV.
This is simply a fear based anti-competitive move. Dealerships are afraid that Tesla will come along and start eating their lunch.
But isn't that silly? the Anti Tesla/anti Electric Vehicle crowd have been in here lecturing us for a long time as to just how awful the Tesla is. I ran down it's huge num
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I guess you didn't flee here to Texas which already had the laws on the books prohibiting Tesla's sales model. The northern states have nothing on the South as far as businesses buying off the legislature to their benefit. Except that in the South it is actively encouraged as "Pro-Business"!
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Oh I don't know...
It is like square footage limitations on retail spaces in Germany that made bigger grocery stores uncompetitive.
It is like rules on work hours that mean you can't buy anything at a grocery store on Sunday in France.
Re:I don't get it. (Score:4, Insightful)
Or you know, you could look at what Tesla actually does...
It's a combination of the fact that Teslas require only a minute fraction of the service of a normal internal combustion engine car, and that Tesla already provides better service than any dealership in existence. They have service centres all over the place (who cares if it's in the same place as the store if it's no further away) and you don't even have to go to the service centre because they will either send a mechanic to your doorstep, or pick up the car from your home or office for you (and replace it with a loaner if service will take longer than you can wait)
So why would I want to force their stores (best located in high foot traffic areas like malls) to be co-located with their service centres (best located in low rent areas like industrial parks) when it doesn't do anything to help me as a consumer? The only thing that it would do is either increase costs (paid in the end by the consumer) or decrease convenience (again at the expense of the consumer)
This law doesn't look at what the most advantageous model is for the consumer, it looks at what the existing business model is of the dealerships and forces everyone in to that mould effectively prohibiting any improvement to it.