NADA Is Terrified of Tesla 455
cartechboy writes It's no secret that the National Automobile Dealers Association has been trying to block Tesla from selling cars directly from consumers, but to date, it has been defeated countless times in many states. Now NADA put out a release and promotional video touting the benefits of dealer franchises, something Tesla has shunned. NADA mentions price competition, consumer safety, local economic benefits, and added value.
Speculation... (Score:5, Insightful)
While possibly true, it's complete speculation to tie this to Tesla.
But hey, Tesla gets page views.
We should have a choice (Score:4, Insightful)
There will always be a need for car dealerships, but there is no good reason to ban direct sales. This is pure rent-seeking behavior. The dealerships should position themselves as Tesla's partners in buying/selling used Teslas and in repairs.
Change is coming for car dealers (Score:5, Insightful)
So the dealers have alot of money, alot of friends and will do what they can to gum up the works for (or kill) Tesla and what it represents if they can. JMHO...
Re:Could the Tesla circle jerk be any more open? (Score:4, Insightful)
Re:We should have a choice (Score:5, Insightful)
"There will always be a need for car dealerships,..."
Yes, because we just love to give cuts to as many people as possible for our purchases.
I remember fondly the days when we couldn't buy computers, hairdryers, video recorders and even luggage containers in a supermarket, because those needed 'special' vendors with 'secret' knowledge.
Re:Speculation... (Score:5, Insightful)
How is it not tied to Tesla? All cars in the US are sold at dealerships, well at least all cars you don't put together yourself that you order from the back of a magazine. Tesla rolls in recently and is the ONLY one not using dealerships. Why would the NADA have to start pimping themselves if people never had an option not to use a dealer? Car dealers are SCUM. They are leaches. Their goal is nothing but to separate you from as much money as they can. Remember that the next time you are sitting at a salesmans desk that is out in the open on the sales floor with a lot of hustle and bustle around, people walking by and they are playing music over the speakers in the showroom relatively loud. There is a reason they do those two things and its not for your benefit. Ask them why that ONE car stock number 7782 that was advertised for 12,888 is not in stock and why the advertised price on another car is $15,800 but that assumes every rebate that you cant possibly get and $5000 down and then another $1000 for a doc fee plus a delivery change of $781. It's not 15,800. Why not just advertise it on your site or the paper for $1000 and add a $18,000 deliver charge? What's the difference? Again they are SCUM. People only kind of like dealers that only do most of those things, it is relative. That is sad. If you like a dealer, it is because you got ripped off and you didn't even know it.
Helping the local jobs and economy argument is bullshit. If that was the case, let's create dealerships for everything and we will all be rich, all have jobs, and be debt free. Same as the RIAA/MPAA arguments. Money does not grow on trees and people do not have a limitless supply. People would spend the money they spent at a dealer somewhere else, possibly at another local store with local employees. Cars still need to be repaired and parts bought for them, that will still happen with or without a dealership.
forewarned is forearmed (Score:4, Insightful)
But everyone knows what that conveys, even the dealers themselves:
Of course, this divides ranks with the dealership community itself, as the old guys close to retirement are going to continuing milking their cash cow by any means available, as the younger guys start to worry about their long term futures when the backlash strikes, which the old guys are doing nothing whatsoever to abate sooner rather than later.
They say that society is "only" three square meals from anarchy. That's a lot, actually. I estimate that the fraternal order of the car dealership is only two snifters of brandy and one Cuban cigar's worth of suggested forbearance away from king-sized flop house crossfire.
Re:Broken window fallacy (Score:4, Insightful)
"Local dealers will be there for consumers in good times and bad."
Yep, I bought a car 6 years ago from a dealer. They closed down 5 years ago as soon as the "GFC" hit.
I probably would have been a little sad, except they were ass holes to me as soon as I drove it off the lot.
Re:Its the margins they are scared of losing. (Score:5, Insightful)
They'd Apple it up and charge comparatively more, while keeping all the profits to themselves.
Good. Tesla spends far more than most companies on R&D, and healthy profits will allow them to continue doing that.
Re:Speculation... (Score:5, Insightful)
Tesla's 3rd generation car is supposed to be a mass market vehicle that may disrupt the "automotive order" if Musk manages to build it. The giga battery factory he is looking for a home for is a critical component since it is critical to have enough affordable batteries for a mass market electric car.
Tesla today wont disrupt NADA, but Tesla in a few years very well may, they know it, so they are trying to nip it in the bud.
Re:Speculation... (Score:5, Insightful)
Barring a radical overthrow of the automotive order, Tesla isn't personally going to terminate dealerships; but if their model holds up, persuades lawmakers, survives in court in more hostile states, etc. it can be copied pretty much verbatim by any manufacturer that cares to.
In fact, the ones that they fear is not tesla, but China. If Tesla opens the door this way, then the Chinese companies will come to America in exactly the same fashion.
Re:Speculation... (Score:5, Insightful)
Indeed, I moderately dislike Tesla generally and Elon Musk specifically, and I'm neutral on both electric cars and luxury cars. Nevertheless, I'm cheering myself hoarse for Tesla in this fight. I'd cheer equally for just about anyone who would make a similar effort to reduce the amount of sliminess involved in car purchases.
Re:My Anecdotal Evidence (Score:5, Insightful)
You are looking at this from the wrong point of view. The way you should be looking at is, if you ALSO had the option of calling up Ford or GM or whoever your car maker was directly, and asking THEM if they could beat the dealer's price, could they? Of course they could, they make the damn car.
The idea that dealers create pricing competition for cars is total baloney because dealers don't make cars in the first place, they just mark them up and sell them. Ford competes with Honda and GM, they don't compete with Honda dealers and GM dealers. The thing that keeps the features and functions progressing for Ford while keeping costs low is not their dealer network, it is competition from other auto makers. The only competition dealers are having is who can mark up your car the least.
Re:We should have a choice (Score:5, Insightful)
They are only crying because this a market they don't have cornered.
Actual competition is terrifying to "free market capitalists".
No it's not. It's terrifying to cronies who use crony capitalism to keep a grip on their markets through government "regulation".
Re:My Anecdotal Evidence (Score:5, Insightful)
'Everyone' hates the car dealership, and I do too. But, in my recent, personal experience, they have provided me the benefit of price competition. I needed to lease a car and found the lowest price I could find. I then simply called the 'Internet Department' at each of the local dealerships for this particular model, and just asked if they could beat that price. One guy said he could, and I went to him. I don't know if this is possible with purchasing a Tesla. Can different dealerships set their own prices, or, since the dealership is the manufacturer, is the price the same across any 'dealership' within a given geographical area?
The problem is, all the different prices you got were different amounts of markup from the manufacturer's price. You settled for the least amount of markup you could find. I suspect that all of them would be more expensive than buying directly from the manufacturer, which in the case of Tesla, you essentially are.
It only seems like a good deal in comparison to worse deals, not because it's actually a good deal.
"You paid WHAT!!" "But it's ok honey, it was 50% off! Think of the money we saved!"
manucturer dealers could be worse (Score:5, Insightful)
Most things are not sold directly by the manufacturer but by retailers. The variety of things that can be bought is too large to have a seperate store for each manufacturer out there, its nice to have product catagories in one place. With smaller objects of lower value, it seems this is strongly preferred. Cars are a very large, expensive item so there is more of a tendancy to have stores that specialize in just them. This sort of reduces the natural retailer/manufacturer seperation.
The fact is dealers do provide added value, however. The value comes from of course, the lot, of being able to actually see a car before you buy it. The cost of running this will be there whether the manufacturer runs the lot, or whether an independent dealer does. The market does operate to regulate prices for dealers, since its a part of the car price, it can be argued that having independent dealers may give people more choice regarding who has a more efficient lot operation.
Many aspects of the dealership people find unpleasant will still be there with a manufacturer run dealership. One of them is the credit checks for the loans. Bargaining is not necessarily exclusive to independent dealers but could also occur at a manufacturer dealer. A lot of the qualities of the independent dealer will still be there with a manufacturer dealer, therefore. Since you have no choice of dealers to work with, it could even be worse.
Maybe people should have the option of a direct buy from a manufacturer, but, a manufacturer locking out independant dealers from providing an alternative is also not a great idea. The vertical integration could be anti-competive and lead to overly monopolistic qualities.
Re:Speculation... (Score:5, Insightful)
I have heard Elon Musk speak on this. His basic proposition is that he has never had a positive dealership experience and he has rarely met anyone that has had a positive dealership experience.
It is a fairly compelling argument.
Re:Speculation... (Score:3, Insightful)
Never buy from a man in a suit. A large portion of what you are paying for is the suit.
Re:Speculation... (Score:4, Insightful)
Look.
Go to the "internet fleet sales" and get a bid from your local dealers.
For example, I got 19500, 20000, 22000, and 23500.
I went in, did the car deal in 2 hours and I was done.
Could I have gotten the car deal for 19200? Sure. I have a friend who REVELS in doing this. He will spend 3 to 4 hours negotiating with the salesman and then the manager. They think they have him trapped in a room with them-- but actually he has THEM trapped in a room with him. After four hours, he'll still negotiate over the last 12 to 17 bucks. And usually win.
Dealers serve a purpose. They need a reasonable profit.
If you seriously want to buy a car amazon style and not get the support of a dealer then more power to you. You may be like my friend (only in a different way).
Car dealers are just people and they need to earn a living too. And most car sales people earn average or slightly above average incomes.
But seriously "Internet sales" for the win. Get a bid, no negotiating. You walk in and THAT'S the price you will get. No ripoffs... no talking to the manager.
Re:Speculation... (Score:5, Insightful)
Nobody is saying that there can't be franchised dealerships. If that is the way a company wants to organize its distribution chain, fine..
The issue is that car dealers, slimebags that they are, are trying to use the legal system to force all businesses, whether they want to organize that way or not, to follow that model.
The reason for this is quite clear (at least to me it is), and it has nothing, absolutely nothing to do with any altruistic purpose (keeping costs down, protecting the customer, or some such bullshit). Its all about using the force of government to protect their racket. They realize, quite accurately, that Tesla's model would threaten to remove a lot of the zero-value-add profit that gets extracted by the dealer from the consumer.
It's not a hard point to understand, unless you are determined not to understand it.
Re:Speculation... (Score:4, Insightful)
Their purpose is to earn a reasonable profit, for any definition of "reasonable" that translates to "as much as I can get away with".
This is capitalistic economics: "What the market will bear".
Re:Speculation... (Score:5, Insightful)
Firstly, I don't think car dealerships should be legally protected. So we are in agreement on this point.
However....
Best Buy should have been perfectly able to function in a mixed market. But instead people use them as a show room- look at the products, and then buy online.
The second is probably a better model. Customers test drive and look at the cars at a dealership and then buy them from the non-dealerships. And then probably try to get support from the dealerships.
The same thing is true for crafting and several other fields. The biggest thing we lose is customer service. Man- you look at the shows from the 50's and customer service levels were 10x what they are now. Department stores literally had an employee at every counter.
By squeezing out the profits- we lose customer service and employment opportunities. It's like the reverse of a virtuous cycle. The end is everything automated and online with very few humans. I don't see what's going to stop it.