'Tesla was not at the Detroit auto show> can't sell in MI'
http://www.mlive.com/auto/index.ssf/2016/01/7_reasons_tesla_says_it_cant_s.html 7 reasons Tesla says it can't sell through traditional car dealerships January 19, 2016 David Muller [video flash] DETROIT, MI – Tesla Motors' general counsel Todd Maron was on Capitol Hill Tuesday for a panel on motor vehicle distribution for the Federal Trade Commission. Much has been made of whether Tesla should be allowed to sell its cars directly to consumers, as it does out store fronts - typically in shopping malls - in 30 U.S states, not including Michigan. Legislation signed by Gov. Rick Snyder in October 2014 strengthened an already existing ban on the direct sales of automobiles in the state. Advocates for the traditional structure said that traditional franchise model keeps costs low for consumers (more on that below), though several speakers on the panel Tuesday said the argument lacked economic logic. Regardless, Maron gave seven reasons why Tesla does not want to sell in a traditional dealership franchise model in the first place: 1. Traditional dealerships are in large, out-of-the-way locations. Maron said Tesla prefers to be in areas with high foot-traffic, such as shopping malls. He said this follows the strategy of any company bringing a new technology to market, and one that consumers may not understand. "You've got to make it convenient for people," he said. 2. Inventory For automakers with a large inventory, it makes sense for dealerships to handle the product. But Tesla's cars are typically built once a customer orders them, so it makes no sense to have franchised dealership with product that does not yet exist, Maron said. 3. The dealer model is based on high sales and a fast pace Maron said that with the dealership model customers typically come to the car lot knowing what they want to buy. He said the model incentivizes sales people to close a deal, and the longer that takes, the worse it is for the salesperson and the dealer. But he said that Tesla is different in that customers have a lot of questions on the technology of the electric car, and so more time and education is needed. 4. Dealers derive little profit from new car sales, instead getting income from service, parts, and add-ons He said Tesla can't offer regular service because the company benefits only from new car sales. Tesla cars also don't typically have regular tune-ups, such as oil changes, and don't have an engine to regularly service. 5. Dealers rely on manufacturers to fund advertising Maron said the company's advertising is minimal. "We certainly wouldn't allow, or subsidize someone else to advertise for us," he said. 6. Franchise dealers could not make money selling Tesla's cars Frnachise dealers make profits by marking up the price from the manufacuter, Maron said. But Tesla sells its cars online. So if a dealer marked up cars that consumers could buy online directly from the manufacturer (i.e. Tesla) at a cheaper price than what they saw at a dealer, most consumers would do so. 7. There's a clear conflict of interest Maron argued that it would be impossible for traditional dealers to convey Tesla's electric-vehicle message, because existing dealerships overwhelmingly have gas-powered cars. He said most dealers would be skeptical of selling Tesla cars, likening it to someone approaching a Boston Red Sox store to sell New York Yankees merchandise. Maryann Keller, an automotive analyst and managing partner at Maryann Keller & Associates, said that the dealership model promotes competition within brands that keeps costs low. "What promoters of the direct-sale model fail to realize is the same brand dealers vigorously compete with each other for the benefit of consumers," Kellers said. She pointed to a 2015 study by the Phoenix Center. This was refuted by others on the panel, such as Dan Crane , a professor of law at the University of Michigan who specializes in anti-trust issues. Crane said that because the dealership franchise model includes a middle man, it necessarily makes the product from the manufacturer more expensive. In any case, Crane said "there's no reason through public policy to choose any method," adding that consumers should decide which model they prefer. [© 2016 MLive Media] http://www.mlive.com/auto/index.ssf/2016/01/tesla_were_not_at_detroit_auto.html Tesla: We're not at Detroit auto show because we can't sell our cars in Michigan ... http://freebeacon.com/issues/free-market-groups-feds-ignoring-evidence-in-war-on-car-dealers/ Free Market Groups: Feds Ignoring Evidence in War on Car Dealers January 20, 2016 Electric vehicle giant Tesla beefs up lobbying muscle as FTC weighs anti-franchising measures For EVLN EV-newswire posts use: http://evdl.org/evln/ {brucedp.150m.com} -- View this message in context: http://electric-vehicle-discussion-list.413529.n4.nabble.com/EVLN-Seven-reasons-Tesla-can-t-sell-through-MI-car-dealerships-tp4680034.html Sent from the Electric Vehicle Discussion List mailing list archive at Nabble.com. _______________________________________________ UNSUBSCRIBE: http://www.evdl.org/help/index.html#usub http://lists.evdl.org/listinfo.cgi/ev-evdl.org Read EVAngel's EV News at http://evdl.org/evln/ Please discuss EV drag racing at NEDRA (http://groups.yahoo.com/group/NEDRA)
