• Sign in to follow this  
    Followers 0

    FTC Holds A Workshop On Dealership and Direct Sale Regulations


    • FTC Looks At the Dealership Regulations and Direct Sales

    The current laws and regulations concerning how vehicles are sold are, to put it mildly, a complete mess thanks to states having different versions. Experts can't seem to agree whether the current rules are good or bad. One thing that they can agree on is buying a vehicle is an unpleasant experience due to the current regulations.

     

    The Federal Trade Commission held a workshop yesterday as a possible first step to unravel the mess. The big topic that was covered was in the workshop was direct sales with a variety of people on either side of the argument to make their case.

     

    For Direct Sales:

     

    Tesla Motors is leading the charge for doing direct sales to consumers. Todd Maron, Tesla Motor's lawyer argued the traditional model doesn't work for the company as their electric vehicles compete with gas vehicles and dealers would likely not push electric vehicles since they are dependent on sales of gas vehicles.

     

    Maron went on to say Tesla doesn't offer “insurance products and add-ons” or require regular service work. But the key point Maron said Tesla needs a different store design and location.

     

    “Our stores are small and in high foot-traffic areas such as shopping malls. When new technology comes out, consumers don’t go to it. You need to bring the technology to consumers,” said Maron.

     

    Fiona Scott Morton, a professor at Yale University said the FTC should allow "vertical integration" (another way of saying direct sales from automakers) to improve the buying experience.

     

    For the Franchise System:

     

    Those standing up for the current system of franchised dealers say intrabrand competition gives consumers a fair price on a vehicle.

     

    Automotive analyst Maryann Keller said the direct sales model doesn't offer any savings to consumers.

     

    Peter Welch, the president of the National Automobile Dealers Association said dealership laws help American consumers and only a few states have banned direct sales.

     

    “Empirical research has demonstrated that intense competition among franchised dealers lowers new-car prices by hundreds of dollars. But the benefits to consumers don’t end there -- they extend to service, warranty work, recalls, and the hundreds of millions of dollars that’s invested in local communities,” Welch went on to say.

     

    “Independent dealers add an extra layer of credibility in the auto industry. Imagine how much more difficult the General Motors and Chrysler bankruptcies would have been to resolve had the manufacturers had to bear the high costs of the distribution system, too,” said Paul Norman, a partner at Boardman & Clark law firm.

     

    What Happens Next?

     

    For the time being, the FTC is taking public comment on direct sales and franchise system till March 4th. After that, we might have an idea of what will happen next.

     

    Source: Automotive News (Subscription Required), Autoblog, FTC Comment Form

    0


      Report Article
    Sign in to follow this  
    Followers 0


    User Feedback


    Well, from the very beginning Tesla has been a vertically integrated company - more than other automakers.

     

    But then again, Musk isn't a novice when it comes to dealing with Giants.

     

    Like how SpaceX rocket launches to orbit are about 2/3 cheaper that the United Launch Alliance, and has more powerful launch vehicles for orbit.

     

    SpaceX is fully American too. The best quote ever from Lockheed and Boeing was that the DOD's satellite launches were a matter of national security - yet their launch vehicles use rocket engines from Russia...

     

    Tangent aside -

     

    But the real issue is that the dealership model has to change. Bolt EVs and Leafs don't need to be serviced for oil changes. No electric car does. And people really would like software patches that are TSBs or recalls for other automakers to just be done over the air.

     

    There's a cliche out there that people hate dealing with dealers. Get rid of them entirely - there's something there to be gained.

     

    But the dealer model does employ a ton of people. But it has to match the kind of vehicles people are buying.

     

    If I told everyone that tomorrow every car will get over 80 mpg, and will never need to have oil changes and that most recalls can be done at home, we'd all deduce that I'm crazy. But that is the present day of electric cars. The future of electric cars will result in a radical shift in the industry. When the product itself is so fundamentally different, the same distribution channels won't work either unless incentives are aligned.

     

    Right now they aren't - and that's a whole another post on its own.

    0

    Share this comment


    Link to comment
    Share on other sites


    Your content will need to be approved by a moderator

    Guest
    You are commenting as a guest. If you have an account, please sign in.
    Add a comment...

    ×   You have pasted content with formatting.   Remove formatting

    ×   Your link has been automatically embedded.   Display as a link instead

    Loading...



  • Popular Stories

  • Similar Content

    • By William Maley
      It was going to happen sooner or later, but Tesla is taking the state of Michigan to federal court over its ban on direct sales to consumers. According to the suit, Tesla is seeking “to vindicate its rights under the United States Constitution to sell and service its critically-acclaimed, all-electric vehicles at Tesla-owned facilities in the State of Michigan”.
      This suit comes after the Michigan's Secretary of State office denied Tesla a dealership license earlier in the month.
      “The license was denied because state law explicitly requires a dealer to have a bona fide contract with an auto manufacturer to sell its vehicles. Tesla has told the department it does not have one, and cannot comply with that requirement,” said Michigan Department of State Communications Director Gisgie Dávila Gendreau in an email to The Detroit News at the time.
      The law in question was signed back in 2014 by current Governor Rick Snyder which made it illegal for an auto manufacturer to sell vehicles directly to consumers. The law also prohibits a manufacturer from performing service on their vehicles.
      “For the last two years, Tesla has pursued legislation in Michigan that is fair to everyone and that would benefit Michigan consumers. Giving auto dealers a monopoly on car sales benefits them, but harms consumers,” said a Tesla spokeswoman to Automotive News in a statement.
      The lawsuit names Synder, attorney General Bill Schuette, and Michigan Secretary of State Ruth Johnson as defendants. Tesla has also requested for a jury trial. 
      Tesla is seeking a permanent injunction to prevent officials in the state to enforce the relevant part of the law. This would force the state to give Tesla a dealer license.
      We'll be watching closely to see if Tesla can make any headway.
      Source: Automotive News (Subscription Required), The Detroit News

      View full article
    • By William Maley
      It was going to happen sooner or later, but Tesla is taking the state of Michigan to federal court over its ban on direct sales to consumers. According to the suit, Tesla is seeking “to vindicate its rights under the United States Constitution to sell and service its critically-acclaimed, all-electric vehicles at Tesla-owned facilities in the State of Michigan”.
      This suit comes after the Michigan's Secretary of State office denied Tesla a dealership license earlier in the month.
      “The license was denied because state law explicitly requires a dealer to have a bona fide contract with an auto manufacturer to sell its vehicles. Tesla has told the department it does not have one, and cannot comply with that requirement,” said Michigan Department of State Communications Director Gisgie Dávila Gendreau in an email to The Detroit News at the time.
      The law in question was signed back in 2014 by current Governor Rick Snyder which made it illegal for an auto manufacturer to sell vehicles directly to consumers. The law also prohibits a manufacturer from performing service on their vehicles.
      “For the last two years, Tesla has pursued legislation in Michigan that is fair to everyone and that would benefit Michigan consumers. Giving auto dealers a monopoly on car sales benefits them, but harms consumers,” said a Tesla spokeswoman to Automotive News in a statement.
      The lawsuit names Synder, attorney General Bill Schuette, and Michigan Secretary of State Ruth Johnson as defendants. Tesla has also requested for a jury trial. 
      Tesla is seeking a permanent injunction to prevent officials in the state to enforce the relevant part of the law. This would force the state to give Tesla a dealer license.
      We'll be watching closely to see if Tesla can make any headway.
      Source: Automotive News (Subscription Required), The Detroit News
    • By William Maley
      In news that will likely not shock anyone, Michigan's Secretary of State office has official denied Tesla a dealership license to sell vehicles in the state. The ruling issued last week follows a hearing earlier this month to review Michigan's initial motion to deny Tesla's request for a license, submitted last November.
      “The license was denied because state law explicitly requires a dealer to have a bona fide contract with an auto manufacturer to sell its vehicles. Tesla has told the department it does not have one, and cannot comply with that requirement,” said Michigan Department of State Communications Director Gisgie Dávila Gendreau in an email to The Detroit News.
      This is due to a state law signed in 2014 which states,  “a vehicle manufacturer shall not … sell any new motor vehicle directly to a retail customer other than through franchised dealers.”
      Tesla has been fighting tooth and nail to sell their vehicles in Michigan for a few years now by lobbying and applying for a license.  As Automotive News notes, Michigan is the most populated state that doesn't have a Tesla gallery or store. 
      "At the urging of local car dealers and GM, Michigan law was changed two years ago to prevent Michigan consumers from buying cars from a Tesla store within the state. As part of the process of challenging the legality of that law, Tesla applied for a license in Michigan. Tesla will continue to take steps to defend the rights of Michigan consumers," Tesla said in a statement to Automotive News.
      Now people outside of Tesla have been trying to change the law. As we reported back in February, a 22-year launched a petition to repeal this law. Also, Rep. Aaron Miller, R-Sturgis introduced a bill into the state's legislature to allow companies like Tesla to do direct sales. But as The Detroit News reports, the bill has sat stagnant.
      “The discussion’s not over but for this session I think we’ve reached that point of no progress. I think the clock is going to run out on us,” said Miller.
      Now it should be stated that anyone from Michigan who wants to order a Tesla can do so from the company's website. You'll have to pickup your vehicle outside of the state however, the closest ones being in Ohio.
      Where does Tesla go next? That is anyone's guess at the moment. But as Tesla's general counsel Todd Maron said back in May, the company would either go to court or the legislation to make the change. Our hunch is Tesla will be going for the former.
      Source: Automotive News (Subscription Required), The Detroit News

      View full article
    • By William Maley
      In news that will likely not shock anyone, Michigan's Secretary of State office has official denied Tesla a dealership license to sell vehicles in the state. The ruling issued last week follows a hearing earlier this month to review Michigan's initial motion to deny Tesla's request for a license, submitted last November.
      “The license was denied because state law explicitly requires a dealer to have a bona fide contract with an auto manufacturer to sell its vehicles. Tesla has told the department it does not have one, and cannot comply with that requirement,” said Michigan Department of State Communications Director Gisgie Dávila Gendreau in an email to The Detroit News.
      This is due to a state law signed in 2014 which states,  “a vehicle manufacturer shall not … sell any new motor vehicle directly to a retail customer other than through franchised dealers.”
      Tesla has been fighting tooth and nail to sell their vehicles in Michigan for a few years now by lobbying and applying for a license.  As Automotive News notes, Michigan is the most populated state that doesn't have a Tesla gallery or store. 
      "At the urging of local car dealers and GM, Michigan law was changed two years ago to prevent Michigan consumers from buying cars from a Tesla store within the state. As part of the process of challenging the legality of that law, Tesla applied for a license in Michigan. Tesla will continue to take steps to defend the rights of Michigan consumers," Tesla said in a statement to Automotive News.
      Now people outside of Tesla have been trying to change the law. As we reported back in February, a 22-year launched a petition to repeal this law. Also, Rep. Aaron Miller, R-Sturgis introduced a bill into the state's legislature to allow companies like Tesla to do direct sales. But as The Detroit News reports, the bill has sat stagnant.
      “The discussion’s not over but for this session I think we’ve reached that point of no progress. I think the clock is going to run out on us,” said Miller.
      Now it should be stated that anyone from Michigan who wants to order a Tesla can do so from the company's website. You'll have to pickup your vehicle outside of the state however, the closest ones being in Ohio.
      Where does Tesla go next? That is anyone's guess at the moment. But as Tesla's general counsel Todd Maron said back in May, the company would either go to court or the legislation to make the change. Our hunch is Tesla will be going for the former.
      Source: Automotive News (Subscription Required), The Detroit News
    • By William Maley
      Since the Volkswagen diesel emission scandal came to light, more scrutiny has been put on automakers and emissions standards. Recent real-world tests of European market diesel vehicles have revealed a number were 10 times over the legal limit for emissions. With stricter regulations coming into effect next year, automakers are reconsidering their investment in diesel.
      Case in point is Renault. Reuters has learned from sources at the company that it believes diesel engines will disappear from their lineup due to stricter regulations. This comes from an internal meeting before a summer break where Renault went over the costs of meeting these stricter regulations. According to two people who were at the meeting, Renault's Chief Competitiveness Officer Thierry Bollore said the investment in diesel had dimmed significantly due to upcoming regulations.
      "He said we were now wondering whether diesel would survive, and that he wouldn't have voiced such doubts even at the start of this year," said one of the people.
      "Tougher standards and testing methods will increase technology costs to the point where diesel is forced out of the market."
      Next year will see Europe adopting emission standards similar to the ones in the U.S. known as Euro 6b. This will become more stringent as time goes on. Two years after Euro 6b comes into affect, European regulators will begin doing real-world testing of fuel economy and emissions. The combination of these two things means automakers will need to spend more money to make their vehicles meet these standards.
      "Everybody is backtracking on diesel because after 2017-18 it becomes more and more expensive," said Pavan Potluri, a powertrain analyst with consulting firm IHS Automotive.
      Already, diesel engines have been disappearing from city cars. Sources say Renault predicts that diesel will disappear from all B-Segment and some C-Segment models by 2020.
      Source: Reuters

      View full article
  • Recent Status Updates

  • Who's Online (See full list)

    There are no registered users currently online