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    Michigan Governor Signs Bill Banning Direct Auto Sales


    • Why You Won't Be Able To Buy A Tesla In The State of Michigan

    The latest state to ban direct sales of vehicles is Michigan. Today, Governor Rick Synder signed a bill into law that would ban such automakers as Tesla from directly selling vehicles to consumers. This bill also allows dealers to make the decision whether or not to charge the transaction fee.

    "This bill does not, as some have claimed, prevent auto manufacturers from selling automobiles directly to consumers at realign in Michigan. That is because this is already prohibited under Michigan law. The current law states that a manufacturer shall not "ell new motor vehicle directly to a retail customer other than through its franchised dealers…" the Governor wrote in a letter to legislators.

    The bill updates a current Michigan law by removing the word 'its'. This elimination causes Tesla and any other OEM who decides to do direct sales in the state not to be able to do it. Instead they would have to sell through a network of franchised dealers.

    Supporters of this bill includes the Michigan Automobile Dealers Association and General Motors.

    "We believe that House Bill 5606 will help ensure that all automotive manufacturers follow the same rules to operate in the State of Michigan; therefore, we encourage Governor Snyder to sign it," GM said in a statement.

    Tesla on their part isn't happy with this law and blasted GM for its support of the law.

    "What's good for GM's customers is not necessarily good for Tesla's customers. What's good for gasoline cars is not necessarily good for electric cars. Tesla is selling a new product with a new technology,” the automaker said in a statement.

    “The evidence is overwhelming that a traditional dealer-based approach does not work for electric cars. Moreover, GM distorts the purpose of the franchise laws (including in Michigan), which are in place not to cement a monopoly for franchised dealers but rather to prevent companies with existing franchises from unfairly competing against them. Tesla has never used franchised dealers, so these concerns are simply irrelevant."

    Source: The Detroit News

    William Maley is a staff writer for Cheers & Gears. He can be reached at william.maley@cheersandgears.com or you can follow him on twitter at @realmudmonster.



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    I have to say this stinks of unions and status quot. We are in the 21st century and people should be able to buy how ever they want not be forced to have to deal with a dealer who may or may not really care about customer service. I feel this is a mistake and will come back to eventually bite the state once it goes through the normal legal challenges and ends up in the supreme court who I can easily see throwing out this law.

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    Maybe GM wants to limit competition for their full electric premium models.  Of which they have none..

     

    Tesla the company and their cars are game changers and disruptors, traditional car makers are scared. 

    Edited by Cubical-aka-Moltar

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    Maybe GM wants to limit competition for their full electric premium models.  Of which they have none..

     

    Tesla the company and their cars are game changers and disruptors, traditional car makers are scared. 

    Sounds like the Tucker Torpedo all over again. I would think they would love to get rid of excessive costs and move to a better way to sell with better profits.

     

    I for one would love to be able to order direct from GM, have the auto delivered to my house and go to an approved repair place only when needed.

    • Upvote 1

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    Instead of GM supporting auto dealers (which have been a boat anchor for several years now), GM should compete directly with Tesla and build a $25K all-electric car.  No Tesla is cheaper than $50K right now.

     

    Remember when about 1000 dealers from GM/Ford/Chrysler were shuttered as part of the bankruptcy?  Now, Tesla wants to end this bad idea, but the states do not want to because so many state legislators either get paid by auto dealers or or own auto dealerships themselves.  Protecting NADA and its members amounts to a stupid state-sanctioned cartel that must end.  Too bad no one else is willing to do just that.

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    Granted, I am not sure why they are so worried....I don't see Telsa selling anything but Higher end products....there is much more money there anyways.

     

     

    Trust me when I say it will not last long either....Telsa will sell here soon....

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    Granted, I am not sure why they are so worried....I don't see Telsa selling anything but Higher end products....there is much more money there anyways.

     

     

    Trust me when I say it will not last long either....Telsa will sell here soon....

    I hope it does.  And perhaps Michigan could kick Snyder to the curb.  I have no problems with Republicans per se, but Snyder is an asshat.

    Edited by A Horse With No Name

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    Granted, I am not sure why they are so worried....I don't see Telsa selling anything but Higher end products....there is much more money there anyways.

     

     

    Trust me when I say it will not last long either....Telsa will sell here soon....

    I hope it does.  And perhaps Michigan could kick Snyder to the curb.  I have no problems with Republicans per se, but Snyder is an asshat.

     

    Not worried too much about Snyder...he pissed off one too many retirees.....

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    Rather than put your head in the ground and hide being blind to change they should support new models of selling and still collect their sales tax and move on. Technology has continually changed the way people do things in the 21st century. Change or be left in the dust and forgotten.

     

    Sounds like most people are ready for change in that state and the politicians will feel it and see it this fall. Incumbents out, new blood in and time for term limits.

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    Can't Tesla still sell it over the Internet or if they can sell it in a neighboring state, people can just drive a few hours and bring it back. If people want a Tesla they will find a way to get one.

    And over time more and more people will buy Teslas and Michigan will probably lose money and business in the long run. It is this type of backward thinking that has led many of Michigan's cities to be bankrupt and living in depression.

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    I think California is going to have to lead the nation again and require that auto manufactures sell directly to consumers. If Michigan can protect their auto manufacturers then California should do the same.

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    A lot of people have a lot of jobs and money at stake here build around  system that they were forced into years ago. They have tried to change things many times and never have been let loose.

     

    If Tesla can change this then they all should be able to join in. But in the end someone is going to lose a lot of money.

     

    There is a difference between should and can.  To negotiate this one out is going to be a tough one for both sides.

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    Yes I agree that some one will lose, but then technology we have today was not around when these out of date laws went into affect. As such, the politicians who are supposed to work for the public need to update and change for the public not the unions or business special interests.

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    Here is the deal Unions are not effected here at the dealer level.

    As for big business they are only looking to not be at a disadvantage here.

     

    Union are not even in this picture.

     

    Here is the deal. You cut Tesla loose all the major MFG are at a disadvantage as they are saddled with all the dealers they were forced to work through via government regulation. Now if offered a deal where GM, Ford and everyone else can do a company dealer and dispense of all the small dealers they would take that deal in a heartbeat. Hell they would love to sell just on the web direct if they could.

     

    But the government will not let that happen either as the local dealers too often lose out of their investment.

     

    This is a house of dominos The bottom is the MFG that has to support the dealer they were forced to sell through. You remove the bottom domino and the whole thing collapse with the small guy on the top falling the hardest.

     

    It all comes down to this. You let all the auto MFG sell cars direct and not be responsible to the dealers or you make them all have dealers. That is the only fair thing. The government dug their hole on this when they forced the trade agreements on the MFG and now that it is place they need to either stick to it or the government need to be responsible to the dealers that are forced out.

     

    Fairs fair. The MFG did not chose to be in this system so why should they pay for what they were forced into and why should one company get to skip on it just because they don't want to play by the rules others are forced to live with.

     

    Hey I am all for no independent dealers and sell direct with set prices but it has to be everyone not just one who was lucky enough not to have been around when the government enforced this system.

     

    Also be wary as if companies control the markets there is always risk here too.

     

    I am not a fan of dealers unions or politicians. But I am a fan of fair and equal here and one set free while others remain stuck with a dealer system is not fair. One set of rules for this game for everyone.

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    I agree with hyper, although he may pull a Ron Burgundy to agree to disagree on calling San Diego as Whale's vagina. The action Tesla is seeking is nothing different than how Japanese car manufacturers started selling cars in the 60s. If Elon has a good product, why is he scared of the dealership? If his stock is hovering at a P/E of infinite value with no chance of turning profit with the turn of the decade, he should invest that capital to create a dealership network with a difference.

     

    It is always easy to side the small guy, but here the small guy is being slippery and sneaky. If he gets the privilege then so should the other manufacturers.

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    Well I am not a Elon fan but I understand why he wants to do as he wants to do. There is not a MFG that would not want to sell direct as Chrysler tried it in California before they were shut down. I even had a Ford owned center here that was to sell only lease used cars direct but folks were buying new there till they got shut down.

    the problem is we have a knotted up mess of a system and to undo it someone has to lose and lose big. The MFG's even though they hate the way things are will stay with the old system if they are forced to buy out all the dealers. So that is not going to happen.

     

    The Dealers do not what to take the loss. Yes some can become factory pick up and service sites but how many will you need. maybe a 20% at best.

     

    And the politicians are lobbied on all three sides and as long as they remain neutral they will continued to be lobbied with the perks that come with that so why act.

     

    So until some on is willing to pay to dissolve the dealer system as it is and pay for it I do not see much change. The only way I can see a major change is If the SCOTUS acts with a ruling and then at that point the dealers are out cold and the lawsuits will arrive.

     

    To me the dealer system is like setting off a Nuke. Once you have done it there is no easy painless way to undo it and someone is going to suffer.

     

    I suspect things over time will remain the same. Elon can make a lot of noise but in the end even he is limited to what he can do. At that point he will deflect off to tube shooting people 1,000 MPH from NY to LA. He did that gain this week as I predicted on another site where the day before they reported his stock dropping 9%. The next day a Tube story came up again.

     

    Elon fancies himself as Tony Stark but lacks the Ironman suit.

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    A lot of people have a lot of jobs and money at stake here build around  system that they were forced into years ago. They have tried to change things many times and never have been let loose.

     

    If Tesla can change this then they all should be able to join in. But in the end someone is going to lose a lot of money.

     

    There is a difference between should and can.  To negotiate this one out is going to be a tough one for both sides.

     

    See, I don't see that at all. Tesla doesn't have any franchises, so it's not like Tesla is competing with Tesla franchises by opening their own stores.  There is absolutely ZERO consumer protection being done here.  Fisker had franchises and the owners of those cars are just as far up the creek without a paddle as if they were sold the cars by Fisker directly.  Saab owners are being saved, not by dealers, GM, or Spyker, but by a third party company that sees a business opportunity in manufacturing parts. 

     

    This is protectionism for the existing manufacturers. Not the dealers. 

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    That is the whole point Telsa has no dealers or franchises. This is what most MFG would love to do but in their case they were forced into the franchise system and now if they want to get out of it if the laws are changed the dealers or the companies will have to lose.

     

    As for the customers while I think they will find service a little more consistent since they are dealing with one network vs. many different networks of franchises they will not see major savings in the long run. If there are profits the companies will take them for the most parts.

     

    As for protection? Well if a company goes down like Fisker not much there. In the case of Saab many of the parts new and old are still there and available thorugh GM for so far back. But even in the case of a 80's Chevy Citation if it is not a common mechanical part and it is not reproduced good luck! Just the nature of the business as companies just do not keep on these parts forever anymore.

    Case in point the Console skeleton on the Fiero is broken in 75% of the cars left. Even the low mile ones they fracture with age. Where do you get one. Well you don't.

     

    The bottom line is there are good and bad to both sides but even if you wanted to make the change how to you fairly get out of this system and not damage someone financially.

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