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William Maley

Industry News: NADA's Chairman Says Tesla's Sales Model Would Cause Higher Prices

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One group that has been fighting tooth and nail against Tesla and their direct sales model is the National Automobile Dealers Association. With Tesla filing a federal lawsuit against the state of Michigan over a law banning direct sales, NADA Chairman Jeff Carlson has made some comments as to why Tesla's direct sales model is bad.

The Detroit Free Press reports that Carlson said the direct sales model is bad for consumers because it would lead to higher prices. Competition between dealers is a good thing for consumers. In a study commissioned by NADA and done by Phoenix Center for Advanced Legal and Economic Public Policy Studies, competition between dealers lead to an average of $700 in price reduction.

"Every state has to look to their consumer and decide what’s best for them. Either they can continue to support the franchised dealers' discount of up to $700 ... or, the choice for the policy makers is they can offer the consumer a vertically integrated model that prices vehicles at retail," said Carlson.

"The public policy makers are going to go to the consumers and say which (model) do you want? The discounted product? Or the product at retail?"

Carlson also pointed out a memo that Tesla CEO Elon Musk sent out to all employees saying that they need to abide by the company's “no negotiation and no discount policy.” It should be noted that policy that Carlson used as an example only pertains to new vehicles. Vehicles that were used as floor models, test drives, or were damaged in transit are allowed to be discounted.

We're to jump in here now and bring a little editorial. Carlson's argument of using price to say why the franchise model is better is ok. But there is another part that either Carlson forgot or neglected to mention - service. There is a reason why people don't like to go to dealerships. They don't feel like they are being treated as a person, more of a number for this month. You see in various ways from dealer markups on popular models, pushing rust proofing or extended warranties during the sales process, and we're only scratching the surface. Yes, Tesla may be a more expensive option. But at least you don't feel that you're being pressured to buy something.

Before someone jumps in and says 'not all dealerships are like this' or some variation of it, we know. The problem is those dealers are so few. It's basically trying to find a strand of hay in a bushel of needles. 

Source: Detroit Free Press, Automotive News (Subscription Required)


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cool, so why doesn't the NADA tell its members to lower their pricing by $700 so people can be spared the song-and-dance dickery of the dealership experience!!!!!!

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Dear  NADA Chairman Jeff Carlso,

Pull your head out please, right now Dealerships are a terrible experience, pressure from the moment you arrive up till you leave.

Where is the Service?

Was there service in the 12 rounds it took to get a final buying price on the auto?

Was there service to me in the rounds and rounds of negotiating for my used car price?

Where was the service during the final paperwork when I was hounded on about the benefit of buying protection package, 3M scotchgard protection for the inside, life time oil changes bought up front, etc. etc. etc.

Were was the service when I came back to ask a question about how to do something in the car and my sales person was nowhere to be found and I was told to make an appointment with service.

I go into service and am treated like a fastfood restaurant. In out and ignored. Where is the service now?

Mr Carlso, how would you describe the Saturn set price shopping experience that people loved compared to negotiating prices?

Again, you seem to ignore the service issue of dealerships and also the competition issue.

You have cherry picked reasons to keep the dealerships, mostly it falls down to you protecting your worthless job by keeping dealerships going and paying into your NADA Union.

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