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Illinois files suits against Rivian & Lucid


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RE direct sales being in violation of vehicle sales laws.

>>"A lawsuit has been filed against electric vehicle startups Rivian Automotive and Lucid Motors in Illinois for selling vehicles directly to consumers in the state.

What Happened: The lawsuit was filed by the Illinois Automobile Dealers Association, the Chicago Automobile Trade Association, and other plaintiffs including individual franchised auto dealers in the state. The plaintiffs allege that Amazon.com-backed electric truck startup Rivian, California-based EV startup Lucid Motors and the state of Illinois are violating state laws that require new vehicles to be sold through franchised dealers. It accuses the Secretary of State’s office of “turning a blind eye to Rivian’s unlicensed sales operations” in violation of state law.

Lucid Motors plans to go public via a SPAC merger with blank-check company Churchill Capital Corp IV. The company is on track to deliver its Air luxury vehicle later this year and is focusing on a direct-to-consumer model by opening new showrooms called “Lucid Studios.” Lucid plans to open a showroom in Oak Brook, Illinois, in the second quarter of 2021.

Rivian has said it plans to begin delivering its R1T electric pickup truck in June and its R1S electric SUV in August this year. The company manufactures its flagship EVs at its plant in Normal, Illinois. The company is constructing a showroom in Chicago.

Why It Matters: Illinois auto dealers have previously too expressed their concern over direct sales and challenged Tesla Inc. for its direct-to-consumer sales model. In May 2019, the auto dealers, the Secretary of State and Tesla entered into an administrative consent order agreeing that Tesla could have no more than 13 dealer licenses in Illinois, as per the lawsuit.

Nevertheless, other automakers are increasingly following Tesla’s lead by adopting the direct sales model. It was reported in February that Lordstown Motors Corp. is looking to sell its trucks directly to customers in Ohio. Ohio allowed Tesla to make direct sales to its customers in 2014. At the time, the Ohio dealer’s association had tried to block the Elon Musk-led company from selling directly. Tesla has a similar arrangement in Michigan as well."<< ~ Benzinga

Edited by balthazar
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I believe the (very tangible) reason for franchising is to foster price competition. With OEM direct sales, there’s zero competition and theoretically- everyone pays MSRP. 

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3 hours ago, balthazar said:

I believe the (very tangible) reason for franchising is to foster price competition. With OEM direct sales, there’s zero competition and theoretically- everyone pays MSRP. 

Yet we see Franchises over charge over MSRP all the time, AKA Mach1 example we discussed lately. I see no reason a company if they do not have franchise, should not be allowed to sell direct. If anything this scares the franchise dealers as they fear competition.

Since Tesla, Rivian, Lucid, Lordstown have no franchises, they are not breaking the law and as such could have their own studio stores to sell. They already lost to Tesla, I expect them to loose to Rivian, Lucid, Lordstown and everyone else who comes to this model of business.

Times are a changing and better for it.

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3 hours ago, balthazar said:

everyone pays MSRP

Unless manufacturer itself decide to be competitive and have discounts.  

I doubt any consumers will miss going to private dealerships.

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Tesla came to a strictly limiting arrangement in at least 2 states, because they were in fact breaking existing franchise laws. I think it's Michigan that they're limited to only 13 outlets.

3 hours ago, ykX said:

Unless manufacturer itself decide to be competitive

Competitive with itself?? So some Tesla stores will set prices lower than other Tesla stores? ??

4 hours ago, David said:

Yet we see Franchises over charge over MSRP all the time

No; not "all the time" but on rare occasions. The vast vast majority of times consumers buy vehicles below MSRP, probably 97% of the time... And that's what consumer expect; to get a deal. Deals are out there on the same vehicle, in the same area, due to competition. 

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2 hours ago, balthazar said:

Tesla came to a strictly limiting arrangement in at least 2 states, because they were in fact breaking existing franchise laws. I think it's Michigan that they're limited to only 13 outlets.

Competitive with itself?? So some Tesla stores will set prices lower than other Tesla stores? ??

No; not "all the time" but on rare occasions. The vast vast majority of times consumers buy vehicles below MSRP, probably 97% of the time... And that's what consumer expect; to get a deal. Deals are out there on the same vehicle, in the same area, due to competition. 

Many dealerships use the additional markup on BS add on to keep the sales price at MSRP or above if possible. In fact more and more people hate the dealership experience and the facts bear out that more and more are willing to buy without a test drive, online and from a trusted source like Costco for a set price than deal with the dealership where the bulk of people feel ripped off.

The numbers are I think pretty real on why dealerships are hated more just about than any other purchase process. This is one of the most detailed showing how consumers hate dealerships and buying of an auto and why the set price at Saturn Dealerships made their satisfaction ratings one of the highest. Sadly gm SCREWED that up. The money invested in Saturn should have been put into Chevrolet and a change of how Chevy sold auto's would have made them that much stronger.

25 Amazing Statistics on How Consumers Shop for Cars | V12 (v12data.com)

gm never learned from the Saturn experience. Auto companies need to change to a better way to sell auto's.

When It Comes to Customer Experience, Saturn Runs Circles Around the Competition | CustomerThink

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24 minutes ago, David said:

Many dealerships use the additional markup on BS add on to keep the sales price at MSRP or above if possible. In fact more and more people hate the dealership experience and the facts bear out that more and more are willing to buy without a test drive, online and from a trusted source like Costco for a set price than deal with the dealership where the bulk of people feel ripped off.

I've been looking at the GMC locator every 2-3 days since Dec- that's 4 months. Usually in a 100-mile radius but also for the 250-mile radius. Also combed a half dozen lots. I've looked a few hundred trucks in dealer inventory in that period, probably 95 or 97% have been below MSRP via the incentives or whatever other discounts are out there. Dealer 'add-on' I could count on one hand... and these are high buck pick-ups, not middling vanilla family sedans.

BTW- you don't actually buy FROM Costco, they just offer yet another discount at participating dealers- looked into that, also.

I have and never have had an issue with a dealership. I certainly don't "hate" them- there's no reason to. I read some people talk like they're entering into a long-term relationship and choosing curtains with a dealership, like buying a car is a month-long vacation in a tiny cabin far upstate. They whinny about the 'buying experience' like they're planning a wedding. It's all nonsense & garbage via my observation. 

I would never buy a vehicle without test driving it, even if there was a 'full refund in 7 days' or whatever program. If I thought I was going to need such a program, it would be because I was too lazy to perform due diligence in the first place. I thought new cars & driving was supposed to be fun? I certainly enjoyed my test drive in a $66K Silverado High Country back in Dec, and if I had the spare time & inclination, I'd also have gone & test drove an F-150 & a Ram.  

Identify your wants & needs, do your research, test/experience it in person, then buy/lease/order. 
Carvana is a inflated joke, websites frequently list things in error... sometimes the best course of action is talking to someone directly who actually orders vehicles and has the latest OEM-sourced info.  

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I hate dealerships myself.  I dont like the buying process.   Its not the back and forth haggling that gets me. Im OK with that.   

Quote

Identify your wants & needs, do your research, test/experience it in person, then buy/lease/order. 

 

I do this.  I do my due diligence before hand. I know what I want so when I actually sit down in the salesman's office, Im ready to buy. I haggle, he/she haggles, we come to an agreement. SOLD!   That process takes 10-15 minutes. Maybe 20 at MOST.   My do diligence is done days, weeks, and sometimes even months before to which I know what car I want.  

My problem is when we agree on price, its the ordeal when I go to the finance guy's office. I have to pass credit. No problem.  Its the next thing that I cant stand.  The shyte phoquing questions and up-selling  about individual extended warranties on the  engine -- steering wheel -- tire fill-up valve, TRUCOAT, Febreeze on the seats, special winter air for the tires in the winter and special summer air for the summer...  and its usually all no answers for me, but it takes a phoquing hour/hour and a half.  The thing is, if I was allowed to talk anytime during this process, it be a quick no to everything and in 5 minutes we'de be done, but its part of the process...

 

 

 

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11 hours ago, balthazar said:

Competitive with itself?? So some Tesla stores will set prices lower than other Tesla stores? ??

I mean competitive with other manufacturers.  In my experience you find "deals" at better dealerships only when dealership is not overly greedy and charges what a manufacturer wants them to charge.  So with direct sales instead of looking for less greedy dealer you can compare direct prices within competing car manufacturers.  I think  in Europe the car sales are done directly if I am not mistaken.

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Tesla has MSRPs, it’d be interesting to learn the transaction prices vs MSRP.

I read that dealers make most of their money on service, then on used vehicles. Income from new vehicle sales comes in 3rd and is ‘minor’.

What if a supposed ‘far lesser’ service income on a Tesla made for a poor financial picture for a Tesla dealership, and Musk pitched it instead as ‘providing better info to potential consumers’ as he did?

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