FTC Sides With Tesla In Michigan Direct Sales Ban - Should Dealership Only Sales Still Be Protected?

Michigan's anti-direct-from-manufacturer legislation is a protectionist measure whose sole purpose is to protect the well-entrenched old-school way of selling cars, which, incidentally, is used by all of Michigan's automakers. It's just one way of trying to keep Tesla cars out of Michigan in the hope that people will buy Chevy Volts or equivalents made by The Big Three.

It's that simple.

A completely separate matter is whether Tesla will be around in 10 years, and whether this legislation will matter in the long run or not.

I'm fine with them lifting all these bans on direct sales, for one simple reason -- people would finally realize it doesn't work for high volume, extremely expensive things and shut up about it. Ironically, all these proponents of direct sales don't even understand what it is they're asking for. Most people still expect to be able to look at all the color combinations and play with all the options and trade in their upside down cars and get financing at the same time and drive home in their new car the same day. So most people aren't "anti dealer" even if they think they are, they just want dealers to be owned by the manufacturers because they think they'll get better deals if they are and they're afraid of getting ripped off.

First off, let's get one thing out of the way, because there's one GIANT fact that seems to get lost or ignored in all the pro-Tesla, anti-dealer claptrap -- big car manufacturers don't want to sell cars to you. If they did, they would. Car manufacturers have no interest in selling cars one at a time to you, they want to sell them thousands at a time to dealers so they can get their money immediately and focus on what they actually are good at doing -- designing and building more cars. It works for Tesla today, because they only sell 20k cars a year, and they're all $80k+, and the people buying them can afford to order and wait and go arrange their own financing and deal with their own trade ins. They don't have to stock anything, all they need is one car and a kiosk in an upscale mall manned by some kid making minimum wage to take your order. And even with only that minimum amount of overhead, Tesla loses about $100 million dollars per quarter. Now try applying that to Toyota, who sells 10x in a month what Tesla does in a year. 200k cars per month, vs 20k per year, and we're talking $13k on up cars for people who need one NOW, not big ticket niche toys for rich folks. Well, suddenly that ritzy mall kiosk doesn't quite cut it anymore. That doesn't work when you need a car that day and have a trade in you're upside down in and iffy credit, like the majority of actual consumers. Big car companies don't want to deal with any of that, they want to let the dealers handle with the hassles of housing and upkeeping millions of cars and selling them one at a time to millions of consumers.

Which brings us to point #2 -- you won't get a better deal. What you WILL get is the same deal as everyone else, and maybe that's good enough for people to accept it. But you know why you won;t get "a better deal"? Because you just eliminated the one thing you said you were fighting for when you asked for direct sales -- "competition". With privately owned dealers, there's competition among same brand stores to undercut one another. If you want a Chevy Tahoe today you can go to all 15 of the Chevy dealers in town (or get internet quotes from across the country) and they'll compete to sell you one they have in stock. But

JRobUSC: +1

I suggest people read his post. He's right on the money!

direct sales is code speak for price fixing and that is bad for consumers. JRobUSC is full of it.

Hey, smart guy, we're on the same side. Try reading first, THEN commenting.

There are other problems with Direct sales - Service - Parts - AND Support
Tesla has already established that you cannot buy ALL the parts for your vehicle - that only their service personnel will have access to them. And - they have not made public the information needed to restart the computer after repairs - so you will be required to return to the dealer to get the computer reset - where they will inspect and REFUSE to do so if the repairs do not meet their "standards". That will eventually reduce the aftermarket selling price since used car dealers will not want a car that THEY must return to a dealer to get serviced. So - they will either refuse to take it in trade - or low ball that trade so they can wholesale out the car (And who will want it at the wholesaler if repairs are expensive too). So - no dealers also results in no competition for parts - and service too.

While that may be OK for the people who can buy a $100,000 vehicle - it won't be for the average consumer.