Automakers Siding With Tesla Against Franchise Laws

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In their effort to limit Tesla’s direct sales model, car dealer lobbies may have pushed too far. The Alliance of Automobile Manufacturers, which represents 12 major carmakers in the U.S., has called out dealer lobbies for their anti-Tesla legislation, and warned that they may be nearing the “tipping point” where the AAM can no longer remain neutral.

For over a century, entrenched car dealership franchises have lobbied for laws that have made their business model all but unassailable…at least until Tesla showed up. The electric automaker has been fighting battles in many U.S. states to be allowed to sell cars directly to consumers, without involved franchised dealers. Dealers have replied by lobbying for stricter and stricter laws restricting or even disallowing the sale of Tesla vehicles in states like Texas and New Jersey.

The National Auto Dealer Association, along with local state dealer lobbies, is the driving force behind many of these laws, and they remain die-hard in their stance that dealerships somehow benefit consumers by keeping costs down and competition high. They even claim a factory direct sales model would compromise consumer safety in this absurd video the NADA put out.

Yeah, it’s OK to laugh. I did too. But you know who isn’t laughing? Automakers.

While GM has recently weighed in on anti-Tesla legislation in Ohio, recently-passed anti-Tesla legislation has raised the ire of the AAM. AAM spokeswoman Gloria Bergquist told Automotive News that;

“At the request of local dealer groups, states set up a labyrinth of protectionist laws that make the car-buying experience difficult and costly for our customers. It’s understandable why Tesla or future competitors would want a simpler sales process. When we look at the big picture, we may be at a tipping point. If dealer groups continue their push for more onerous franchise laws, we will be forced to keep an open mind about how best to serve new-car buyers in the future.”

What inspired the AAM to lash out? A new law in Pennsylvania, which allows Tesla to sell an unlimited number of vehicles at an unlimited number of stores, which was met by howls of disapproval from local car dealers…and the AAM, which says it gives Tesla an unfair advantage. Selling cars directly is an advantage to automakers, and one the dealership lobbies are standing in the way of automakers doing what Tesla is doing.

So basically, the AAM is only against Tesla because they want the same direct sales advantage. With Tesla making national headlines for taking on the dealership lobby, it was only a matter of time before the big automakers were forced to take one side or the other, and it’s not surprising that they’re siding with Tesla. Buying a new car is frequently ranked as one of the worst consumer experiences, regardless of what the dealerships are saying, though the Tesla approach to selling cars has been met with cheers from buyers and consumer advocates alike. The Federal Trade Commission has even (unofficially at least) sided with Tesla against this non-nonsensical and protectionist legislation.

Sounds like car dealers may have shot themselves in the foot, and instead of just ignoring Tesla, they may have just given the electric automaker a powerful new ally in the battle against dealer franchise laws.

 

Christopher DeMorro

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.