The owners of dealership group operating in New York and New Jersey was just fined $1.8 million plus compensatory damages after Consumer Affairs followed up with numerous customer complaints, reports NJ.com. This is exactly why Tesla’s fight for direct car sales is so important.
This is actually the second time Carmelo and Ignazio Giuffre, both of New York, have been found guilty of deceptive business practices related to their car dealership group. The first time was back in 1999, when they were fined $450,000 and had to promise not to repeat past mistakes. Together they owned eight dealership that Consumer Affairs found guilty of shady business tactics, like bait-and-switch, missing information or car history reports, failing to return refunds in a timely manner, as well as failing to honor advertised or negotiated prices. In addition to the fine, they also have to hire a “compliance monitor” for two years to ensure they don’t return to their shady tactics.
Basically, eight separate businesses employing hundreds of people were directed to engage in illegal behavior. The worst part is, none of this is the least bit surprising. Why? Because the situation pits seller vs. buyer, turning it into a contest of who-can-screw-over-the-other-guy the worst. Is it any wonder even die-hard conservatives are siding with Tesla?
Frankly, the concept of car dealerships have always baffled me.While a car might be the second-biggest investment most Americans ever make (though college is quickly catching up), dealerships have consistently treated customers with contempt. Don’t take my word for it though; everybody has a terrible car dealership experience, yours truly included. After a hard lesson learned, my second try at buying a new car left me spending two days playing dealerships against each other to try and get the car I wanted at the best price. In the end, I did pretty well, and I even managed to my 2012 Chevy Sonic in the color my wife wanted.
But Tesla has shown us a better way, where you go into a store, order the car you want at a pre-set price…and then that’s that. No haggling, no upselling, no special offers on models that don’t exist. Pick your options, pay, and in a few weeks your ride will be ready. Even automakers themselves seem to be ready to take Tesla’s side.
Tesla salespeople don’t get paid on commision, so they have no incentive on trying to upsell you. Tesla vehicles also don’t require any regular service, so you won’t end up paying for repairs you don’t need when you go in for a tire change (another favored tactic of shady dealerships).
Dealership lobbies like to paint a picture of a market where fair prices and competition disappear as automakers turn to collusion to rig prices. Seems far fetched if you ask me, especially when Apple has proven that people are willing to pay a premium for premium products and services, en masse. Tesla owners love their cars and the company that built them precisely because of excellent customer service, something car dealers have, by and large, failed to deliver.
In fairness though, some dealership groups have come out in support of Tesla and direct sales. These guys get that Tesla isn’t going away, and that car dealers aren’t making any fans by preventing Tesla from selling its cars. By and large though, dealership groups in every state are battling against the direct sales model, and consumers aren’t happy.
Tesla’s fight against the dealership lobby is important if we want to change an industry that thrives on shady tactics that put car buyers at a significant disadvantage. Just another reason Tesla really is the most important automaker in the world.