Car Dealers Sue Tesla, Citing State Franchise Laws • Hacker News Board

Re: Car Dealers Sue Tesla, Citing State Franchise Laws

#51

Post by jetti » Sat, Nov 10, 2012, 3:24 PM UTC

mrkmcknz wrote: post #30

protomyth wrote: post #21

It is basically the same type of law that kept studios from owning movie theaters. Separating producers from local sales was a big thing. We can say it is a crap law but there were some very real worries and reasons that lead to it in many industries. Expect if the law is overturned that all the manufactures will replace local dealers with their own showrooms. This isn't about stopping innovation, it's about accumula…

Maybe I'm too naive to see why manufactures having their own showrooms would be such a problem?

They have have advantages over non-manufacturer dealerships. For instance, parts would be internal and thus they may get them for just material cost which would allow for either lower service costs or higher margins both of which aren't available at non-manufacture dealerships. You could apply the same scenario to fully finished new cars as well.

Re: Car Dealers Sue Tesla, Citing State Franchise Laws

#52

Post by wilsaj » Sat, Nov 10, 2012, 3:27 PM UTC

delinka wrote: post #35

archildress wrote: post #25

"Tesla is choosing to ignore the law and then is choosing to play outside that system." Is there a statement more indicative of the fear of innovation in archaic industries? Let's hope that laws like this begin to vanish and clear the way for innovation. If they don't, I'm sure Mr. Musk will find a workaround. They could essentially setup their retailing operation as a separate legal entity and work around this. And…

"Separate legal entity" isn't quite enough. It also can't be owned by the manufacturer.

Would a parent corporation that owns both the manufacturer and a separate distributor work?

Re: Car Dealers Sue Tesla, Citing State Franchise Laws

#53

Post by ihsw » Sat, Nov 10, 2012, 3:28 PM UTC

gpcz wrote: post #36

reinhardt wrote: post #22

Earlier quoted context omitted.

No, go out of business and look for a real job.

If the only choice for dealerships in the classic phrase "innovate or die" is to die, why even say that the dealership industry needs to innovate?

The alternative is to 'bail them out' -- either through strong and enforced-by-guns legislation in their favor, or the monetary kind to 'create jobs.'

I'm fairly certain we're all sick of private-industry and government colluding together in the name of state-sponsored profit. No industry deserves a guaranteed profit margin.

Re: Car Dealers Sue Tesla, Citing State Franchise Laws

#54

Post by rhplus » Sat, Nov 10, 2012, 3:31 PM UTC

beedogs wrote: post #26

Did the horse-and-buggy dealers sue the automobile industry when it was starting to threaten them, too?

In the UK, the Locomotive Acts[1] restricted speed and weight of autos and imposed signaling rules (cars had to be preceded by a walker with a red flag!) and required yielding to horses. Arguably, these laws hindered early automobile development and public acceptance and helped the development of railways and trams.

I'm not sure about the US, but by the early 20th century the American auto industry was on the offensive, setting up shell companies[2] to buy up and dismantle inner-city trolley lines.

[1] http://en.wikipedia.org/wiki/Locomotive_Act

[2] http://en.wikipedia.org/wiki/Great_American_Streetcar_Scanda...

Re: Car Dealers Sue Tesla, Citing State Franchise Laws

#55

Post by rubyrescue » Sat, Nov 10, 2012, 3:31 PM UTC

mrkmcknz wrote: post #30

protomyth wrote: post #21

It is basically the same type of law that kept studios from owning movie theaters. Separating producers from local sales was a big thing. We can say it is a crap law but there were some very real worries and reasons that lead to it in many industries. Expect if the law is overturned that all the manufactures will replace local dealers with their own showrooms. This isn't about stopping innovation, it's about accumula…

Maybe I'm too naive to see why manufactures having their own showrooms would be such a problem?

Imagine that Ford only allows maintenance at company owned stores, because they don't sell replacement parts to dealers, then they charge $500 for a fan belt, etc.

Re: Car Dealers Sue Tesla, Citing State Franchise Laws

#56

Post by shawn-butler » Sat, Nov 10, 2012, 3:31 PM UTC

reinhardt wrote: post #22

gpcz wrote: post #20

Earlier quoted context omitted.

Its easy to say that at the macro scale, but what are you suggesting car dealerships do on the micro scale? Learn how to build their own cars and sell them in defiance of the current laws on the contingency that the judge rules in Tesla's favor?

No, go out of business and look for a real job.

Oh, just like the US auto manufacturers should have just gone out of business instead of being bailed out?

Re: Car Dealers Sue Tesla, Citing State Franchise Laws

#57

Post by andrewtbham » Sat, Nov 10, 2012, 3:37 PM UTC

mrkmcknz wrote: post #30

protomyth wrote: post #21

It is basically the same type of law that kept studios from owning movie theaters. Separating producers from local sales was a big thing. We can say it is a crap law but there were some very real worries and reasons that lead to it in many industries. Expect if the law is overturned that all the manufactures will replace local dealers with their own showrooms. This isn't about stopping innovation, it's about accumula…

Maybe I'm too naive to see why manufactures having their own showrooms would be such a problem?

As a modern example: look at luxotica for an example of a monopoly. They own large shares of the manufacturing and retail for eyeglasses, and they charge exorbitant prices.

They own Oakley, Ray-Ban, LensCrafters, Pearle Vision and Sunglass Hut. They also operate Sears Optical and Target Optical.

They also produce eyewear under license for names such as Coach, Anne Klein, Bulgari, Prada, Polo, Versace, Ralph Lauren, and Tiffany.

http://online.wsj.com/article/SB1000142405274870451890457536...

Making manufacturers divest of retail operations is a way to break up their monopoly.

Re: Car Dealers Sue Tesla, Citing State Franchise Laws

#58

Post by grannyg00se » Sat, Nov 10, 2012, 3:38 PM UTC

rubyrescue wrote: post #55

mrkmcknz wrote: post #30

Earlier quoted context omitted.

Maybe I'm too naive to see why manufactures having their own showrooms would be such a problem?

Imagine that Ford only allows maintenance at company owned stores, because they don't sell replacement parts to dealers, then they charge $500 for a fan belt, etc.

Except that if I knew that was their way of business I would simply avoid buying their products.

Isn't this a case where the free market actually would account for that scenario? It's not like they have a car monopoly.

Re: Car Dealers Sue Tesla, Citing State Franchise Laws

#59

Post by MrBlue » Sat, Nov 10, 2012, 3:39 PM UTC

shawn-butler wrote: post #56

reinhardt wrote: post #22

Earlier quoted context omitted.

No, go out of business and look for a real job.

Oh, just like the US auto manufacturers should have just gone out of business instead of being bailed out?

Yes. Exactly. That is how the free market works.

Re: Car Dealers Sue Tesla, Citing State Franchise Laws

#60

Post by geon » Sat, Nov 10, 2012, 3:39 PM UTC

rubyrescue wrote: post #55

mrkmcknz wrote: post #30

Earlier quoted context omitted.

Maybe I'm too naive to see why manufactures having their own showrooms would be such a problem?

Imagine that Ford only allows maintenance at company owned stores, because they don't sell replacement parts to dealers, then they charge $500 for a fan belt, etc.

Then no one will buy a Ford.