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Trouble in Missouri

teslamotors.com

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Re: Trouble in Missouri

#31

Post by jvandonsel »

wmeredith wrote: post #5

I live in Kansas City, MO (Independence, actually). I just called my representative's office. You can find yours here: http://www.senate.mo.gov/LegisLookup/default.aspx/default.as... My statement was as follows if anyone cars to piggy-back/draw inspiration. Hello, I am a constituent and I'd like to voice my opposition to House Bill 1124 in its current form. It has recently had anti-competitive and anti-consumer langu…

I whole-heartedly agree with your position, but how do you convincingly make the argument that it will cost MO jobs and money?

Re: Trouble in Missouri

#32

Post by AaronM »

KMag wrote: post #23
freehunter wrote: post #2

Can someone explain to me why it should be illegal for Ford or Chevy to sell their cars directly? Is it really anti-competitive? Apple sells their phones directly, AT&T sells Apple phones directly, and resellers like Best Buy or Radio Shack sell Apple phones, and they're all doing pretty well economically. Not even arguing that Tesla should be allowed to sell cars without a dealership, why bother preventing direct sa…

(1) Local protectionism but also (2) Car dealerships need expensive inventory of illiquid assets and franchise licenses. If the franchise contracts aren't well written (perhaps collusion between manufacturers prevents competition over franchise rights), then a big auto company can maximize profits by selling franchise rights and then a couple years later looking at volumes of sales for which areas it makes sense to s…

Its my understanding that dealerships maintain no inventory of vehicles, at least not new vehicles, on their books.

Re: Trouble in Missouri

#33

Post by jcampbell1 »

AaronM wrote: post #32
KMag wrote: post #23

Earlier quoted context omitted.

(1) Local protectionism but also (2) Car dealerships need expensive inventory of illiquid assets and franchise licenses. If the franchise contracts aren't well written (perhaps collusion between manufacturers prevents competition over franchise rights), then a big auto company can maximize profits by selling franchise rights and then a couple years later looking at volumes of sales for which areas it makes sense to s…

Its my understanding that dealerships maintain no inventory of vehicles, at least not new vehicles, on their books.

This is completely wrong. Dealers own the inventory. Dealers take ownership of the car as soon as the car leaves the factory gate - they own the in-transit cars.

Re: Trouble in Missouri

#34

Post by throw_away »

freehunter wrote: post #2

Can someone explain to me why it should be illegal for Ford or Chevy to sell their cars directly? Is it really anti-competitive? Apple sells their phones directly, AT&T sells Apple phones directly, and resellers like Best Buy or Radio Shack sell Apple phones, and they're all doing pretty well economically. Not even arguing that Tesla should be allowed to sell cars without a dealership, why bother preventing direct sa…

In addition to what the others have said in response, I've heard that car dealerships collect a fairly hefty chunk of local sales taxes due to the nature of the product they are selling, which may give them some leverage with local governments to keep things the way they are.

Re: Trouble in Missouri

#35

Post by spo81rty »

throw_away wrote: post #34
freehunter wrote: post #2

Can someone explain to me why it should be illegal for Ford or Chevy to sell their cars directly? Is it really anti-competitive? Apple sells their phones directly, AT&T sells Apple phones directly, and resellers like Best Buy or Radio Shack sell Apple phones, and they're all doing pretty well economically. Not even arguing that Tesla should be allowed to sell cars without a dealership, why bother preventing direct sa…

In addition to what the others have said in response, I've heard that car dealerships collect a fairly hefty chunk of local sales taxes due to the nature of the product they are selling, which may give them some leverage with local governments to keep things the way they are.

That would still happen when you license the car at the DMV. Even for cars purchased out of state.

Re: Trouble in Missouri

#36

Post by jessaustin »

jcampbell1 wrote: post #33
AaronM wrote: post #32

Earlier quoted context omitted.

Its my understanding that dealerships maintain no inventory of vehicles, at least not new vehicles, on their books.

This is completely wrong. Dealers own the inventory. Dealers take ownership of the car as soon as the car leaves the factory gate - they own the in-transit cars.

Completely wrong?

http://en.wikipedia.org/wiki/Retail_floorplan

Re: Trouble in Missouri

#37

Post by jessaustin »

mortenjorck wrote: post #27
mikeash wrote: post #16

Earlier quoted context omitted.

One thing I don't understand is why the dealers didn't play the manufacturers off each other to mitigate the problems. I can see that, for Apple dealers, it could be a major problem. Apple products are a specific niche, and you can't take your Apple dealer and turn it into something else with much hope of success. Selling PCs is a pretty different business. But when it comes to car, surely selling Fords is much the s…

I'm going to guess there's a pretty strong non-compete built into the standard dealership contract.

But there are many dealerships that have like ten different brands?

Re: Trouble in Missouri

#38

Post by jessaustin »

jcampbell1 wrote: post #19
freehunter wrote: post #2

Can someone explain to me why it should be illegal for Ford or Chevy to sell their cars directly? Is it really anti-competitive? Apple sells their phones directly, AT&T sells Apple phones directly, and resellers like Best Buy or Radio Shack sell Apple phones, and they're all doing pretty well economically. Not even arguing that Tesla should be allowed to sell cars without a dealership, why bother preventing direct sa…

Let's say you borrow money, and open a nice profitable dealership. The manufacturer, then decides to steal your profits by raising the wholesale price of cars for you until you are bankrupt, and the manufacturer buys the dealership out from under you in bankruptcy court. That type of behavior is what created franchise laws in the first place.

That smells like a just-so story. The grim scenario you describe could happen in any franchise situation. What stops McDonald's from doing this to its franchisees? Not this type of law.

Re: Trouble in Missouri

#39

Post by webmaven »

jrs235 wrote: post #28
mortenjorck wrote: post #26

Earlier quoted context omitted.

Perhaps a better law would be that no manufacturer with existing franchise owners in the state can have direct sales in the state. As arbitrary a distinction as that may be, it honestly sounds like this would satisfy everyone involved.

Except the manufacturers that don't want another manufacturer to able to sell in the state. Especially since that new manufacturer will be selling directly allowing their cars to be sold for less than if a franchise fee had to be amortized into every vehicle sold (in other words, they'll have lower overhead costs), which still affects the existing dealerships who won't be happy as they will be at a slight disadvantag…

Basically, a manufacturer that wanted to sell direct would have to buy out the dealerships first.

Re: Trouble in Missouri

#40

Post by awjr »

mikeash wrote: post #17
frogpelt wrote: post #15

Earlier quoted context omitted.

It may help to view this set of laws the same way that some people view labor unions. Labor unions started with positive intentions and were needed to protect workers who were often overworked and underpaid. Now many feel that labor unions mostly exist to support themselves and make it harder on everyone from corporations to consumers and their effects aren't near as beneficial as they once were. The internet has mad…

Are Stihl and John Deere dealerships protected by law, or is that just how the business arrangements shook out? There's nothing wrong with the dealership model per se, but it's troublesome when it becomes mandated by law.

Stihl have a business model based around dealerships.
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