Automakers started out with direct sales. Anti-trust issues quickly arose with that business model and that’s where we got dealership laws, as imperfect as they may be.
The document is rather one-sided and slanted, but I think it’s interesting to see how a dealership association explains their perspective:
Of particular interest is warranty issues. Tesla has an extra-strong interest in hiding recall-worthy issues and preventing warranty service from occurring since their service department is owned by the manufacturer.
A car dealership has the opposite incentive: every dealer-performed warranty service is a payment from the manufacturer to the dealer.
Finally, even if GM is lobbying to do direct sales, dealerships employ more Americans than the carmakers and parts manufacturers. Their lobbying group is larger and more local.
> A car dealership has the opposite incentive: every dealer-performed warranty service is a payment from the manufacturer to the dealer.
Wouldn't this be served just as well by having independent repair shops certified by the manufacturer to do recall and warranty repairs, without prohibiting direct sales of vehicles?
I would say that laws covering right-to-repair are almost entirely a different subject than laws governing retail competition.
Being forced to buy a vehicle from the manufacturer would be exactly like being forced to buy Indiana Jones and the Great Circle only from Microsoft. But it's a lot better to be able to buy it from multiple game stores, many of which compete on price.
Overall I think it's totally fine that Tesla wants to sell cars direct, and any manufacturer should be able to. But they should also be obligated to sell to dealerships at a fair price (they shouldn't be able to just pretend that their own selling process has no cost associated with it).
Dealerships also make most of their profit from the service departments which is why they don’t really like EVs. No longer do you need to go in every 3-6 months to get an oil change, belt replacement, spark plugs, etc.
1. There are still service items on a Tesla that are relatively frequent. Tires rotated every 6,400 miles, brake calipers cleaned and lubricated yearly for northern climates with salted roads, cabin air filter changed every 2 years, and two other service items every 4 years.
2. This is technically a tangent to the issue at hand. If Tesla was a gasoline vehicle startup they would have the same incentives to avoid dealership franchises, perhaps an even stronger incentive.
3. The fact that vehicle service is the most profitable part of the business is a great argument for the dealership model. Tesla owning their own service centers means that they are directly incentivized not to fix reliability problems in their vehicles, while all the car companies who have to pay out dealerships to handle recalls and warranty claims have a direct incentive to produce a reliable vehicle. Lo and behold, Tesla is about halfway down the vehicle reliability list according to consumer reports. At least they're better than Chrysler?
The document is rather one-sided and slanted, but I think it’s interesting to see how a dealership association explains their perspective:
https://www.nada.org/media/3267/download?inline
Of particular interest is warranty issues. Tesla has an extra-strong interest in hiding recall-worthy issues and preventing warranty service from occurring since their service department is owned by the manufacturer.
A car dealership has the opposite incentive: every dealer-performed warranty service is a payment from the manufacturer to the dealer.
Finally, even if GM is lobbying to do direct sales, dealerships employ more Americans than the carmakers and parts manufacturers. Their lobbying group is larger and more local.