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Why are direct-to-consumer car sales illegal? Why are cartels legal?

Neomalthusian said:
What makes you think this is all out of a desire to save money? Constitutionally, what should prohibit a company from selling direct, even if that were to mean (and it doesn't necessarily, mind you) that there were less in the way of warranties, support, and so forth? It's one thing to sing the praises of the great things done by dealerships, but it's another to defend the government infringement upon a company's freedom to sell what it makes except through a cartel. So defend that specifically. If what dealerships do is so great, why would dealership associations need to lobby legislatures to prohibit others from selling direct? Please explain that.

If what a labor union offers in terms of labor is so superior, why would laws and regulations need to prevent others from competing with it? If what dealerships do is so great, why would laws and regulations need to prevent anyone from being allowed to compete with them?



OH! Good to keep in mind, in context of this discussion.
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More to protect the consumer than anything else. A lot of things are regulated. We have that problem with AC units for homes. We can sell window and through the wall units direct to the public but not split systems where properly sealing and charging the Freon is required. The person must be EPA certified to purchase those products. I know with cars and trailers they must be certified for the road and for the state they are sold in. California has different requirements than Texas. Dealerships also take care of recalls and warranty problems. Very few factories are equipped to handle these problems plus taking your car to the factory could be a problem when the factory is in Korea.

Plus on larger cost items support is important. We literally get hundreds of people in our store every week who bought products from the big box stores and when they have problems could not get help from the store they bought it from. The big box stores actually send the people to us for warranty. The problem is the factory will not warranty the product through us. Part of their direct buying and cheaper pricing is they buy as is and claim they will handle problems. We pay a higher price for our products so we have the manufacturers support.
 
Van Basten said:
Good to see someone cares about actual people, good answer.
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The vast majority of people, the consumers, pay much more for their products in the dealership model with the few dealership owners benefiting compared to the thousands of consumers. And Tesla has their own garages that does repairs so what jobs are lost there? It comes down to do you want to pay hundreds to thousands of dollars more on a purchase that goes into the pocket of an unneeded middleman.
 
Neomalthusian said:
You appear not to have the first clue what you're saying. For-profit greed accumluated through monopoly power corrupts your government officials to protect their for-profit monopoly power interests, and here you are defending that. Time for you to spend some time in front of a mirror.
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The only "for profit greed" there is belongs to corporations and their CEO's. The endless drive for higher and higher profits and margins comes at he expense of their employees and their families.

CorpProfitsVsWages_onechart.jpg
 
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PIPEWRENCH said:
More to protect the consumer than anything else. A lot of things are regulated. We have that problem with AC units for homes. We can sell window and through the wall units direct to the public but not split systems where properly sealing and charging the Freon is required. The person must be EPA certified to purchase those products. I know with cars and trailers they must be certified for the road and for the state they are sold in. California has different requirements than Texas. Dealerships also take care of recalls and warranty problems. Very few factories are equipped to handle these problems plus taking your car to the factory could be a problem when the factory is in Korea.
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The fact (assuming it is fact) that a competitor is not well equipped to do those things shouldn't mean the competitor is prohibited from trying to sell. I'm not suggesting those regulations be excused or overlooked, they would still have to be met, but that shouldn't mean dealerships should have cartel status whereby no one is even permitted to try to sell except through them.

It's one thing to have regulations that create roundabout barriers to entry that are difficult to outside firms or new entrants to overcome. It's another thing to flat out ban entry by new players for the protection of the cartel members.
 
iguanaman said:
The only "for profit greed" there is belongs to corporations and their CEO's.
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Utterly ridiculous garbage. This topic is about cartel tactics, what our law says about those tactics, and how current legislators and regulators grant special privileges and exceptions to those rules all over the place. Try to stay on topic instead of spewing your tired rhetoric about the rich. I have no tolerance for that crap.
 
gdgyva said:
For one thing, jobs

Dealerships provide millions of jobs across America

Sales, service, parts, reconditioning, lot guys, office and admin, etc

When manufacturers can sell directly, it cuts out all of those jobs

Second, who is going to do your service work....without the sales, most dealerships would have to close their doors

So when that car breaks, and it will...who is going to fix it for you?

third....competition....numerous dealerships selling the same brand cars means a consumer has options, and can get a better deal than if there was no competition
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You're acting as if someone is looking to close all the dealerships. All Tesla wants in an alternative and changing the laws that prevent them from doing so doesn't need to change anything for any other manufacturers or dealers. Even if it did, it'd still be in the manufacturers interests for the tasks you describe to be done so the people who do them will still have jobs. Some might be employed by manufactures rather than dealers but I don't see it making a massive practical difference.

After all, there are places (in the US and beyond) where this is permitted and there are still plenty of dealerships employing all these people regardless.
 
HonestJoe said:
You're acting as if someone is looking to close all the dealerships. All Tesla wants in an alternative and changing the laws that prevent them from doing so doesn't need to change anything for any other manufacturers or dealers. Even if it did, it'd still be in the manufacturers interests for the tasks you describe to be done so the people who do them will still have jobs. Some might be employed by manufactures rather than dealers but I don't see it making a massive practical difference.

After all, there are places (in the US and beyond) where this is permitted and there are still plenty of dealerships employing all these people regardless.
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If manufacturers were allowed to sell directly, nearly every dealer in the county would close. Only a few huge service centers would stay open for repairs, and warranty work. Why allow dealers to take the profit for selling the car, when you can keep it yourself?

But, have you ever seen a car directly off of the carrier? Is it ready to drive? Is it ready for the consumer?

The answer is no...every dealer from every manufacturer has to do certain things as the cars roll off the carrier. Most call it the PDI (pre delivery inspection) and it is just another reason that cars have to go through dealers

Tessa thinks they can change the dealer model....and sell cars online

That may work for a small percentage of people...but for most, no freaking way. They want to touch and feel the 30k + product that they are buying...
 
gdgyva said:
If manufacturers were allowed to sell directly, nearly every dealer in the county would close. Only a few huge service centers would stay open for repairs, and warranty work. Why allow dealers to take the profit for selling the car, when you can keep it yourself?

But, have you ever seen a car directly off of the carrier? Is it ready to drive? Is it ready for the consumer?

The answer is no...every dealer from every manufacturer has to do certain things as the cars roll off the carrier. Most call it the PDI (pre delivery inspection) and it is just another reason that cars have to go through dealers

Tessa thinks they can change the dealer model....and sell cars online

That may work for a small percentage of people...but for most, no freaking way. They want to touch and feel the 30k + product that they are buying...
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You're talking out both sides of the mouth on this one. First you lament that all dealerships would close if it weren't for the fact that everyone is forced to buy through them. That doesn't make a good case for continuing to protect the dealerships and their associations. If anything it makes the case for the opposite. If the only way they exist is by banning everyone else from selling what they sell, that is a monopoly power that our laws were supposed to have prohibited.

But then you act like the dealership model is superior and that's what people want. If that's the case, why would dealerships be so existentially threatened by the notion of a carmaker having the right to sell a car outside of a dealership?

I see no coherent argument that whatever dealerships do cannot possibly be done any other way except be preserving their monopoly power that they lobby so hard to preserve.
 
Neomalthusian said:
You're talking out both sides of the mouth on this one. First you lament that all dealerships would close if it weren't for the fact that everyone is forced to buy through them. That doesn't make a good case for continuing to protect the dealerships and their associations. If anything it makes the case for the opposite. If the only way they exist is by banning everyone else from selling what they sell, that is a monopoly power that our laws were supposed to have prohibited.

But then you act like the dealership model is superior and that's what people want. If that's the case, why would dealerships be so existentially threatened by the notion of a carmaker having the right to sell a car outside of a dealership?

I see no coherent argument that whatever dealerships do cannot possibly be done any other way except be preserving their monopoly power that they lobby so hard to preserve.
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You can't have manufacturers competing directly with dealers

That can't work

Only one way will work....manufacturer selling direct, or dealers selling indirectly

And in this country, you can't get rid of dealers....and it has nothing to do with the NADA, WANADA, or any other dealer organizations

The manufacturers aren't setup to sell directly, and the consumers here wouldn't buy that way except for a select small percentage

And my opinion is slightly biased...I run a chain of dealerships...and have been in the business for 30+ years
 
gdgyva said:
You can't have manufacturers competing directly with dealers

That can't work
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Competition never works... for someone, because competition usually results in one side not doing so well. In this case, manufacturers competing with dealers doesn't work for dealers, because dealers have enjoyed monopoly power, and without monopoly power they wouldn't do as well (obviously).

Sherman made monopoly power illegal. Since then, lots of special exceptions have been made. This is one of them.

And in this country, you can't get rid of dealers....and it has nothing to do with the NADA, WANADA, or any other dealer organizations

The manufacturers aren't setup to sell directly, and the consumers here wouldn't buy that way except for a select small percentage
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THEN WHY ARE YOU CLAIMING THAT DEALERESHIPS ARE ALL EXISTENTIALLY THREATENED BY THE WOULD-BE RIGHT OF MANUFACTURERS TO SELL DIRECT?

Both sides of the mouth. You can't claim that they're all going to close if they lose their monopoly grip, and then in the next breath say that hardly anyone would buy direct because manufacturers suck at meeting customers' needs directly. It's one or the other.

And my opinion is slightly biased...I run a chain of dealerships...and have been in the business for 30+ years
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I respect your personal disclosure and know that I have nothing against you. This topic is important to me, and for me it goes way beyond just dealerships.
 
MaggieD said:
Im happy with dealerships. Great service. They work for my business. Having different dealerships allows for competition. Competition is good for buyers. I want a Lexus? Ivegot five dealerships vying for my business...instead of one manufacturer. Some things aren't broken. No need to fix 'em.
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This may not be as true as you think.

https://www.youtube.com/watch?v=uMWmYJOa-BM
 
Neomalthusian said:
Competition never works... for someone, because competition usually results in one side not doing so well. In this case, manufacturers competing with dealers doesn't work for dealers, because dealers have enjoyed monopoly power, and without monopoly power they wouldn't do as well (obviously).

Sherman made monopoly power illegal. Since then, lots of special exceptions have been made. This is one of them.



THEN WHY ARE YOU CLAIMING THAT DEALERESHIPS ARE ALL EXISTENTIALLY THREATENED BY THE WOULD-BE RIGHT OF MANUFACTURERS TO SELL DIRECT?

Both sides of the mouth. You can't claim that they're all going to close if they lose their monopoly grip, and then in the next breath say that hardly anyone would buy direct because manufacturers suck at meeting customers' needs directly. It's one or the other.



I respect your personal disclosure and know that I have nothing against you. This topic is important to me, and for me it goes way beyond just dealerships.
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Dude...last time, then I am done

See if you can follow

Dealers and manufacturers cannot compete...it wouldn't be fair....no one would buy from dealers

Without the sales side, they couldn't afford to stay open, hence no dealers

No dealers, no service...no service, no way manufacturers can fix their customers cars

It is a vicious circle....

Would you buy from a dealer and pay two grand more, or buy direct from the factory?

The factory of course...everyone would....but then all the dealers go out of business

And the last part of the problem, how do you compensate all the dealers for the franchise rights they own?
 
gdgyva said:
Dude...last time, then I am done

See if you can follow

Dealers and manufacturers cannot compete...it wouldn't be fair....no one would buy from dealers

Without the sales side, they couldn't afford to stay open, hence no dealers

No dealers, no service...no service, no way manufacturers can fix their customers cars

It is a vicious circle....

Would you buy from a dealer and pay two grand more, or buy direct from the factory?

The factory of course...everyone would....but then all the dealers go out of business

And the last part of the problem, how do you compensate all the dealers for the franchise rights they own?
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I stopped reading after stating there would be no service without dealers. Obviously if the manufacturers chose to go around dealers they would open up their own service centers like Tesla does or hire 3rd party service centers. Its a no brainer in a free country that manufacturers like Tesla should be able to have the freedom to choose their business plan. And given you state no one would buy from dealers you are admitting it is much better to consumers without them.
 
And the money saved by consumers can either be saved and invested with the multiplier effect creating jobs, or they can use the money to purchase additional goods and services elsewhere which increases living standards, creates more wealth, and creates more jobs. So by being more efficient it is an overall big gain for society even if a few have a negative effect of losing their jobs. But even this is good for wealth creation as it frees up inefficient labor to create additional wealth, which also raises living standards and creates more jobs.
 
gdgyva said:
Dude...last time, then I am done

See if you can follow

Dealers and manufacturers cannot compete...it wouldn't be fair....no one would buy from dealers
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If it seems like I'm struggling to follow, it's because you just said this:

And in this country, you can't get rid of dealers....and it has nothing to do with the NADA, WANADA, or any other dealer organizations

The manufacturers aren't setup to sell directly, and the consumers here wouldn't buy that way except for a select small percentage
Click to expand...

Without the sales side, they couldn't afford to stay open, hence no dealers

No dealers, no service...no service, no way manufacturers can fix their customers cars

It is a vicious circle....

Would you buy from a dealer and pay two grand more, or buy direct from the factory?

The factory of course...everyone would....but then all the dealers go out of business

And the last part of the problem, how do you compensate all the dealers for the franchise rights they own?
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If dealerships provide this critically necessary and indispensably important thing, that supposedly can't be provided for any other way except through the dealership model, why do you predict they would all fail if a company was allowed to sell outside of their model?

It shouldn't be confusing why I'm not following your train of thought. On one hand you talk about the indispensably important service and customer security they only they can provide, and allege the competition between dealerships optimizes low prices for customers, but then claim dealerships are all dead in what water without continued legal protection banning non-dealer sales.
 
Ineffiecient bubbles benefit a few but overall have a negative effect on the economy. That is what blocking direct sales to protect a special interest does.
 
A somewhat entertaining albeit admittedly scathing discussion of the issue:

 
If dealerships didn't exist, car manufacturers would have to invent them. I don't have any problem with them selling direct, but all that would do is replace the current dealerships with one owned by the monolithic manufacture. But there shouldn't be a law against selling cars direct. Tesla shouldn't be hobbled because of their non-traditional way of trying to do business.

I used to own a construction material distribution business. In that industry middlemen are a necessity for contractors. They don't have the time or money to send their guys to as many as 15 different manufacturers to pick up materials for each job and then deliver them to job sites. What would end up happening is that they'd have to be their own material house, which would destroy competition among contractors because only a tiny handful would be able to compete. And in that industry, at least here in SoCal, manufacturers self-impose a ban on selling directly to contractors for various, but obvious reasons.

But cars aren't construction materials and a car company could deliver the entire finished product to someone's door with relatively few problems. The people that now work at dealerships would just work directly for the manufacturer.

But then the question becomes whether the car manufacturers would even want to do that. To even begin to have set that infrastructure up would be a herculean task. It would take more money that would be worth it. So from a purist perspective, yes, they should be allowed to sell direct if they want to, but the law seems likely to have benefitted current manufacturers far more than it's hurt them. However, a modification of the law, something that says if you sell over X number of cars in Y area per year, then you have to do it through a dealership seems reasonable because then it could help provide entry into the market for newcomers like Tesla. It'd be win for the new entries and a win for the consumers.
 
Opopanax said:
If dealerships didn't exist, car manufacturers would have to invent them. I don't have any problem with them selling direct, but all that would do is replace the current dealerships with one owned by the monolithic manufacture. But there shouldn't be a law against selling cars direct. Tesla shouldn't be hobbled because of their non-traditional way of trying to do business.

I used to own a construction material distribution business. In that industry middlemen are a necessity for contractors. They don't have the time or money to send their guys to as many as 15 different manufacturers to pick up materials for each job and then deliver them to job sites. What would end up happening is that they'd have to be their own material house, which would destroy competition among contractors because only a tiny handful would be able to compete. And in that industry, at least here in SoCal, manufacturers self-impose a ban on selling directly to contractors for various, but obvious reasons.

But cars aren't construction materials and a car company could deliver the entire finished product to someone's door with relatively few problems. The people that now work at dealerships would just work directly for the manufacturer.

But then the question becomes whether the car manufacturers would even want to do that. To even begin to have set that infrastructure up would be a herculean task. It would take more money that would be worth it. So from a purist perspective, yes, they should be allowed to sell direct if they want to, but the law seems likely to have benefitted current manufacturers far more than it's hurt them. However, a modification of the law, something that says if you sell over X number of cars in Y area per year, then you have to do it through a dealership seems reasonable because then it could help provide entry into the market for newcomers like Tesla. It'd be win for the new entries and a win for the consumers.
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Lots of businesses use middlemen without being legally obligated to do so.

If Target or Amazon can sell cars better than a dealership, I say give them a shot. If Ford can do it better than a dealership, give them a shot too.
 
laska said:
The vast majority of people, the consumers, pay much more for their products in the dealership model with the few dealership owners benefiting compared to the thousands of consumers. And Tesla has their own garages that does repairs so what jobs are lost there? It comes down to do you want to pay hundreds to thousands of dollars more on a purchase that goes into the pocket of an unneeded middleman.
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Dealerships are here to stay, get over it.
 
Van Basten said:
Dealerships are here to stay, get over it.
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What kind of bend over defeatist attitude is that? How about no, and also who the **** are you? Some car salesman or some shill?

"Get over it" is not an argument.
 
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Lachean said:
What kind of bend over attitude is that? How about no, and also who the **** are you? Some car salesman or some shill?
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Someone who cares about countless jobs?

So you have to pay a bit more for servicing, get over yourself.

You can say "no" however many times you want, it doesn't matter.
 
OK. How would no dealerships work?

I had a steering motor or something go out on my Prius in upper Michigan - dealer only. They actually had the part. I was out the next day by noon.

What does a Tesla owner do?
 
chuckiechan said:
OK. How would no dealerships work?

I had a steering motor or something go out on my Prius in upper Michigan - dealer only. They actually had the part. I was out the next day by noon.

What does a Tesla owner do?
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What, parts manufacturers just can't figure out what to do without dealerships?
 
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