Elio And Tesla Versus Gm

[Ekh]

Joel Sheltrown speaks out about the dealership distribution model -- important for Elio sales.

http://www.thetruthaboutcars.com/2016/01/general-motors-tesla-spar-electric-car-sales/

 

[Ekh]

My comment to TTAC on this:

In Ohio this is an important issue. In June 2014 Tesla forced a compromise with the Republican-controlled legislature in which they were allowed to keep 3 showrooms, and after a date a few weeks later, no other motor vehicle dealers would be allowed to sell outside the four-tier model that's been in place for 70 years.

Elio motors (and others) are not exempted because they are motorcycles, because the revised law defines motor vehicles as being anything you can drive on a road at a speed of greater than 25 miles per hour.

So Mr. Sheltrown's testimony yesterday seeks to put in place a Federal regulation that would trump the states. In it he and others are pressing to pass an "autocycle safety and regulation" law that would define "autocycles" as a new class of vehicle -- three wheels, enclosed body, automotive engine and controls, no straddle seat. Autocycles do need their own safety testing protocols and regulations -- and at the same time would be salable by the Tesla model.

As a future Elio owner who lives in Ohio, I say YOU BET. I think the 4-tier system is pernicious because it adds cost disproportionate to value in buying and maintaining a car. It should be changed, whether via Mr. Sheltrown's autocycle legislation or by a simpler law aimed directly at the suppression of free enterprise by the car manufacturers.

 

[Rob Croson]

Also being an Ohio resident, I agree. I don't see any benefit that I get by being forced to buy through a dealership.

 

[Ekh]

Also being an Ohio resident, I agree. I don't see any benefit that I get by being forced to buy through a dealership.

Their argument is that the dealership set-up provides quality control and provides better service than factory-owned systems would provide. But all you have to do is require a seller of motor vehicles to provide service facilities on or off-site -- which Ohio law now stipulates anyhow, so that argument goes with the wind.

The reality is it is pure financial protectionism that defeats competition -- and Kasich is not truly a free enterprise kind of dude, he's a crony kind of dude.

Bah!

 

[TCBronson]

I think the NADA, National Automotive Dealer Association has a powerful lobby to protect dealers and to look out for their best interests. They don't want "factory" owned stores taking away independent business owners opportunities. My 2 cents.

 

[Ekh]

I think the NADA, National Automotive Dealer Association has a powerful lobby to protect dealers and to look out for their best interests. They don't want "factory" owned stores taking away independent business owners opportunities. My 2 cents.

Indeed they do and a pain in the butt it is. In my opinion, the only real value of the dealership is in putting a number of available models in one place at one time. But in terms of protection of the customers interests, the dealer system is really bad news. Logically, the free market ought to be able to decide whether dealerships or factory sponsored sales locations are actually better for the customer. Customers would quickly figure out the answer to that one! I suspect the dealer organization already knows the answer, and that is why they are so frightened of competition --they know they suck.

 

[TCBronson]

I used to be a factory rep for a major automobile manufacturer and I called on good dealers and bad dealers. There is some merit to factory stores at least from the consistency of customer service and treatment. Again, just my 2 cents.

 

[slinches]

Even if the dealers think they have value, limiting competition means they can still collectively control the market (and set prices accordingly).

Anyway, their only argument seems to be "intra-brand competition", which makes absolutely no sense to me. Why would car dealers competing between each other on price affect the price the manufacturer sells to them? Even if that did reduce cost to the consumer, what's the harm in allowing direct sales? If they can't compete on cost, the manufacturer will be unsuccessful and there'd be no loss to the dealers.

 

[TCBronson]

All dealers pay the same price for vehicles from the manufacturer. Dealers do compete against each other and customers usually suffer because of it. Factory stores would eliminate those issues and everybody would be treated equally.