JANESVILLE—Tesla seeks a change to state law that would allow it to open its own stores and service centers in Wisconsin, but it could face pushback by some traditional auto dealers.
He said the law could circumvent what he considers healthy competition by dealers under a current law structure that he said ultimately benefits consumers.
“The purpose of the laws on the books, it’s well known. If you have multiple (local or regional) representatives — in this case, dealers — it produces competition. That’s good for the consumer. If it’s a factory-direct sale, you have one source, and there is no other source of competition,” Clapper said.
The rule change could cut licensed dealerships from the equation and offer “no advocate between the consumer and the manufacturer,” he said.
I completely understand why the dealers would push back on this change in law. After all, this is their business model and they don’t want to see it changed. But their arguments don’t hold water.
The root of their argument is that dealers provide value by introducing competition into the market for consumers. This was true 50 years ago when there were only really three manufacturers in the market (Ford, GM, & Chrysler). Now there are not only dozens of manufacturers, but consumers can literally shop for care all over the country via the internet. In fact, I’m willing to bet that most dealers would admit that many of their customers walk into the showroom already knowing a lot about the vehicle and how much they are willing to pay. Their argument is no longer valid in our modern economy.
Dealers do provide value and I’d think that many consumers would still prefer to buy through a dealer where they can have a relationship and great service. But some consumers would rather buy direct from the manufacturer, and that’s OK. Just like some people buy their computers and phones over the internet and some still like to go to Best Buy or Wal Mart to get them.
Lawmakers should resist the urge to keep forcing an unnatural market condition just to appease the automobile dealers.