Posted on 03/12/2014 2:39:04 AM PDT by SMGFan
If Tesla is your choice, you might have a hard time finding one after the state Motor Vehicle Commission today unanimously passed new rules that will limit Tesla's direct sales business model.
The new rules made more stringent the need for a franchised dealer, a model that the electric carmaker says is "anti-Tesla" as the carmaker operates through storefronts that allow for buyers to purchase directly from the manufacturer.
(Excerpt) Read more at nj.com ...
How should we interpret this? More anti-Capitalism by Governor Chubsy?
The big auto companies are behind this. The dealer network is necessary for their financing and the financing is necessary because they’re inefficient and they MUST use the union labor. Big plants are not efficient in responding to customer demand. Detroit tools a plant to make a limited number of models. (Other manufacturers use “flexible” methods and can make any car on any line but the UAW doesn’t like that.) So, the big three got the government and states to enact rules, regulations and laws that favor them over startups.
Here’s how dealerships work. The dealer must maintain a certain amount of debt, say two million dollars. The Miami dealer can only sell Corvettes and the top end luxury trucks. But he gets an allotment which includes models he can’t sell. So, if he can move 10 Corvettes and 10 designer F150’s he might get 3 Corvettes and 3 designer trucks plus 15 Volts, 4 low end Impalas and 5 top end Impalas. He then has to call around and (on his nickel) trade Impalas and Volts to dealerships that can sell them in exchange for their F150’s and Corvettes they can’t sell. Sometimes he loses a lot of money in that nobody wants the Volts. He may use the Impalas as loss leaders if he can’t trade them. The accounting for this is so specialized that dealerships advertise for “an accountant familiar with GMAC bookkeeping and a specialist with Chrysler accounting software.”
Dealers make little ($100) to no profit on new car sales. Dealers put up with this because used cars make them anywhere up to 30% profit. Also, the auto shop is hugely profitable. The manufacturer designs things so that only the dealer can afford the specialized tools to fix their cars. The dealer typically uses the lowest grade labor and charges $85/hour, but pays minimum wage where they can.
If a new model came along, it would be inherently more efficient and the big three would lose sales. So, the government keeps that from happening.
Another thing is when a manufacturer sells direct to a consumer, under the Uniform Commercial Code, those pesky implied warranties kick in - like warranty of merchantability, fitness for use, etc. Much better protections for the consumer then the extremely limited “limited warranty” the other manufacturers love to use via the franchise indirect-sales system.
Can’t have the old ways comeback.... /s
“Another thing is when a manufacturer sells direct to a consumer, under the Uniform Commercial Code, those pesky implied warranties kick in - like warranty of merchantability, fitness for use, etc. Much better protections for the consumer then the extremely limited “limited warranty” the other manufacturers love to use via the franchise indirect-sales system.”
Oh, gosh! I didn’t know that. The Yugo, the Vega, the fire prone Volt, what a legal nightmare that would be. Thanks.
"On that $106,355 ASP (average selling price), Tesla enjoyed a 25.2% (non-GAAP) gross margin (an average of $26,801 per car)"
Where is the worthless fat boi? Stuffing his face?
Bump for later.
“How should we interpret this?”
New Jersey, still the nation’s toilet!
I'd use the standard "wet my beak" political model.
Maybe they could sell 80% Teslas in NJ.
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