The dealer franchise system has worked for selling cars in the United States for nearly as long as there have been cars in the United States.
By requiring new vehicles to be sold through private dealers not associated with the automakers, the market has been able to determine fair prices based on the MSRP. That’s been mostly good for consumers, at least the ones educated enough to research and negotiate a fair price.
It’s also allowed dealers to make gobs of money by acting as the middlemen between automakers and consumers.
Tesla thinks that model should change.
Electric carmaker Tesla has gained all kinds of media attention over the last few months, most recently for touting its Model S as the safest car ever built. The Model S is certainly a game-changing car, having proven that an electric sedan can be reliable, safe, sexy and achieve a range of up to 300 miles.
One thing for sure: Tesla doesn’t like to play by the rules or succumb to what others think is impossible.
A press release this week proudly proclaimed that the Model S was the safest car ever tested by the National Highway Traffic Safety Association (NHTSA), a remarkable feat considering the automaker has delivered only about 15,000 vehicles to customers around the world.
I use that fact to preface this:
Tesla knows it can build quality cars outside the mainstream. It wants to sell them that way, too, and not use a traditional dealer network.
Skipping a third-party dealer network allows the company to set its prices and sell from private retail stores, just as Apple does with electronics. Some states already have Tesla showrooms, while others are in the midst of legal battles to stop the company from opening a store within their borders.
I respect the dealer franchise laws and their reason for existence, but I also believe this country is ready for a change, or at least ready for the possibility of change. Why should the law dictate how a company sells its wares? If willing citizens want to purchase directly from a company willing to sell, what’s the problem?
I’m curious to hear from car dealers, former dealers, and consumers:
Should Tesla be allowed to sell cars directly to the public?