Who decides how consumers should shop?

Consumers once shopped predominantly at their local stores; but first mail order catalogs and today the Internet have created new ways to shop for and purchase a wide range of goods and services. Similarly, consumers once arranged for taxis by hailing one from a street corner or by calling a dispatcher; yet today, smartphones and new software applications are shaking up the transportation industry, creating new business opportunities and new services for consumers.

In buying cars, however, these new ways to shop may not be available to consumers. For decades, local laws in many states have required consumers to purchase their cars solely from local, independent auto dealers. Removing these regulatory impediments may be essential to allow consumers access to new ways of shopping that have become available in many other industries.

This very question has been raised across the country, as a still-young car manufacturer, Tesla, pursues a direct-to-consumer sales strategy that does not rely on local, independent dealers.

In this case and others, many state and local regulators have eliminated the direct purchasing option for consumers, by taking steps to protect existing middlemen from new competition. We believe this is bad policy for a number of reasons.

American consumers and businesses benefit from a dynamic and diverse economy where new technologies and business models can and have disrupted stable and stagnant industries, often by responding to unmet or under-served consumer needs. When that occurs in an industry long subject to extensive regulation, existing businesses—like automobile dealers—often respond by urging legislators or regulators to restrict or even bar the new firms that threaten to shake up their market.

Out of 15 million cars sold in the U.S. in 2013, Tesla accounted for a little over 22,000. This hardly presents a serious competitive threat to established dealers. What it could represent is a real change to the way cars are sold that might allow Tesla to expand in the future and prove attractive to other manufacturers, whether established or new ones that have yet to emerge, and consumers. Efforts to litigate, legislate, and regulate to eliminate Tesla’s perceived threat have forced it to battle jurisdiction-by-jurisdiction for the simple right to sell its automobiles directly to consumers.

When the automobile industry was in its infancy, auto manufacturers recruited independent, locally owned dealers to reach consumers in localities across the country. State laws progressively embraced wide-ranging protections for these dealers due to a perceived imbalance of power between the typically small local dealers and major national manufacturers. Dealers persuaded lawmakers that they needed protections from abusive practices by manufacturers. Federal laws, too, developed to protect auto dealers from abuse.

These protections expanded until in many states they included outright bans on the sale of new cars by anyone other than a dealer—specifically, an auto manufacturer. Instead of “protecting,” these state laws became “protectionist,” perpetuating one way of selling cars—the independent car dealer. Such blanket bans are an anomaly in the broader economy, where most manufacturers compete to respond to consumer needs by choosing from among direct sales to consumers, reliance on independent dealers, or some combination of the two.

Dealers contend that it is important for regulators to prevent abuses of local dealers. This rationale appears unsupported, however, with respect to blanket prohibitions of direct sales by manufacturers. And, in any event, it has no relevance to companies like Tesla. It has never had any independent dealers and reportedly does not want them. 

FTC staff have commented on similar efforts to bar new rivals and new business models in industries as varied as wine sales, taxis, and health care. We have consistently urged legislators and regulators to consider the potential harmful consequences this can have for competition and consumers. How manufacturers choose to supply their products and services to consumers is just as much a function of competition as what they sell—and competition ultimately provides the best protections for consumers and the best chances for new businesses to develop and succeed. Our point has not been that new methods of sale are necessarily superior to the traditional methods—just that the determination should be made through the competitive process.

Change is a critical dimension of that competitive process. Manufacturers in a variety of industries now reach consumers directly through websites, providing extensive information that was once only available from dealers or by phone or mail inquiry. And consumers routinely turn to the Internet as a convenient way to comparison shop and buy products and services. 

Such change can sometimes be difficult for established competitors that are used to operating in a particular way, but consumers can benefit from change that also challenges longstanding competitors. Regulators should differentiate between regulations that truly protect consumers and those that protect the regulated. We hope lawmakers will recognize efforts by auto dealers and others to bar new sources of competition for what they are—expressions of a lack of confidence in the competitive process that can only make consumers worse off.

Andy is the Director of the Office of Policy Planning, Debbie is the Director of the Bureau of Competition, and Marty is the Director of the Bureau of Economics. The views expressed are their own, and do not necessarily reflect the opinion of the Commission or of any individual Commissioner.

The author’s views are his or her own, and do not necessarily represent the views of the Commission or any Commissioner.

Comments

I'm glad to see a government response on this. Is the the official response to the White House Petition to allow Tesla to sell direcly? It received enough signatures last june to warrant a response, but so far there hasn't been an official White House reponse. Link: https://petitions.whitehouse.gov/petition/allow-tesla-motors-sell-directly-consumers-all-50-states/bFN7NHQR
Well done FTC! Thanks for advocating for the U.S. consumer.
The FTC did not write this. It is the sole opinion of 3 employees of the FTC. And if you think this is the best way to buy a car, go for it. Let me know how it works out when you're paying $1500 more than you needed to because the manufacturer won't negotiate. Also, let me know how you like those cars that are put out by narrow minded engineers that don't fit the real world because they've had no input from dealers in the real world who are listening to their customers.
You are paying more than you need to now when you buy it from a dealer. They start with huge markups, and hope they get a few suckers at that price, then negotiate down to a smaller, but still significant profit. The dealer get his cut, even when he "sells at invoice". And in the age of email and internet, customer communicate directly to the Manufacture about changes/improvement. This is far more effective than telling your dealer and hoping he passes it along.
This is a free society and we must research all possibilities in purchasing any merchandise or vehicles we would like to purchased. The "mark up" is out of control. I ave worked in distribution center and the mark is total ridiculous. The freedom to purchased vehicles from another state is welcome. It should be and the dealerships are out of control. They will deceived many people in purchasing their vehicles when the "blue book" gives a different value for the vehicle. An example: "Purchased a car in Florida is higher than purchasing one in North Carolina." Example: Purchasing a 2014 Toyota Camry in Florida is priced at $25,995.00 the same vehicle in North Carolina is priced at $18,995.00 with major discounts." Which would you purchased??? This should be open forum for all consumers. The same financing will suffice where ever we live. The companies or banks are all over the world. Thanks FTC for bringing this information to us. We welcome truth any day and consumers do your research. The dealership mark up is ridiculous and unreal. The dealership is about quantity and not quality. We need quality and not quantity.
Only those who don't know how the industry works thinks money is saved by cutting out the competition at the dealer level. The idea that cutting out private cap dealers eliminates any expense is ludicrous and has proven not to be the case time and time again. But I say, "Go for it!" If Tesla wants to try it, I'm happy for them to live or die with the results. What WON'T happen is for legacy OEMS to try to sell direct to consumers in competition with their private cap dealers. Consumers don't understand this and think GM, Ford, Toyota, and the rest will actually try to compete with its private cap dealer network. This isn't going to happen for a variety of reasons. They think state franchise laws prevent this from happening and resent this out of ignorance. In place are "franchise agreements" between the legacy OEMS and their dealers. OEMs need access to local dealer's capital, local connections, and retail expertise. Private cap dealers weren't about to make major investments with contracts in place. Anyone who thinks legacy OEMs could or would frivolously change their mind and start competing with their own distribution network lack business common sense and have no knowledge of how contract law works. They also lack common sense.
I know Apple users hate buying computers directly from the manufacturers. Apple is well-known for its poor-quality designs, which probably are due to the fact that they are doing the repairs and customer service themselves rather than handing that job off to someone else.
Hilarious; Apple was the only PC manufacturer to increase sales YoY last quarter. Try again.
So, go and buy from a dealership. But if you want to pay 1500 more for a car on a sunday morning while you are at the bath. Why there have to be a law against do it?
If dealerships are so beneficial, then Stop lobbying the government to ban direct sales of cars. Let the consumer decide, you should have nothing to be afraid of if what you say is true.
Let me know how it works out when your kid/wife/uncle who is not good at negotiating goes to buy a car at a dealer and pays more just because they can't/don't want to sit and play "the game" for 7 hours. I can say that no matter how good of a deal I've gotten in the past, I've never had a positive dealer experience. Time for change. Funny that you think the dealers care about improving the cars, when most of their profit comes from fixing the problems that arise from the car. Tesla not only listens to their customers but actually makes improvements based on this feedback (see addition of creep mode and hill assist). BTW- How'd that dealer feedback help out with the GM ignition problem?
You honestly expect us to believe that it's cheaper to buy from a dealership?
And which dealership do you work at?
Yes, and I'm sure the dealer price isn't at all inflated to pay the sales meen/women, showrooms, infrastructure, etc. Losing $1500 discount is better than paying a $3000 markup for a local dealer. Also, this isn't about forcing people to buy directly - it's giving them a *choice*! If the dealership model is better for customers, it should win via consumers preferring it. And with regard to your lack of feedback, is your contention that tesla owners are less satisfied with their cars than dealership purchased cars? If a car is bad people won't buy it - from a dealership or directly.
What a joke. Obviously written by a dealer. If there is no middleman to markup the price, consumers will pay LESS. Not to mention that even if it were true, I'd gladly pay $1500 to avoid dealing with slimy car dealers. There is zero reason to think that a manufacturer wouldn't care about feedback from its customers. They want to keep selling cars. Tesla's cars are the best quality in the entire industry (a reported fact, not my opinion, I don't own one). The cars aren't "put out by narrow minded engineers". Engineers are told what to create by management/marketing.
Let me know when you become my mother. Then maybe I will start to worry what *You* think of *My* use of *My* money
I bought a Tesla. And I did not pay more, I am paying less than I would have had to pay for any other car I was looking for, one of them being Audi Q7 for comparison. Those "narrow minded" engineers turned out to be "well focused" instead and built a car I like so much I feat any situation in which I may be forced to drive anything else. They are listening to their customers much closer than the dealers and, unlike dealers of my past cars, contacted me upfront with things they wanted to check on the car, came to me, have me another Tesla to drive while they do it. They also save me time from having to run around multiple dealerships trying to squeeze the price out. It is what it is. Awesome experience, unlike all the tricks and attempts to squeeze more money for maintenance out of my pocket by previous dealerships. I am not against dealerships per se, and could see them working with Tesla later, but those would have to be entirely different. Dealership model of today is, as they say, a stealership. Don't focus on just the up-front price of the car, there is much more to TCO and the experience than that.
Michael - Maybe you've missed the last 30 years, but we have things like the Internet now, which enable us to send our thoughts & feedback directly to manufacturers... No dealers are required to "communicate". And if Tesla engineers screw up (doubtful), they'll lose market-share; its simple economics and open competition. No one is putting a gun to people's head and forcing them to buy a Tesla - the consumer will either like it or not. And if you _really_ don't trust the average consumer to communicate with the manufacturer, well there _are_ these companies called "Market Research Firms" that Tesla can hire, to figure out what their consumers want and need. Again, Dealers are in no way a necessary part of this process.
If anything, Dealers sound like the WORST way you could be doing this in 2014. Of course a dealer is going to put his own slant on "what a customer wants" to get more value for his meaningless job of trying to scam people.
The last thing I want to do is "negotiate" for an investment as big as a car... They should set the price at what people are willing to pay, and it should be competitive if they want to compete.
Do a poll on the number of people who've had a horrible experience at a dealer and tell me that isn't enough motivation to change the existing model. Manufacturers put huge pressures on the "independent" dealers in order to maintain the consistency of brand and "service level" that these dealers focus on nothing but the numbers to report back to the manufacturer instead of focusing on the consumer's needs. It's time for a change.
Dealerships are the most unpleasant businesses in America in my experience. First, you go in and they try to tell you what you want and how they can give you a good deal. The only good deals are those available through groups such as Credit Unions. Otherwise, the consumer has to tolerate several visits to the dealer, with numerous "checks with the boss" by the salesman to see if he can get my offer approved. If you leave and return, the price almost always drops: that is my experience of buying cars for the past 49 years in four different states. My Tesla was the first car I enjoyed buying, and it will be my next purchase, too, when GEN III (the $35,000 Tesla) is on the market. I don't need protection from Tesla Motors: they sell the best cars in the world! Don't tell them I said so, but I would have paid a lot more had I known what a superior car my MS would be! Those buyers in my Tesla Owners' Club in Atlanta feels the same way!
If a manufacturer goes direct, and won't give youa good price relative to the competition, then you go elsewhere. Problem solved. Autos are a very competitive business, no matter what sales model.
No one is forcing anyone buy from a place you don't want to. The FTC is just signaling that haggling style dealerships are no longer your only choice. Remember Saturn? For 10 years you paid retail price, no haggling. Many people chose that. You now have MORE choice - you are still free to choose the car outlet, brand, and model of your choice. If you like to haggle, you can go to places where you can haggle. If you want to buy direct from the manufacturer (like a Gap t-shirt or a Bose stereo) you can do that too.
Unfortunately your comment doesn't correspond with basic economic principles. For example. Goldman Sachs put out a research report in 2000 regarding, savings in the “vehicle order-to-delivery cycle from build-to-order, direct manufacturer sales.” Based on an average vehicle price of $26,000, Goldman Sachs estimated a total cost savings in the order-to-delivery cycle of $2,225 or about 8.6%. Since 2000, GM has experienced great production efficiencies in its direct manufacturing sales in Brazil that also proves an interesting point in light of this topic. At the end of the day, the underlying economic principle is the consumer loses when there is a middleman. As an enthusiast of Elon Musk and Tesla, my company (www.americasstartup.com) created a series of commercials to help Tesla's current difficulties regarding directly selling to consumers: join the initiative and protect consumer rights. https://www.youtube.com/watch?v=o62Kz64ihCI
What's the matter, sparky? This month's sales figures in the toilet? If you're not a shill for the dealers, you sure as hell sound like one. How about you let ME worry about how much I spend on my next car, ok? You go back to trying to scam the car buying public into buying worthless add-ons like 'undercoating'. By all means, keep wasting time and money trying to fight Tesla, et al in court instead of actually adapting your business model to meet the needs of the consumer. The rest of us will just sit back laugh while you and your fellow snakeoil salesmen circle the drain:)
I've ordered a Model S and the purchasing process was the absolute best car buying experience I've had to date. The pricing is fixed, you pay for only the options you want, no finance guy is ramming LoJack, undercoating, and extended warranties down your throat, and their service comes to you with a loaner and an apology. Car dealers are lady century's model. Time to pull your head out of the sand and live in the now.
Over 133,000 Americans have signed a White House petition agreeing with this position. If you agree too, please sign the petition: https://petitions.whitehouse.gov/petition/allow-tesla-motors-sell-directly-consumers-all-50-states/bFN7NHQR
Thanks for your help
Excellent article! Thank you all so much for taking the time and effort to put it together. I wish that the FTC had the authority to just vacate these anti-competitive state laws. Is there any chance that the inter-state commerce clause would apply?
AG, DF, & MG, I recently walked into a Tesla store for the first time. It was much better than going to a dealership and being clobbered by a sales guy. But, there are some limitations to this business model as well. A franchise model offers more locations (I believe) for service, the ability to test drive on-the-spot, and more individual time with someone who can answer your questions about the vehicle (instead of 10 customers taking turns to speak with 1 Tesla store worker). To name a few. There ARE franchise dealers that have a set price for each model and/or have one salesperson take you through the entire process of selling the car, selling insurance products, and arranging financing. My prediction is that dealers who take a more progressive approch to how their store operates (and how they pay sales people) will be more successful in competing with Tesla. Note: 22,000 sales in the luxury segment with only a few models is pretty impressive if you ask me. So, I disagree with the first statement in paragraph 5. Tesla does represent a threat. There are still many unknowns though - especially how the market will react when BMW, Lexus, or Mercedes come to market with similar battery-only cars?
I agree with you Mike, the Tesla showroom was a much better experience. Agree with your second point too, that there could be advantages to the franchise model. Given that, wouldn't it be better for businesses to work out what model is best for their product, rather than the government forcing a particular one?
An impressively sensible statement. Need to be careful, danger of restoring faith in government. While we are on the subject of incumbent vested interests stifling competition from Tesla in particular, could you please take a look at the complex issue of false and misleading advertising of Hydrogen Fuel Cell Vehicles as green. Hydrogen is exclusively in any economic future sense the product of Natural Gas with attendant heavy and unregulated pollution of air and groundwater at the source and copious CO2 pollution during conversion of Natural Gas to Hydrogen via unregulated steam reforming. It is certainly not green and when whats is basically fracking and steam reforming is advertised as green and 'emissions free' with diversionary tag lines such as 'hydrogen is the most abundant element in the universe', new developments in green and green-leaning processes are faced with false competition from vested polluting practices. To borrow your phrase: We hope lawmakers will recognise efforts by auto dealers auto makers and the oil and gas industry and others to promote hydrogen as a green emissions free fuel offered cheaply of for free with a Fuel Cell Vehicle for what it is — illegal/unlawful competition to restrict the market for renewable energy and sustainable transportation by the false and intentionally deceptive marketing of heavily polluting processes as though they were also green or green-leaning. I would ask the FTC to investigate the practice of fossil fuels converted to Hydrogen deliberately sold in ways designed to undercut the pricing model of green and green-leaning technologies (and sold as such) with intent to stifle competition to the incumbent producers of the fossil fuel source of Hydrogen (Big Oil) and cars (Big Auto). See Hyundai Tucson FCV offered with Free hydrogen in California, and the efforts of Big Oil to site hydrogen filling stations in proximity to centres of market share for Tesla and to defraud the California Air Resources Board of $200 Million for polluting filling stations producing local CO2 emissions via steam reforming that would otherwise have been emitted by any fossil fuel powered vehicle powered by the same fossil fuels.
Julian, I believe your claim that hydrogen is "exclusively in any economic future sense the product of Natural Gas" to be materially incorrect. Whilst it may not be widely available today, I believe that we will see mass production of hydrogen available from electrolysis - the "splitting" of water into hydrogen and oxygen. Obviously this requires plenty of cheap electricity, but this may soon become available from renewable energy sources including solar power and wind turbines. Indeed, electrolytic splitting of water may help us achieve something man has long sought to do - find a means to effectively store electrical energy for subsequent re-use, but on an industrial scale. Further, with no disrespect intended to Tesla, I believe that one reason we may be forced to look towards the fuel cell alternative to batteries stems from the ready availability of raw materials. It has been fairly widely reported that batteries such as those used in everything from the Tesla Model S down to smartphones is heavily reliant upon "Rare Earth" metals - known as "rare" for good reason. As competition for these resources increases, we may be forced to contemplate fuel cell (or other alternative technology) simply because (in a supply and demand model) the cost of materials for a "Model S sized" battery pack becomes unfeasibly high.
Clive, Respectfully your comments are the product of a deeply decisive marketing campaign and very much unrelated to physical or economic reality. Hydrolysis would indeed be feasible with the availably of abundant cheap renewable electricity. However for each unit of electricity an EV such as those produced by Tesla is capable of moving the same mass 400% of the distance simply by eliminating the waste of energy in producing, compressing, transporting and retrieving electricity from hydrogen. Moving electricity to market along wires and storing it on board an 85% efficient vehicle with all grid and charging losses accounted for is about 70% efficient in the conversion of source to kinetic energy. Introducing hydrogen into the equation reduces the efficiency to the order of 17 ~ 25%. There are no Rare Earth metals or minerals used in either the battery or motor of a Tesla Model S or any vehicle proposed by Tesla. One of the innovations of Tesla Motors Inc. is the extremely high performance AC Induction motor and associated inverter and its algorithms. Almost all other EVs have defaulted to a DC brushless system owing to the complexity of those algorithms. DC brushless frequently uses the Rare Earth neodymium in its permanent magnets. AC Induction has no permanent magnets. The magnetic fields are generated on the fly with AC current in copper coils and by induction as the name suggests. Naturally there can be no argument that the use of Platinum as a catalyst in Fuel cells is to rely upon a very uncommon element indeed. Regardless, there is no impetus for the introduction of FCVs except for the abundance of Natural Gas and the desire of its producers to head off competition from renewables and sustainable transportation by defrauding green consumers and green-leaning politicians with false and misleading advertising. Amongst the misleading things that are advertised to achieve deception: The use of hydrolysis when this cannot compete economically with Natural Gas nor can it compete with more constructive uses of renewable electricity than to waste 75% of it on hydrogen production fior FCVs. Never going to happen. The attempt to use solar to power FCVs via electrolysis would set back the renewable break-even point from 2~3 years in the future to 20 to 30 years in the future - which of course is the implicit outcome desired by the fossil fuel industry that is promoting hydrogen. Mr Musk has stated in interviews that a work-up of materials cost for the battery on the London Metal Exchange is $60~$70 per kWh. This is essentially 25% of the lowest generally accepted estimates for current battery cost. With the efficiency of vertical integration contemplated by Tesla in its Gigafactory it seems reasonable that battery cost will be halved at a fair estimate after all operating and manufacturing costs. Not forgetting that unlike fossil fuel feedstocks for Hydrogen, all battery materials are essentially recyclable. There can be no argument that a large mass of used batteries contains a higher concentration of valuable materials than any mineral ore produced from the ground, in addition large quantities of the same battery type have a distinct structure that lends itself to recycling by automated dismantling that can drastically improve upon the notion of melting the mixture together as the first step in recovery of dissimilar elements. Again the recyclability of fossil fuels is zero. In addition to cost improvements in battery technology as we know it, Tesla is a front runner in what is known as the Metal Air battery. It is somewhat like a fuel cell in that it absorbs oxygen from the air as part of a reaction to release electrons. In the case of Tesla however, this is a rechargeable battery offering something between 10 and 50 times the energy density of current Lithium Ion. When recharged it releases oxygen back into the air and like the other battery technologies with the exception of Fuel Cells it can be charged directly with renewable electricity. This is a technology that will extend the range of Tesla vehicles (and any drive train licensees that adopt it) by almost any number considered desirable - 500 to 1000 miles will be no issue. Tesla has filed patents for use of this technology as a range extender that obviates any possible merit in the use of fuel cells and their polluting feedstocks. Owing to the use of oxygen from the air to replace the entire cathode structure of a conventional battery as well as the need for many of the precautions required to place anode and cathode chemistries adjacent to one another, materials volume and cost is low. Although the financial motive of the proponents of Hydrogen Fuel Cells is straight forward and easy to understand (the protection of vested interests in polluting industries from competition). Sadly the deception is complex and lethally dangerous. I believe the easiest way to head off an environmental catastrophe resulting from this Cuckoo In The Nest deception is to set standards banning the advertising promotion of any product of Fracking and Steam Reforming as green, environmentally friendly, totally emissions free and so on. Instead to require proof and guarantees in connection with the promotion or offer of sale of any FCV that any hydrogen supply made available for it must only be from a renewable source for the lifetime of the vehicle. It is beyond specious to suggest that the source of hydrogen will become greener over time. That is precisely the opposite of the intentions of any party from Big Oil to Big Auto currently involved in the promotion of this technology.
And direct efficient use and storage of electricity is inferior to very lossy conversion of that power to stored (VERY difficult) hydrogen, how? Distribution of power over existing infrastructure is inferior to (VERY difficult) piping of hydrogen to a few pumping stations, how? Drivel.
Further, Tesla batteries use no "rare earth" metals. You're confused, once again.
In the Great State of California most of the Hydrogen Refueling locations are at SHELL Oil Gas Stations. SHELL Oil does not use electrolysis to split water to generate their H. They do it by harvesting from Natural Gas. More electricity is used to create, compress, transport, and pump this hydrogen fuel than is generated by the fuel cell technology in the Fuel Cell Electric Vehicles themselves. It is far more efficient, at all levels, to simply use a battery instead. Using Hydrogen simply allows oil companies to keep vehicles tied to them as a future and everlasting revenue stream.
The following is a quote from Tesla: "Tesla does not use rare earth metals in our battery or motor. Typically, rare earth metals apply to DC motors, which use magnets. One of the reasons we use an AC induction motor is it does not require magnets, which often contain the rare earth metals." Reference: http://www.teslamotors.com/de_AT/forum/forums/no-rare-earth-metals-model-s
All car companies are scared of Tesla. Afraid of disruption and change. Tesla built the greatest car ever and is doing things no other car company has done before and they want to stop them, ridiculous. Car dealerships suck too. Just a bunch of ugly basic dirty looking cars no one wants sitting there taking up space and then you got the jack offs plunging at you trying to sell you their crap cars lol
It's not that one method should be replaced by another. It simply makes sense for consumers to have the choice as to how they want to buy--through a dealership or directly from a manufacturer. In any other industry, this would be seen as crazy. We are not forced to go to "computer dealerships". We can find and purchase the computer we want and have it shipped to us. That same freedom should be available for vehicles as well.
Bought two Tesla's in 2013. Best car buying experience ever. Bought both in Arizona where it's illegal for Tesla to "sell" but not illegal for me to "buy". It is time to end the dealer monopoly laws. Not sure why dealers would even want to sell Tesla's, there is no money to be made in after sale service. The cars are amazing.
Bravo. Thank you for taking the side of consumers - forcing us to buy from a middleman isn't an American concept.
Great article. Ironically the states make it harder to buy a car on the Internet than a gun.
Right on article. Auto Dealers have said they are necessary to protect the consumer against Auto Manufactures recall policies, to quote one reason. Where were they during the recall for dangerous flaws in the Big 3 & Toyota? Let me choose who I trust. We consumers need the competition between car manufactures and not bail them out for gross mismanagement. Save the USA from these Prima Donnas!
I applaud the FTC directors for speaking up on this important subject. Protectionist laws which artificially preserve antiquated business models not only inhibit innovation in the industry, but add additional cost to an already expensive transaction. It appears that the elected representatives in my state are more interested in protecting campaign donors than they are about protecting the individual consumer. Blockbuster and Tower Records gave way to Netflix and iTunes. While that transition was temporarily painful for a few, consumers have benefited tremendously. This is the beauty of a free market economy. The market will pick winners and losers, not those who have positions of political or financial power. It's time to let the market decide the true value of the local independent auto dealer, if there is still value there.
Thank you, FTC officials, for stating your sensible position so well. States passed franchise laws to protect franchised dealers from their own manufacturers who might become competitors. No company should be forced to become a franchisor so that franchise laws can apply to them. In our supposedly free competitive enterprise system, it is the American consumers who should decide which products and business models succeed. I can't imagine why a dealer would even want to sell a Tesla car. Maintenance is minimal. Dealers make most of their money through parts and service. Tesla sends a Ranger to repair your car at your home or business, or leaves you with a loaner if he needs to take the car to a Tesla service center. Tesla's service division has been mandated to provide no net profit to the company. Who would want to be a franchised dealer under these conditions? The dealers and their legislator coconspirators are just trying to keep out competition. That's unconstitutional and un-American. Times change, and we all must adapt. If similar protectionist measures were in place a century ago, we still may be relying on horses and buggies. The mandatory dealership laws appear contrary to the interstate commerce clause of the US Constitution. Will the FTC go to federal court to demand noninterference in the right of a manufacturer with no franchise contracts to offer direct sales and service to consumers?
This will go down in history as one of those "DUH!" statements. Dead on and obvious to anyone who has ever needed to purchase something. While we're on the subject lets get state AG's off the backs of Uber, Lyft, Sidecar, Airbnb, et al. Our ever-expanding regulatory system is nothing more than regulation for sale to the highest (campaign) bidder.
Well written, well said. Eliminating regulations and big government- is what Republicans claim they stand for. Democrats state they are there to protect the people. Therefore, allowing direct sale to the consumer SHOULD have bi-partisan agreement. Telsa and other EV's can save the world by ending our dependence and consumption of dangerous foreign oil....- but only if our government will allow this....
I am very happy to see the FTC take this position. The monopoly protection of auto dealerships is about as anti-free market as it gets. How anyone who claims to support a free-market economy can support this setup is beyond me. Direct to consumer sales will cut down on costs to purchase autos as middleman markup is no longer part of the equation. This should drive car prices down making them more affordable and easier to purchase. Dealerships can still exist, but now they will have to compete. Competition is the key factor to a healthy and developing economy. The government's role in the economy should be to ensure that competition always exists.

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