Auto Dealers Whine That Tesla Stores Are Illegal(wired.com)
wired.com
Auto Dealers Whine That Tesla Stores Are Illegal
http://www.wired.com/autopia/2012/10/tesla-dealer-illegal/
153 comments
It can be a rather unpleasant experience, plus it makes me feel bad to immediately hate the person before I get to know his/her style of selling. I know it's unfair but when that salesperson walks up I'm immediately "just go away and leave me alone".
Plus the sad fact is that the salesperson is the middleman of the manager, who is the middleman of the financier, who is the middleman of the dealership. There are probably more steps I'm forgetting.
Why can't cars be sold just like any other product? What makes them so special that government has to be involved, other than protecting monopolistic practices? I may never purchase a Tesla but I would argue against anyone that would want to stop this type of car sales.
Plus the sad fact is that the salesperson is the middleman of the manager, who is the middleman of the financier, who is the middleman of the dealership. There are probably more steps I'm forgetting.
Why can't cars be sold just like any other product? What makes them so special that government has to be involved, other than protecting monopolistic practices? I may never purchase a Tesla but I would argue against anyone that would want to stop this type of car sales.
> Why can't cars be sold just like any other product?
Because then they run the risk of getting Amazon'd or Wal-Mart'd.
Because then they run the risk of getting Amazon'd or Wal-Mart'd.
Why is that a risk? What's wrong with ordering a car from Amazon?
Or do you mean it's a risk from the dealers' perspective? Because I get that and personally don't care.
Or do you mean it's a risk from the dealers' perspective? Because I get that and personally don't care.
I'd love to order a car from Amazon too. My last car buying experience was a multi-day beat down, in the end the best I can summarize it: "I probably got screwed, but they didn't screw me as hard as they wanted to."
I don't care about the dealers either, but as another poster stated, dealers have their own lobbying groups to make sure that the people that make the laws do care.
I don't care about the dealers either, but as another poster stated, dealers have their own lobbying groups to make sure that the people that make the laws do care.
The risk is that a whole bunch of middlemen who don't add much (if any) value would get cut out of the equation. The dealers are well aware that their business model is despised by buyers, hence the forest of protectionist law that they've purchased over the years.
>>Because then they run the risk of getting Amazon'd or Wal-Mart'd.
Your post sounds like Amazon and Wall-Mart are doing some thing wrong in the way they are running things.
And what is the risk you are talking about. Do you mean to imply Amazon and Wall-Mart are evil and have some caused damage to their consumers/customers?
Your post sounds like Amazon and Wall-Mart are doing some thing wrong in the way they are running things.
And what is the risk you are talking about. Do you mean to imply Amazon and Wall-Mart are evil and have some caused damage to their consumers/customers?
The original Wired story is addressing concerns about storefront distribution channels instead of traditional dealerships and how this impacts existing dealers. So my statement about potential negative impact if Amazon or Wal-Mart could become a distribution channel is from from the perspective of existing dealerships, not from the perspective of the consumer, many of which would jump at the chance to buy a car from Amazon or Wal-Mart.
I don't think it sounds like that at all. He's talking from the dealers perspective, who will absolutely lose out in the case of being "Walmart'd".
I'm not sure what being Amazon'd or Wal-Mart'd is. Are you talking about commoditization?
Cars already are a commodity, albeit an expensive one. When it comes down to getting from point A to point B they are all interchangeable.
"Amazon'd" or "Wal-Mart'd" was my shorthand way of saying that increased efficiency in the distribution channel + leverage from volume purchases would drive margins down for auto makers and put dealerships in jeopardy since the don't add any value.
"Amazon'd" or "Wal-Mart'd" was my shorthand way of saying that increased efficiency in the distribution channel + leverage from volume purchases would drive margins down for auto makers and put dealerships in jeopardy since the don't add any value.
They'd still make lots of money from their service department, so I wouldn't feel sorry for them.
Costco'd: http://www.costcoauto.com/
Why can't cars be sold just like any other product?
If you want to walk in, look at a sticker, and walk out with your new car, you should visit a Saturn dealership.
Unless they changed it recently, they never haggle.
If you want to walk in, look at a sticker, and walk out with your new car, you should visit a Saturn dealership.
Unless they changed it recently, they never haggle.
>Unless they changed it recently...
Saturn doesn't exist anymore.
From Wikipedia: "Following the withdrawal of a bid by Penske Automotive to acquire Saturn in September 2009, General Motors discontinued the Saturn brand and ended its outstanding franchises on October 31, 2010. All new production was halted on October 1, 2009."[1]
1. http://en.wikipedia.org/wiki/Saturn_Corporation
Saturn doesn't exist anymore.
From Wikipedia: "Following the withdrawal of a bid by Penske Automotive to acquire Saturn in September 2009, General Motors discontinued the Saturn brand and ended its outstanding franchises on October 31, 2010. All new production was halted on October 1, 2009."[1]
1. http://en.wikipedia.org/wiki/Saturn_Corporation
Or a Scion dealership. I bought a Scion TC a few years back and it was the smoothest experience ever. No haggling, just pay the advertised price and walk out. Every Scion dealer was obligated to advertise the same price, so you knew you were getting the same price as everyone else.
What's stoppping you from walking into ANY dealership, paying sticker price and driving off in a new car?
[deleted]
I thought the Saturn brand was discontinued.
Completely agree - even when the salesmen behave exactly as you'd want them to, it's still a stressful experience because of the price opacity.
When my wife and I bought our current car, we researched the average price for that year/model and resolved not to pay more than that, even though the price we were quoted was much higher. So we went to the dealer and noticed that the price on the sticker was LOWER than the price we'd planned to demand.
We quickly conferred, "Well, it says that $200 of that price is for the mudflaps, we should at least demand that we not have to pay for those since we don't care about them." So the salesman ends up quoting us a price even LOWER than we'd planned to ask for. We looked at each other, shrugged uncertainly, and said "sure, that's fine."
Objectively we ended up paying less than we'd planned when we walked into the dealership, but we felt significantly less happy about it! Later on we kicked ourselves for being caught too off guard to do any haggling; we probably could have knocked at least a few hundred dollars off, and even if not there would have been no harm in asking. There's something to be said for not having to hassle with haggling if you find it unpleasant (as we do), but it's a perverse system that gives you a better deal than you were expecting and makes you feel worse for it.
When my wife and I bought our current car, we researched the average price for that year/model and resolved not to pay more than that, even though the price we were quoted was much higher. So we went to the dealer and noticed that the price on the sticker was LOWER than the price we'd planned to demand.
We quickly conferred, "Well, it says that $200 of that price is for the mudflaps, we should at least demand that we not have to pay for those since we don't care about them." So the salesman ends up quoting us a price even LOWER than we'd planned to ask for. We looked at each other, shrugged uncertainly, and said "sure, that's fine."
Objectively we ended up paying less than we'd planned when we walked into the dealership, but we felt significantly less happy about it! Later on we kicked ourselves for being caught too off guard to do any haggling; we probably could have knocked at least a few hundred dollars off, and even if not there would have been no harm in asking. There's something to be said for not having to hassle with haggling if you find it unpleasant (as we do), but it's a perverse system that gives you a better deal than you were expecting and makes you feel worse for it.
Future tip: there's a fair amount of price transparency out there, if you search for invoice pricing. Sites like Edmunds provide invoice pricing for the entire car, as well as the MSRP.
Most high volume dealers will sell you cars at or 1% above invoice. This way you can walk in to the dealer informed and know the approximate range.
Dealers don't like this. Some only negotiate as "$ or % off MSRP" and absolutely refuse to compare to invoice. It doesn't matter, since you know what the invoice is.
Finally, demanding not to pay for an accessory that's on the car that you don't care about is a losing proposition. Most of these accessories are factory- or port-installed and are factored in the sticker printout that's with the car. The dealer was charged by the manufacturer for that accessory and has to pay its cost. You are better off finding another car with less stuff on it, or ordering a car (which usually is a painful process, unless you're buying a Mini).
Most high volume dealers will sell you cars at or 1% above invoice. This way you can walk in to the dealer informed and know the approximate range.
Dealers don't like this. Some only negotiate as "$ or % off MSRP" and absolutely refuse to compare to invoice. It doesn't matter, since you know what the invoice is.
Finally, demanding not to pay for an accessory that's on the car that you don't care about is a losing proposition. Most of these accessories are factory- or port-installed and are factored in the sticker printout that's with the car. The dealer was charged by the manufacturer for that accessory and has to pay its cost. You are better off finding another car with less stuff on it, or ordering a car (which usually is a painful process, unless you're buying a Mini).
I've read that the "invoice price" is artificially inflated, because manufacturers give dealers hidden "incentives" and things like that to lower the real cost to the dealer. Any thoughts?
I wouldn't call it artificially inflated, in that often times there are just no incentives (especially if ordering a car and not buying from existing stock).
There are two kinds of incentives: publicly advertised incentives (often called "cash back") and manufacturer-to-dealer incentives. The first kind is fairly common. For example, towards the end of a model year (or especially last year of a generation of a car), it's common for manufacturers to offer $1 or $1.5K cash back. The second, "advertised to dealer" kind is much more difficult to find out about. It might hinge on the # of cars the dealer sells that month. It might target a very specific model. Sometimes Edmunds has such incentives listed on a regional basis.
Many people don't bother checking even the manufacturer's own site for incentives. Right now, for example, Toyota has a $500 cash back on Corollas in my area. If I walk into a dealership and demand invoice, I am going to be actually paying $500 over invoice. Most salesmen will withhold available incentives and will happily nod and say "sure, here you go, invoice, you are robbing us blind here buddy."
About the only "inflation" is that the invoice price does include dealer holdback, which helps offset financing charges of holding a car on the lot in stock. A car that was held for a while will accumulate more financing charges (and thus less of the holdback will go into the dealer's pocket), whereas a car that is sold right away will let the dealer pocket the entire holdback. Typically we are talking anywhere from $200 to $800, depending on the car price and car manufacturer. This is an extra sensitive area and dealers are particularly unwilling to negotiate "into the holdback."
There are two kinds of incentives: publicly advertised incentives (often called "cash back") and manufacturer-to-dealer incentives. The first kind is fairly common. For example, towards the end of a model year (or especially last year of a generation of a car), it's common for manufacturers to offer $1 or $1.5K cash back. The second, "advertised to dealer" kind is much more difficult to find out about. It might hinge on the # of cars the dealer sells that month. It might target a very specific model. Sometimes Edmunds has such incentives listed on a regional basis.
Many people don't bother checking even the manufacturer's own site for incentives. Right now, for example, Toyota has a $500 cash back on Corollas in my area. If I walk into a dealership and demand invoice, I am going to be actually paying $500 over invoice. Most salesmen will withhold available incentives and will happily nod and say "sure, here you go, invoice, you are robbing us blind here buddy."
About the only "inflation" is that the invoice price does include dealer holdback, which helps offset financing charges of holding a car on the lot in stock. A car that was held for a while will accumulate more financing charges (and thus less of the holdback will go into the dealer's pocket), whereas a car that is sold right away will let the dealer pocket the entire holdback. Typically we are talking anywhere from $200 to $800, depending on the car price and car manufacturer. This is an extra sensitive area and dealers are particularly unwilling to negotiate "into the holdback."
When I bought my last car, I actually had it both ways: slimy car salesman and nice guy who made it all go smoothly.
After looking around, I was ultimately interested in 2 different cars from different dealers. For car one, the salesman kept hedging of a price. The price that I knew I could get according to my research wasn't even close to the price he quoted. He was actually quite pleasant to deal with, but I just had a feeling that the dealership wanted to keep prices high.
At a different dealer for the same car, the salesman wouldn't even give me a price for the car until they saw my trade-in. I walked out of that place immediately.
For the car that I ultimately bought, I walked into the sales office with my wife and two kids. He immediately setup a test drive (including our car seats). When we got back, we quickly went through the options we'd need and the price of the car. It was all very transparent, and with the manufacturer incentives (end of the model year) it was a pretty reasonable price (well below invoice), and I was very happy with it. I actually liked the first car better, but was very happy with the one I ended up with.
Because of how that guy treated us, I'd go back to him to by multiple cars in the future. So really, it goes back to the balance between maximizing short-term profits over long term profits. The sleazier the dealerships will try to maximize short term sales at the expense of long term sales. The better ones try to build customer relationships so that they aren't just selling you one car. They are trying to also sell you your next car.
After looking around, I was ultimately interested in 2 different cars from different dealers. For car one, the salesman kept hedging of a price. The price that I knew I could get according to my research wasn't even close to the price he quoted. He was actually quite pleasant to deal with, but I just had a feeling that the dealership wanted to keep prices high.
At a different dealer for the same car, the salesman wouldn't even give me a price for the car until they saw my trade-in. I walked out of that place immediately.
For the car that I ultimately bought, I walked into the sales office with my wife and two kids. He immediately setup a test drive (including our car seats). When we got back, we quickly went through the options we'd need and the price of the car. It was all very transparent, and with the manufacturer incentives (end of the model year) it was a pretty reasonable price (well below invoice), and I was very happy with it. I actually liked the first car better, but was very happy with the one I ended up with.
Because of how that guy treated us, I'd go back to him to by multiple cars in the future. So really, it goes back to the balance between maximizing short-term profits over long term profits. The sleazier the dealerships will try to maximize short term sales at the expense of long term sales. The better ones try to build customer relationships so that they aren't just selling you one car. They are trying to also sell you your next car.
I kind of enjoyed buying my last vehicle. For some reason, the salesman had it in his mind that I could not afford the one I was looking at. I was the one trying to talk him into adding options, while he was trying to take them away to keep the costs lower. Once I finally talked him into the one I wanted, he, without asking, starts filling out the loan application. I'm like "umm, I'm going to be paying for it in cash."
Before I even left home I had already determined what I considered a fair market exchange for the trade with my existing vehicle. I think in the end, they actually ended up doing a little bit better than I had expected.
Before I even left home I had already determined what I considered a fair market exchange for the trade with my existing vehicle. I think in the end, they actually ended up doing a little bit better than I had expected.
I try to not pay cash ever when there are financing deals available at today's ridiculously low interest rates. Many car makers will have 0% or 1.9% financing and you should take that since there's a reasonable chance you will make more than that back by taking the cash you saved and investing it instead. At 0% financing, it's a no brainer, why give them all your cash up front instead of throwing it into an interest bearing account instead and making some money instead.
I've always heard that you get a better price if you tell them you're paying in cash...is this just bad info?
Bad info.
They make money on the financing, so are likely to be more willing to negotiate on price if they think they will make it back on the financing.
Doesn't mean you can't can't _pay_ cash, but 95% of dealers you don't want to be too upfront about that.
They make money on the financing, so are likely to be more willing to negotiate on price if they think they will make it back on the financing.
Doesn't mean you can't can't _pay_ cash, but 95% of dealers you don't want to be too upfront about that.
For that matter, even if you can't pay cash you shouldn't get lulled into assuming you have to take the dealer's financing. Shop around a bit, see if you can find a loan where only the bank gets a piece of the pie, instead of both the bank and the dealer. For my last purchase, my credit union gave me about half the rate the dealer offered.
But don't let them know that until they're getting ready to fill out a loan application.
But don't let them know that until they're getting ready to fill out a loan application.
Agreed. Which is why you should never tell them you are paying cash upfront, unless you are dealing with an individual seller who obviously might prefer not to work with financing company. They will give you a better deal if they think they can make it up on the financing.
Individual sellers will more likely give favor to cash in hand, at least I know I would rather have cash in hand for my car.
Individual sellers will more likely give favor to cash in hand, at least I know I would rather have cash in hand for my car.
It's better to lead them on, thinking that you are going to finance. Then, when you have a final price, drop the cash bomb. Be ready for some furious attempts to raise the price in a bunch of ways, after that revelation!
It's a trade-off. For many people who don't understand how to figure out interest rates and payments, it gives the dealerships one more number to play with to hide the real price of the car. As others have mentioned, if you do understand it and can decipher it, it gives another place for them to make money.
OTOH, if you're buying a used vehicle from a private owner, cash in hand is a pretty strong argument.
Seconding Tyler's point, but with a slight amendment.
Paying cash is generally[] not better than financing through the dealership, but is much better than bringing your own financing.
[] There are a couple more factors that I haven't seen mentioned, specifically that paying cash is generally a lot faster. For the dealership, there isn't necessarily a benefit, but for the salesperson, a quick sale means they might get to slot an 'extra' sale in for that day, so it's worth it to them to play around with their commission on what they might consider a 'gimme'. If paying cash, it is best to do so on busy days so that there are other 'fish' for the salesperson to go to next. If you're the only person there, there's no real sense in urgency.
Paying cash is generally[] not better than financing through the dealership, but is much better than bringing your own financing.
[] There are a couple more factors that I haven't seen mentioned, specifically that paying cash is generally a lot faster. For the dealership, there isn't necessarily a benefit, but for the salesperson, a quick sale means they might get to slot an 'extra' sale in for that day, so it's worth it to them to play around with their commission on what they might consider a 'gimme'. If paying cash, it is best to do so on busy days so that there are other 'fish' for the salesperson to go to next. If you're the only person there, there's no real sense in urgency.
> The price of every vehicle is fully negotiable but the negotiating room is opaque. Key car features and options are bundled in arbitrary packages and priced in ways that make pricing even more opaque.
This is my ongoing remark on this topic: walking into a particular dealership is a mistake. You're making it hard for yourself to use your only negotiation asset - the option to go elsewhere. Figure out the features you need and contact multiple dealerships for a quote. This sets up a much more better game for you. But yeah, dealerships still suck.
This is my ongoing remark on this topic: walking into a particular dealership is a mistake. You're making it hard for yourself to use your only negotiation asset - the option to go elsewhere. Figure out the features you need and contact multiple dealerships for a quote. This sets up a much more better game for you. But yeah, dealerships still suck.
> Figure out the features you need and contact multiple dealerships for a quote.
Sites like http://www.autobytel.com/ can help simplify this process.
See also: AutoNation’s AutoUSA, Microsoft Corporation’s MSN Autos, CarsDirect.com, Cars.com, eBayMotors.com, Dealix.com, and AutoTrader.com.
Sites like http://www.autobytel.com/ can help simplify this process.
See also: AutoNation’s AutoUSA, Microsoft Corporation’s MSN Autos, CarsDirect.com, Cars.com, eBayMotors.com, Dealix.com, and AutoTrader.com.
Indeed. A persistent cartel is a sign that such industry has unethical legal protection, to the detriment of the consumer.
For new cars, there's always YC-backed CarWoo, a no-hassle car buying website: http://carwoo.com/
I haven't tried it, but heard good things. For a lot of brands (especially non-luxury Japanese) new cars are cost-effective right now.
I haven't tried it, but heard good things. For a lot of brands (especially non-luxury Japanese) new cars are cost-effective right now.
Dealers generally hate sites like CarWoo and TrueCar:
http://forum.dealerrefresh.com/f46/carwoo-anyone-2746.html
Search that forum for lots of lovely language from the dealers about those two. TrueCar is particularly despised.
There is some positive feedback from dealers about CarWoo though, more so than TrueCar, so perhaps they figured out a thing or two better.
http://forum.dealerrefresh.com/f46/carwoo-anyone-2746.html
Search that forum for lots of lovely language from the dealers about those two. TrueCar is particularly despised.
There is some positive feedback from dealers about CarWoo though, more so than TrueCar, so perhaps they figured out a thing or two better.
I think it's only the small-time dealers that hate carwoo. Have a look at the comment by Scott Salzman on that forum, which fits with my own experience. I bought my car through carcostcanada.com, and my local dealer couldn't even match the no-haggle quote I got through the site (their best offer was 1k more).
The dealer I went with was a high-volume dealership in the city. Not only was their price low, but they also were very friendly and helpful. It makes sense to use sites such as this - it's a huge time saving for both the customer and the dealer.
The dealer I went with was a high-volume dealership in the city. Not only was their price low, but they also were very friendly and helpful. It makes sense to use sites such as this - it's a huge time saving for both the customer and the dealer.
I used CarWoo a couple months ago to buy a new Subaru. It worked fine. Since I wanted an unusual combination of color, trim, and options it was helpful that I could leave my request open for a while and let the offers roll in from multiple dealers until I found one that matched my requirements. Personally I cared more about getting exactly what I wanted than paying the lowest possible price.
They could do better in filtering our junk offers. I clearly stated that I wanted a silver car without a sunroof but still had dealers spamming me with offers for a red one with a sunroof or whatever.
They could do better in filtering our junk offers. I clearly stated that I wanted a silver car without a sunroof but still had dealers spamming me with offers for a red one with a sunroof or whatever.
I've never bought a car from a dealer and one the primary reasons is that I don't want to deal with a salesman. I'd rather get a used car where there's a significant price discount and there are well-established guides (KBB, Edmunds) that wil tell you basically what you should expect to pay. Buying a used car is much more price transparent than buying new. (The other reason is that I refuse to go into debt for something I use for an hour a day and hate every minute of it).
buying a car through a plan negotiated either by your employer, union, or other relationship to the automaker, usually sets limits on what a dealer can charge.
Example, a purchase I made this year specified the sale price of the car (lower than invoice you normally see) plus I think $100 documentation fee. No other fees were permitted.
I have seen X, S, and other other plan, for Fords, I am quite sure GM is the same if not Chrysler as well. When I bought a Mazda in 08 I only paid sales tax on the price Mazda set, not the dealer.
Example, a purchase I made this year specified the sale price of the car (lower than invoice you normally see) plus I think $100 documentation fee. No other fees were permitted.
I have seen X, S, and other other plan, for Fords, I am quite sure GM is the same if not Chrysler as well. When I bought a Mazda in 08 I only paid sales tax on the price Mazda set, not the dealer.
"Whine" is an alert word for me. Any time someone tries to present his opponent's argument through an unflattering characterization "whining, stomping his feet, throwing a tantrum" rather than by presenting a well reasoned argument, I immediately become more guarded and skeptical about the argument I'm about to hear. Have you ever presented what you felt was a very fair and reasoned argument, only to have someone disregard it all and tell you you're whining?
I know, I know, you just can't expect too much from journalistic headlines. "Auto dealers claim that tesla stores are illegal" doesn't have the same punch. And based on what I've read here, I am on tesla's side (though it's pretty hard to find anyone on the side of the auto dealerships).
I know, I know, you just can't expect too much from journalistic headlines. "Auto dealers claim that tesla stores are illegal" doesn't have the same punch. And based on what I've read here, I am on tesla's side (though it's pretty hard to find anyone on the side of the auto dealerships).
I sense the presence of the submarine.
http://www.paulgraham.com/submarine.html
http://www.paulgraham.com/submarine.html
"Oh no! It's a new business model that is different than our old business model! We must use legal means to stop it immediately because we don't know yet if we can compete with it!"
Plus, customers may like it better since the current method is usually despised...
Plus, customers may like it better since the current method is usually despised...
There is no competition to be had. The dealerships aren't scared of competition from Tesla, especially since the price of a Tesla Model S is out of range for the majority of car buyers. What they are scared of is that Tesla sets a precedence for other manufacturers to follow suit which would then put a lot of people out of work.
What they are scared of is that Tesla sets a precedence for other manufacturers to follow suit which would then put a lot of people out of work.
Good. There's no reason it should receive protection by the government in the first place. It's bad for the consumer.
Good. There's no reason it should receive protection by the government in the first place. It's bad for the consumer.
Putting people out of work == freeing up labor from inefficiencies. They can be productive or inefficient elsewhere, at their own expense, rather than mine.
>What they are scared of is that Tesla sets a precedence for other manufacturers to follow suit which would then put a lot of people out of work.
No. What they're afraid of is that Tesla sets a precedence for other manufacturers to follow suit which would then move revenue out of the dealer's reach. Or: It's not about jobs, it's about money.
No. What they're afraid of is that Tesla sets a precedence for other manufacturers to follow suit which would then move revenue out of the dealer's reach. Or: It's not about jobs, it's about money.
What you say is true, but I think it supports my statement. It's the dealerships themselves that have to compete with the business model, not necessarily the automakers. The dealers have to show to the automakers that their method is better or they fail.
Standard tactic in many areas. If you can't compete with someone, just petition the government to hinder them. Diana Moon Glampers will be along to help shortly.
Today I found out that USA (arguably the most libertarian country on earth, as far as business is concerned) has strict laws governing the sale of vehicles, said laws actually preventing companies from selling vehicles. I find that quite amazing.
Under most rankings of economic freedom, the United States barely manages to be in the top 10. The Heritage Foundation places Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, Chile, Mauritius, and Ireland all above the United States on their Index of Economic Freedom.
Source: http://en.wikipedia.org/wiki/Index_of_Economic_Freedom
Source: http://en.wikipedia.org/wiki/Index_of_Economic_Freedom
Doesn't Australia have hideously terrible internet regulations? I guess that wouldn't fall under economic freedom...
A lot of nations have hideously terrible regulations in some area, and comparing such regulations in an index like this is of course subjective to some extent. It's also not a measure of all freedoms (otherwise, Singapore wouldn't be so high). It's intentionally only looking at economic freedom, which is relevant to the comment I was replying to (and as far as I can tell, the index is not trying to imply that these are the only freedoms that matter).
If you're referring to mandatory filtering no - it never happened. Despite the communications minister announcing it. A large ISP also won a major test case against big media about having to report file sharers. Turns out they dont have to. So right now it's not so bad but I'm waiting for the nanny state to fight back.
Singapore? You are free in Singapore to the degree that their benevolent dictatorship wishes you to be.
That's basically true everywhere. Except that in Singapore, it is explicit.
Are you free to fill your gas tank in New Jersey (hint: no).
Are you free as an american taxpayer to bank outside the US? (hint: no).
Are you free to sell cars in the US? (hint: no)
Are you free to get medical diagnostics of your choice in New York state (paying the market price, of course)? (hint: no)
Are you free to live in California, yet own a liquor store in New York? (hint: no)
There are numerous other examples. The common thread in these examples is that some lobby managed to secure a legislation that guarantees their benefit at your expense. You have about as much power to change that as a Singaporian does to change things in their country.
Really, if you believe that the US is more free than the rest of the western world, you're probably unaware of the local law (and probably of the laws elsewhere)
Are you free to fill your gas tank in New Jersey (hint: no).
Are you free as an american taxpayer to bank outside the US? (hint: no).
Are you free to sell cars in the US? (hint: no)
Are you free to get medical diagnostics of your choice in New York state (paying the market price, of course)? (hint: no)
Are you free to live in California, yet own a liquor store in New York? (hint: no)
There are numerous other examples. The common thread in these examples is that some lobby managed to secure a legislation that guarantees their benefit at your expense. You have about as much power to change that as a Singaporian does to change things in their country.
Really, if you believe that the US is more free than the rest of the western world, you're probably unaware of the local law (and probably of the laws elsewhere)
Except Singapore rigs its elections.
The US has simulated freedom with the two party systems. I don't know whether elections are rigged in the US or Singapore; but to assume that US elections is fraud free is a bit naive (see recent voter registration scandals for the prelude; and follow BlackBoxVoting for the details that humans can't directly follow). If you assume the fraud magnitude is trivial, or that it cancels out, you better have a good explanation for it.
If you think you are better off, you are sorely mistaken. You're not worse off either. It's just all the same.
If you think you are better off, you are sorely mistaken. You're not worse off either. It's just all the same.
I don mean fraud. The elections are rigged by the ruling party in Singapore. They time them to occur only when they are strong politically and dont give their opposition a realistic chance to compete. Th us is far from perfect, but is a stretch to all Singapore a democracy at all. Singapore is not place where one is free. It is a place where one is free to do what is in the interest of the government. Luckily, they are a very talented crew, and it works out well- for now. But to put a place where one cannot buy chewing gum at the top of some list of free societies is an interesting choice. The place is downright Orwellian.
> But to put a place where one cannot buy chewing gum at the top of some list of free societies is an interesting choice.
I'm sure you believe that, as many do. I'm not saying Singapore is a free country. But it IS comparable to the US and western Europe.
So, you can't buy chewing gum in Singapore, big deal. You can't buy alcohol on a sunday in many places in the US. You can't buy wine in a grocery store in New York.
I've heard from a Yemenite guy that you can't get their traditional perfectly-legitimate-everywhere-else stimulant (can't remember the name - Jhat?) in the US.
Before Feb 2008, you could not buy a sex toy in Texas. In Alabama, you still can't. https://en.wikipedia.org/wiki/Texas_obscenity_statute https://en.wikipedia.org/wiki/Anti-Obscenity_Enforcement_Act ; I don't remember which state right now, but in one of them, walking shirtless down the street is enough to get you on the sex offender list.
Again, I'm not saying Singapore is free or a bastion of democracy. But theory means nothing, and in practice, it is on par with the rest of the western world.
I'm sure you believe that, as many do. I'm not saying Singapore is a free country. But it IS comparable to the US and western Europe.
So, you can't buy chewing gum in Singapore, big deal. You can't buy alcohol on a sunday in many places in the US. You can't buy wine in a grocery store in New York.
I've heard from a Yemenite guy that you can't get their traditional perfectly-legitimate-everywhere-else stimulant (can't remember the name - Jhat?) in the US.
Before Feb 2008, you could not buy a sex toy in Texas. In Alabama, you still can't. https://en.wikipedia.org/wiki/Texas_obscenity_statute https://en.wikipedia.org/wiki/Anti-Obscenity_Enforcement_Act ; I don't remember which state right now, but in one of them, walking shirtless down the street is enough to get you on the sex offender list.
Again, I'm not saying Singapore is free or a bastion of democracy. But theory means nothing, and in practice, it is on par with the rest of the western world.
Absolutely true and one of the reasons I would be hesitant to live somewhere like Singapore. I wasn't arguing that Singapore was better, but simply discussing the surprise that the original commenter had in learning about such restrictive economic regulations in the US.
And the truth is, Singapore's benevolent dictatorship and the governments of 8 other nations currently allow their citizens more economic freedoms than the democratically elected politicians in the United States. At least, that's what this Index claims, which seems to match reality to some extent. The Index doesn't measure the power of the government to take those freedoms away on a whim, or non-economic freedoms, but simply the current level of economic freedom in these countries.
And the truth is, Singapore's benevolent dictatorship and the governments of 8 other nations currently allow their citizens more economic freedoms than the democratically elected politicians in the United States. At least, that's what this Index claims, which seems to match reality to some extent. The Index doesn't measure the power of the government to take those freedoms away on a whim, or non-economic freedoms, but simply the current level of economic freedom in these countries.
Not to mention that there are some states that just prohibit the sales of vehicles on Sunday. That is what I find amazing. I can't imagine being told that one day a week I'm not allowed to sell my product.
It does seem a little odd, but as a resident of one of those states I think it's awesome. I can peruse the lot with zero chance of being approached by a salesperson. IMHO it actually facilitates car sales, because one day a week people can look at new cars without immediately feeling like prey.
You can do that online any time. What you see in the lot on Sunday is the same as what you would see online.
But as a resident of one of those states as well, I hate it. Not because I want to buy a car on Sunday but because if the dealership is open the service section of the dealership would also be open.
But as a resident of one of those states as well, I hate it. Not because I want to buy a car on Sunday but because if the dealership is open the service section of the dealership would also be open.
No, what you see online is a digital representation of a physical product. What you see on the lot is an actual physical product that can be touched and smelled.
...and sat in. Or not, in my 6'5" case.
Not when the dealership is closed though...that's the point of just looking online when they are closed on Sunday.
Very true.
Once upon a time, there was a used car dealer in Austin that unlocked all their cars when they opened in the morning. And the only time a salesguy would ask "Can I help you?" (anyone hate "What can I put you in?" too?) was when they were walking by you after talking to someone else. And they took "I'm still looking right now" for an answer.
I felt really bad when I couldn't find something I liked there.
Once upon a time, there was a used car dealer in Austin that unlocked all their cars when they opened in the morning. And the only time a salesguy would ask "Can I help you?" (anyone hate "What can I put you in?" too?) was when they were walking by you after talking to someone else. And they took "I'm still looking right now" for an answer.
I felt really bad when I couldn't find something I liked there.
There's a huge difference between looking at pictures online and seeing the cars in person.
There are some very strange laws. In Texas, IIRC, a vehicle dealer must be closed on either Saturday or Sunday. So you get some dealers advertising, "Go see everyone else on Saturday, buy from us on Sunday!" And then, there are recreational vehicle dealers that have to close their motorhome sales one of the two days, but can sell trailers all weekend long.
I know right? I have a couple college friends working for GM. They get some awesome employee discount, and can flip it and buy a new car every 6mo or year or so. But they still have to go through dealers to buy their car. It's crazy. They can see their car in the GM lot, as it's being built, but they have to wait until it's shipped to a dealer, pay through a dealer, pick out their options through a dealer and submit a build sheet through a dealer, and still wade though dealers trying to up sell them on crap sitting on the dealer lots, just to "buy" their car.
Part of the GM dealer franchise agreement prohibits GM from competing against its dealer franchises, i.e., by selling directly to customers straight from the factory.
It's not a law, it's simply a contractual provision that the dealers negotiated to protect their investments.
It's not a law, it's simply a contractual provision that the dealers negotiated to protect their investments.
> arguably the most libertarian country on earth, as far as business is concerned
Ahahaha, I hope you're joking. The US isn't even close to being libertarian. The American economic system isn't based on capitalism, it's based on corporatism and regulatory capture.
Ahahaha, I hope you're joking. The US isn't even close to being libertarian. The American economic system isn't based on capitalism, it's based on corporatism and regulatory capture.
Yes, but aren't other countries even less libertarian?
According to two major economic freedom indices[0][1], the US is ranked 18th and 10th, respectively, worldwide. So no, I wouldn't say that the US is the "most libertarian country in the world".
0: http://en.wikipedia.org/wiki/Economic_Freedom_of_the_World
1: http://en.wikipedia.org/wiki/Index_of_Economic_Freedom
0: http://en.wikipedia.org/wiki/Economic_Freedom_of_the_World
1: http://en.wikipedia.org/wiki/Index_of_Economic_Freedom
Canadian here. My country is listed higher than the US in both lists, but I have to laugh out loud at that. Canada is swimming in protectionist laws that choke off competition in some vital sectors, like telecom. Even Amazon got crap for wanting to open warehouses here, because it was considered too "threatening" (as in, people might shop there) to the protected, Canadian companies. Canadians routinely cross the border to shop in US towns that are close to the border, because we don't get gouged as much there, and the choices are far better than we get here.
Candadian who moved america: America just has it's own special brand of protectionist crap. Americans often buy their medication from Canada due to all the crony capitalism that the USA has encountered with their health care system. Don't get started on the whole corn subsidy SNAFU.
Also the USA has cheaper shopping compared to most of the world. Few places are cheaper, especially for goods that are not food, clothing or similar.
Canada is primarily a resource economy. Minerals, oil & banks take up a majority of of the TSX's value. Symptoms of Dutch Disease are prevalent inside canada itself.
Also the USA has cheaper shopping compared to most of the world. Few places are cheaper, especially for goods that are not food, clothing or similar.
Canada is primarily a resource economy. Minerals, oil & banks take up a majority of of the TSX's value. Symptoms of Dutch Disease are prevalent inside canada itself.
I'm particularly amused when American regulators try to claim that one should not purchase drugs from Canada, because their safety can't be verified. Really.
Every rich nation has a complex web of mercantilist measures in place, for sure.
Every rich nation has a complex web of mercantilist measures in place, for sure.
That is a common experience for me (Germany here). There is no guaranteed vacation (full on neoliberalism), few barriers to firing people (dito), but theres also minimum wage, something that is completely foreign to most right and middle-leaning parties here.
So the evidence seems to suggest that the whole libertarian and socialism debate is nothing but political banter, with little ideological foundation.
So the evidence seems to suggest that the whole libertarian and socialism debate is nothing but political banter, with little ideological foundation.
The free market works for jobs too when you let it. If company A offers a job with no vacation and company B offers 4 weeks a year the employee will choose company B. If neither offers vacation you can choose to find another company / industry or start your own.
Job protection laws protect and promote mediocrity.
Job protection laws protect and promote mediocrity.
It does in an employee market. If it's an employer market (which it is during economic downturns), then company A will offer your a job with no vacation, and company B will offer you a job with no vacation AND no overtime payment. And there are no other companies, and most people can't start their own.
A free market is an inherently unstable equilibrium. If you don't put protection in place to make it stable, it will quickly stop being free.
Of course, if you put too much protection, you get other unwanted effects, like promoting mediocrity. Extremes, either way, are bad.
A free market is an inherently unstable equilibrium. If you don't put protection in place to make it stable, it will quickly stop being free.
Of course, if you put too much protection, you get other unwanted effects, like promoting mediocrity. Extremes, either way, are bad.
We have strict laws governing the sales and services of all kinds of things. Some of them are good, some are bad. The strictness and enforcement of these laws can also range from state-to-state.
The problem with some of these laws are that often they were written with the idea of protecting a business concern to maintain their advantage over, and to the detriment of, the consumer.
The problem with some of these laws are that often they were written with the idea of protecting a business concern to maintain their advantage over, and to the detriment of, the consumer.
If there's any industry begging to be "disrupted," it's the automotive industry.
True, and Tesla has been the biggest disruptor. But barriers to entry are huge, and regulation really clamps down on "disruption".
You know all those awesome concept cars you see at car shows that never get built? One reason nothing revolutionary comes out is that the industry is regulated to the max. Much of it is "safety" features, which may be well and good, but much of those "safety" constraints are arbitrary. But there are laws about everything from the shape of the steering wheel, to how far apart headlights need to be, and the CAFE standards pushing for fuel economy limits how cars have to be designed and built, as the companies need to squeak out every last mpg on the car.
You know all those awesome concept cars you see at car shows that never get built? One reason nothing revolutionary comes out is that the industry is regulated to the max. Much of it is "safety" features, which may be well and good, but much of those "safety" constraints are arbitrary. But there are laws about everything from the shape of the steering wheel, to how far apart headlights need to be, and the CAFE standards pushing for fuel economy limits how cars have to be designed and built, as the companies need to squeak out every last mpg on the car.
Let's hope the government sees Tesla as the exception it is and lets them do their thing.
[deleted]
>>“Anything that gets you to the executed contract is part of the sale,” Bob O’Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association, told the auto industry publication.
When I read this, I couldn't help think of another quote from a 2008 Wired article [1] - ironically on Elon Musk and SpaceX. In it, he shares nails down a guy names John Pike, who predicted doom for SpaceX.
The context is different but the quote works:
>>Wired.com: Your whole mantra is "cheaper and more reliable." But so far you're zero for three, which is anything but cheap and reliable, and guys like GlobalSecurity.org's John Pike say the reason it has taken billions of dollars and tens of thousands of people to successfully launch rockets is physics, not some new design or economic model.
>>Musk: Guys like John Pike have existed since the dawn of time, and if you listen to people like that then things will never get better, never change.
Guys like Bob O’Koniewski have existed since the dawn of time. You can either generate wealth by creating value or seizing and hoarding value. It's clear which side of that dichotomy Elon and Bob each stand, respectively.
[1] http://www.wired.com/science/space/news/2008/08/musk_qa
When I read this, I couldn't help think of another quote from a 2008 Wired article [1] - ironically on Elon Musk and SpaceX. In it, he shares nails down a guy names John Pike, who predicted doom for SpaceX.
The context is different but the quote works:
>>Wired.com: Your whole mantra is "cheaper and more reliable." But so far you're zero for three, which is anything but cheap and reliable, and guys like GlobalSecurity.org's John Pike say the reason it has taken billions of dollars and tens of thousands of people to successfully launch rockets is physics, not some new design or economic model.
>>Musk: Guys like John Pike have existed since the dawn of time, and if you listen to people like that then things will never get better, never change.
Guys like Bob O’Koniewski have existed since the dawn of time. You can either generate wealth by creating value or seizing and hoarding value. It's clear which side of that dichotomy Elon and Bob each stand, respectively.
[1] http://www.wired.com/science/space/news/2008/08/musk_qa
Henry Ford was the one that started the independent dealer model. It made sense back then, because there was no way he could handle both the manufacture and distribution of the vehicles across the nation.
Today, the average dealer makes about $750,000 in profit each year. Many of these dealers are family owned and very active with local politics. In many smaller cities, the car dealership provides a good portion of tax revenues.
With all this said, dealerships have incredible clout when it comes to legislation. They pretty much ruined TrueCar.com's business model.
I think Tesla will be forced to offer independent distribution at some point if they get larger. And I've read that they are planning to do so. The dealer lobby is just way too strong in this country.
Today, the average dealer makes about $750,000 in profit each year. Many of these dealers are family owned and very active with local politics. In many smaller cities, the car dealership provides a good portion of tax revenues.
With all this said, dealerships have incredible clout when it comes to legislation. They pretty much ruined TrueCar.com's business model.
I think Tesla will be forced to offer independent distribution at some point if they get larger. And I've read that they are planning to do so. The dealer lobby is just way too strong in this country.
Epic comment in the quotes:
"What is best in life? To crush the middlemen, see them driven before you, and hear the lamentation of their lawyers."
"What is best in life? To crush the middlemen, see them driven before you, and hear the lamentation of their lawyers."
So my running list of things that are obviously outdated and fruitlessly resisting their death throes now includes:
- Auto dealerships - Music labels - Government secrecy
- Auto dealerships - Music labels - Government secrecy
Don't forget local taxi/livery commissions...:)
Only 3? I figured Radioshack/Bestbuy belong in this category in the long run.
Would be interesting discussion on what industries denizens of HN think will fall in this manner.
Would be interesting discussion on what industries denizens of HN think will fall in this manner.
Radio Shack made themselves obsolete. I don't think Best Buy is obsolete, but merely needs a restructuring.
Radio Shack used to be great when you were working on a project and just needed one more part; a capacitor, a motor/servo, a PIC, etc. I don't need another phone reseller, I don't need useless RC cars, I don't need odd TV remotes. I need an electronics store that sells electronic parts.
Best Buy is great for researching your purchases. I can read reviews of a laptop online, but I can't feel it, feel the build quality or the keyboard, I can't test the viewing angle. I can read reviews of TVs, but I can't see the picture quality, I can't hear the speakers. I can't ask questions and get answer immediately. Best Buy is great for this.
I don't mind paying a higher price if it means I get what I need as soon as I need it. These stores should, IMO, focus on things that a customer would not trust an online purchase for, and focus on adding value to these immediate purchases. Radio Shack for parts, Best Buy for consumer purchases, each with value added by knowledgeable salesmen.
Radio Shack used to be great when you were working on a project and just needed one more part; a capacitor, a motor/servo, a PIC, etc. I don't need another phone reseller, I don't need useless RC cars, I don't need odd TV remotes. I need an electronics store that sells electronic parts.
Best Buy is great for researching your purchases. I can read reviews of a laptop online, but I can't feel it, feel the build quality or the keyboard, I can't test the viewing angle. I can read reviews of TVs, but I can't see the picture quality, I can't hear the speakers. I can't ask questions and get answer immediately. Best Buy is great for this.
I don't mind paying a higher price if it means I get what I need as soon as I need it. These stores should, IMO, focus on things that a customer would not trust an online purchase for, and focus on adding value to these immediate purchases. Radio Shack for parts, Best Buy for consumer purchases, each with value added by knowledgeable salesmen.
The number of people that would buy a capacitor, motor/servo or PIC is not what it used to be. Electronics don't ship with schematics anymore or have nice big through-hole components that are easy for a layman to replace. I miss the old Radio Shack too, but we are in a tiny minority.
I actually went into RS this weekend for an electronic part, and _almost_ came away with something. They had a 5A relay, I need a 15amp part. It would have been far cheaper than the $10 shipping from newark or one of the online places.
So Close, yet so far.
So Close, yet so far.
> Best Buy is great for researching your purchases. I can read reviews of a laptop online, but I can't feel it, feel the build quality or the keyboard, I can't test the viewing angle. I can read reviews of TVs, but I can't see the picture quality, I can't hear the speakers. I can't ask questions and get answer immediately. Best Buy is great for this.
Sounds like you just need an Amazon showroom. A hell of a lot cheaper to run, and a hell of a lot less annoying pimply teenage employees trying to sell you accessories and extended warranties.
Sounds like you just need an Amazon showroom. A hell of a lot cheaper to run, and a hell of a lot less annoying pimply teenage employees trying to sell you accessories and extended warranties.
I've thought long about this issue, as I did a paper in marketing class about the threat of Amazon to brick and mortar stores. I don't think an Amazon showroom is really the best answer. Sears tried that (and still has some of these stores). Volume is very low. It works best for catalog items, and catalogs are fairly rare.
The ability to touch and feel is a value-add, but just one of many. The pimply teenagers you mention are something I feel needs to change. The biggest value-add these stores can have is information and strong recommendations. Basically, if someone who knows what they are doing cannot recommend this product over that product, don't stock this product. That way when people walk into the store, the salesman can ask what they are looking for and recommend the best product they can buy for their needs. This keeps cost down and having a knowledgeable sales staff is a huge win for everyone.
Right now in Best Buy, all I can really do is look at what is available and then research it online for more specs and reviews, combining the best of both worlds. This is time consuming and unproductive in the long run. Asking a sales member for advice is worthless currently. This is what needs to change for Best Buy, in my opinion. The best product for my needs, recommended by a salesman who knows what he is doing, available instantly.
The ability to touch and feel is a value-add, but just one of many. The pimply teenagers you mention are something I feel needs to change. The biggest value-add these stores can have is information and strong recommendations. Basically, if someone who knows what they are doing cannot recommend this product over that product, don't stock this product. That way when people walk into the store, the salesman can ask what they are looking for and recommend the best product they can buy for their needs. This keeps cost down and having a knowledgeable sales staff is a huge win for everyone.
Right now in Best Buy, all I can really do is look at what is available and then research it online for more specs and reviews, combining the best of both worlds. This is time consuming and unproductive in the long run. Asking a sales member for advice is worthless currently. This is what needs to change for Best Buy, in my opinion. The best product for my needs, recommended by a salesman who knows what he is doing, available instantly.
I think Radio Shack is back to that business model. I heard you can buy Arduinos there now.
"Best Buy is great for researching your purchases."
It would be, if they had enough of a selection to peruse.
It would be, if they had enough of a selection to peruse.
Also: Bookstores, Record stores
Real Estate
+Taxi Unions/Laws
All that the auto dealers are going to do with this effort is draw attention to this cool new car. Sure, they might succeed in banning them in a state or two (which is ridiculous), but in the end any publicity will benefit Tesla and hurt the dealers (disclaimer: I am not a marketing professional).
EDIT: To clarify my vague statement above, I meant "banning" the Tesla display store business model, not banning Tesla altogether. That's a much more unlikely outcome, although I'm sure they would if they could.
EDIT: To clarify my vague statement above, I meant "banning" the Tesla display store business model, not banning Tesla altogether. That's a much more unlikely outcome, although I'm sure they would if they could.
There was a similar discussion on how terrible car dealers are a few weeks ago on HN when tesla announced their stores. The car dealer model is clearly flawed. As an auto enthusiast and someone who spends way to much money on my cars I absolutely hate car dealers and the BS you have to go through to buy a car.
Not only that but it seems that every time I go into a car dealership I know more about the cars than the sales people. Most of the time they're just some random guy off the street that decided to sell cars and got their training from a generic book or reading the sales materials. It's like they spent more time learning how to negotiate, con their customers and make the most commission they possibly can than they do learning about the car and what they are actually selling.
I feel bad for consumers that are not "car people" and go to a dealership seeking info from sales people.
Not only that but it seems that every time I go into a car dealership I know more about the cars than the sales people. Most of the time they're just some random guy off the street that decided to sell cars and got their training from a generic book or reading the sales materials. It's like they spent more time learning how to negotiate, con their customers and make the most commission they possibly can than they do learning about the car and what they are actually selling.
I feel bad for consumers that are not "car people" and go to a dealership seeking info from sales people.
"If, after the sales pitch, you’re ready to pull the trigger, you are politely directed to a computer to make your deposit and place your order."
Sounds like their business model will be left for a judge to decide. I think people on HN are angry because the auto industry feels like a monopoly and the law that Tesla might be infringing on should be illegal any ways. But what the judge wil have to decide is whether Tesla's interpretation of the law is correct. In normal cases this could take a pretty long time and Tesla would be able to operate until a judge says otherwise.
Without reading the law I would like to think that Tesla is onto something here. Just like the rest of the angry HN users, I would feel satisfied to know that the big auto industry wrote a law for their own benefit and technology passed them by.
Sounds like their business model will be left for a judge to decide. I think people on HN are angry because the auto industry feels like a monopoly and the law that Tesla might be infringing on should be illegal any ways. But what the judge wil have to decide is whether Tesla's interpretation of the law is correct. In normal cases this could take a pretty long time and Tesla would be able to operate until a judge says otherwise.
Without reading the law I would like to think that Tesla is onto something here. Just like the rest of the angry HN users, I would feel satisfied to know that the big auto industry wrote a law for their own benefit and technology passed them by.
I'm confused. Is this article saying that in the US it's illegal for a maker of the product to sell the product to whomever he wants?
How is that helping anyone but the dealerships?
How is that helping anyone but the dealerships?
> How is that helping anyone but the dealerships?
It's not.
It's not.
> > How is that helping anyone but the dealerships?
> It's not.
That was my initial though as well, but I came up with at least one case where survival of the dealerships is critical to an open market place.
If all stores were owned by car manufacturers, that would be a significant barrier to entry of new automakers. Not only do new entrants have to build a car company, but now they have to create a new distribution network as well at the same time.
That said, Tesla is a new car company and creating a new distribution network for them does not seem that big an issue.
That was my initial though as well, but I came up with at least one case where survival of the dealerships is critical to an open market place.
If all stores were owned by car manufacturers, that would be a significant barrier to entry of new automakers. Not only do new entrants have to build a car company, but now they have to create a new distribution network as well at the same time.
That said, Tesla is a new car company and creating a new distribution network for them does not seem that big an issue.
>If all stores were owned by car manufacturers, that would be a significant barrier to entry of new automakers.
Is that a barrier to Tesla? It appears a big potential barrier to Tesla (a new automaker) is in fact the dealerships and the law preventing manufacturers from selling directly. In this case it's helping to prevent new entrants into the industry.
Is that a barrier to Tesla? It appears a big potential barrier to Tesla (a new automaker) is in fact the dealerships and the law preventing manufacturers from selling directly. In this case it's helping to prevent new entrants into the industry.
How would vertical integration between car manufacturers and dealerships be a barrier to entry specifically, given today's tech? I think there would be new car entrants doing what Tesla is doing.
Then shouldn't the law simply ban such pricing practices? That seems like a less oppressive solution. Banning an important industry from selling its own products just sounds wrong.
It's not my area of expertise. But there have been lawsuits against vertical exclusivity in car dealership. These slides seem to go into it:
http://www.justice.gov/atr/public/hearings/single_firm/docs/...
http://www.justice.gov/atr/public/hearings/single_firm/docs/...
That is correct. Car dealers are much like real estate brokers - politically savvy and entrenched.
Say for example there are five Chevy dealerships in the greater Omaha area. If General Motors were allowed to own one itself it could give itself discounts internally such that it could undersell the other dealers and put them out of business. Once the competition was gone it could then raise prices harming consumers. Competition is good for consumers and the laws in question are aimed at protecting consumers.
Yes I know they are also competing with other brands, but some people are brand loyal enough that they would not switch to Ford or Chrysler.
Yes I know they are also competing with other brands, but some people are brand loyal enough that they would not switch to Ford or Chrysler.
So there needs to be competition between sellers of a single brand, just because some people are so brand-loyal that they would refuse to switch brands to avoid being 'taken to the cleaners?' I'm not sure I agree with this sentiment.
You're also ignoring that the brand (e.g. Chevy) is selling to all of the dealerships. If they raise the price, the dealerships all have to pay if they want the car/truck/etc. Do the dealerships really have that much bargaining power?
You're also ignoring that the brand (e.g. Chevy) is selling to all of the dealerships. If they raise the price, the dealerships all have to pay if they want the car/truck/etc. Do the dealerships really have that much bargaining power?
"If Apple were allowed to sell its own products itself, it could undersell other dealers and put them out of business...
Yes I know they are also competing with other brands, but some people are brand loyal enough that they would not switch to Android or Windows Phone."
Yes I know they are also competing with other brands, but some people are brand loyal enough that they would not switch to Android or Windows Phone."
In regards to your edited quote: http://www.coolsprings.com/news/macauthority-closing-for-app...
Or General Motors gives internal discounts, that kills off the middlemen ("Chevy dealerships"), competition from other brands keeps the prices low. Competition is essential here, you can't just ignore it and state brand loyality.
In this case, the laws that keep dealerships alive are hurting you as a customer; the many testaments of bad experiences with deceiptful salesmen are evidence of that.
In this case, the laws that keep dealerships alive are hurting you as a customer; the many testaments of bad experiences with deceiptful salesmen are evidence of that.
I heard there's one state where you need a license to do interior design, how is that for bullshit legislation?
Also, braid hair in Utah: http://www.npr.org/blogs/money/2012/06/22/155596305/episode-...
(I think this was reversed since the story)
(I think this was reversed since the story)
Interior design are like contractors -- they can make structural changes to physical structures as part of their course. I don't see it as at all ridiculous that they need a license any more than for general contractors. I frankly want to know that they've done some studying before they cut into my walls.
It would be bullshit if you were referring to interior decorators, but I don't think there's any certification or licensing to become an interior decorator unless you join an association or club that requires it.
It would be bullshit if you were referring to interior decorators, but I don't think there's any certification or licensing to become an interior decorator unless you join an association or club that requires it.
No, it's not. It's saying that in certain states the definition of a car dealership precludes Tesla's current sales facilities (i.e., mall storefronts) from finalizing sales.
Tesla can still maintain these storefronts, and still negotiate and reach an agreement in principle in these storefronts. It simply can't finalize (i.e., sign the contract) in these storefronts. The reasons for this vary from state to state, so I won't even bother try to explain the justifications.
Tesla can still maintain these storefronts, and still negotiate and reach an agreement in principle in these storefronts. It simply can't finalize (i.e., sign the contract) in these storefronts. The reasons for this vary from state to state, so I won't even bother try to explain the justifications.
Timing is ripe for Tesla to join up with other auto manufacturers to start a PR campaign to get these laws overturned. Normally special interests are the only ones who care enough to lobby about niche issues which is how we end up with so much bass-ackwards legislation. But in this case it's manufacturers vs dealers, and the public by and large hates dealers, so this could quickly be turned against them and I bet they'd shut up pretty fast.
As an American, this disturbs me to no end. There are laws on the books to prevent a manufacturer from selling their own product directly to consumers? And what of the benefit? To protect a certain class of sales people.
I'm a licensed real estate agent (non-practicing) and I can understand the need for government regulation to protect consumers from ignorant and unscrupulous sales people but in no way is a home builder prevented from selling their homes directly to home buyers. Real estate law, at least in California, covers required disclosures which apply both to manufacturers and salespeople.
I can understand limiting sale of certain classes of products that can be dangerous if in the hands of the general public but not limiting sales to monopolize a class of salespeople. Especially to the detriment of manufacturers and consumers.
Am I missing something? I can't see who wins except for car dealerships.
I'm a licensed real estate agent (non-practicing) and I can understand the need for government regulation to protect consumers from ignorant and unscrupulous sales people but in no way is a home builder prevented from selling their homes directly to home buyers. Real estate law, at least in California, covers required disclosures which apply both to manufacturers and salespeople.
I can understand limiting sale of certain classes of products that can be dangerous if in the hands of the general public but not limiting sales to monopolize a class of salespeople. Especially to the detriment of manufacturers and consumers.
Am I missing something? I can't see who wins except for car dealerships.
> As an American, this disturbs me to no end.
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> Am I missing something?
The fact that this surprises you means you've probably missed the hundreds of other such laws that are on the books, and for which you are paying daily (and dearly) without even realizing.
The fact that this surprises you means you've probably missed the hundreds of other such laws that are on the books, and for which you are paying daily (and dearly) without even realizing.
So if "anything that gets you to the executed contract is part of the sale", shouldn't all those independent car dealerships be paying the car manufacturers for those expensive and slick TV, magazine and internet advertisements they produce to get people to go to said dealerships to buy their cars?
(Or do they already?)..
(Or do they already?)..
They do.
Actually, we do. If you look closely you'll often see a line item on the final invoice for something like "advertising" or "promotion". Yup --- they make you pay for the advertising.
I learned this years ago from a site that walked through car purchase negotiation techniques. Sorry, I don't remember which site.
I learned this years ago from a site that walked through car purchase negotiation techniques. Sorry, I don't remember which site.
Semantics. We also pay for their air conditioning, tools, coffee, uniforms, etc. if you want to use that logic. It's just broken out for some reason.
Thanks for clarifying that. Although I would guess that the dealers don't pay for 100% of the advertising? Or is that also the case?
We (consumers) pay for all advertising.
True story (mine): I knew a car dealer that made it very clear to me that if I buy the new car from him (and leave the old one there for a lower price) he'll give me significant discount. I said to myself "can't hurt to try" and went this route. The next day after owning the car (which I still own) the new owner of my old car called to ask what's the realistic condition. Turns out the dealer sold him the car for about $1500 more than I got from him, so I can only imagine he made the same thing with my new car, earning him $3000 for less than two hours of papirology.
I don't mind people making money, but for $10 - %15k cars it's an absolute steal.
I don't mind people making money, but for $10 - %15k cars it's an absolute steal.
This is normal. The dealer makes very little from a new car. They have to recoup that from trade-ins and selling used cars, which have a higher margin. New cars don't offer a lot of wiggle room because the invoice price for them is set, and they already sell them for little profit.
The dealer makes more than that from the new car. In addition to the invoice price (which is significantly higher than the dealer price) they also make money from add-ons, extended warranties, and the loan terms.
This doesn't stop them from making top dollar on everything else that they can though.
This doesn't stop them from making top dollar on everything else that they can though.
And some manufactures have "holdback" which means the dealer can get a percentage back if the car sells within 90 days. For VW it is 2% off MSRP.
http://www.edmunds.com/car-buying/dealer-holdback/
http://www.edmunds.com/car-buying/dealer-holdback/
And the invoice price is always more than they pay for the vehicle anyway. It's not uncommon to see new vehicles advertised at several hundred below invoice (most I've seen is -$300 or so).
Not to mention the juicy profits they make from their service department.
The legal protection afforded to cartels is just astounding. I think just yesterday the front page of HN was talking about the taxi cartels, and their efforts to use the law to prevent competition. And now this? As others here have already pointed out, this doesn't really resemble the free market that the US is alleged to have.
I abhor when people use "veep". It just looks childish and makes no sense....
If Tesla encourages one to buy the car at a terminal within the non-dealership, to me that feels like something similar to self help checkout lines at a retailer who offers home delivery. My best guess is that the car dealership law was never intended to cover this.use case, and that both Tesla and the dealer associations should be lobbying to change the law in their favor. I'd hate to rely ok existing law for this one.
tesla did some great work here. i can't follow the argument that automakers selling cars kills competition. the analogy to apple stores is a perfect example: there are still thousands of resellers offering apple products!
I am not a lawyer and this is not legal advice.
Every one of these sales takes place over the internet, and across state lines. This is interstate commerce. How then are states able to regulate it?
Every one of these sales takes place over the internet, and across state lines. This is interstate commerce. How then are states able to regulate it?
It's not that simple: http://law2.umkc.edu/faculty/projects/ftrials/conlaw/stateco...
Since the regulations aren't applied specifically to out-of-state businesses, and considering that many states have the same laws (hence there's no unreasonable burden on out-of-state businesses), they may be legal.
I'm not a lawyer either, though.
Since the regulations aren't applied specifically to out-of-state businesses, and considering that many states have the same laws (hence there's no unreasonable burden on out-of-state businesses), they may be legal.
I'm not a lawyer either, though.
Kudos to Tesla for taking on this cartel.
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[1] Edmunds lists the following types of fees charged by traditional car dealers at the time of sale: "registration fees," "doc fees," "trade-in fees," "dealer fees," "holdback," "financial reserve," and "advertising fees." Good luck trying to figure out what these fees ought to be for the vehicle you want to buy. Source: http://www.edmunds.com/car-buying/what-fees-should-you-pay.h...