Tesla's gains on the dealership status quo are freaking people out

Tue, Jun 17 2014

Tesla took two more steps towards being allowed to sell its vehicles as it chooses (that is, direct to customers) this week. Legislative efforts in New Jersey and New York both gave the California automaker legal permission (or near permission) to operate its stores. It's gotten so bad – or good, depending on your views, that other automakers are starting to speak up.

Yesterday, Tesla got official permission to keeps it five stores open in New York thanks to the signature of Governor Andrew Cuomo on a pro-Tesla bill that passed earlier this year. This is not a surprise. The bill also makes it difficult for any other automaker to operate its own stores in the state.

Other automakers are now saying that the dealers have too much power.

In nearby New Jersey, the state Assembly voted yesterday to allow EVs to be sold directly to the consumer. This vote follow an Assembly committee's vote earlier this month and the bill now moves to the New Jersey Senate and, if it passes, would need to be signed by Governor Chris Christie before becoming law. You may remember there's a bit of bad blood there. This is all quite a turnaround from mid-March, when the state legislature voted against direct sales. If passed, Tesla would be allowed to operate four stores in the state.

As you can see, progress is being made. And that's changing the battlefield. The National Automobile Dealers Association (NADA) released a new package of pro-dealership information called "Get the Facts: The Benefits of Franchised Auto Dealers" to take the other side. NADA says that the "current franchised new-car dealer model has benefited consumers, manufacturers and local communities for nearly a century" and then lays out its reasons why. You can watch the NADA's short Get The Facts video below.

Perhaps most interestingly, other automakers Â– through the Auto Alliance Â– are now saying out loud that the dealers have too much power. In a statement to Automotive News, the Alliance said, " When we look at the big picture, we may be at a tipping point. If dealer groups continue their push for more onerous franchise laws, we will be forced to keep an open mind about how best to serve new-car buyers in the future." That was enough to scare the chairman of the Automotive Trade Association Executives, who told AN that, the Alliance coming out against the franchise system was a "recipe for disaster."

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By Sebastian Blanco