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02/15/2019

State Legislators representing Englewood and the surrounding communities in Bergen County, yesterday, introduced legislation to expand the size and scope of the special exemption under New Jersey law that allows Tesla -- and Tesla alone -- to bypass state laws designed to protect New Jersey new car consumers. This comes as no surprise, since Tesla is a company that has only managed to survive up until this point because of the special treatment and generous financial subsidies it demands from government at both the state and federal level.

Tesla has been operating in New Jersey under an exemption pushed through the Legislature and signed by Governor Christie in March of 2015, which allows the Silicon Valley-based electric carmaker to operate without independent franchisees at up to 4 retail locations. Tesla currently operates at 5 locations (2 in Paramus, 1 in Springfield, 1 in Short Hills and 1 more in Cherry Hill) and they are building a sixth store on Route 1 in Lawrenceville.

The rationale for the special exemption granted to Tesla four years ago was that the startup electric carmaker needed special consideration and that, once the company was up and operating at 4 factory-owned retail locations, all future Tesla stores would conform to the existing franchise laws which govern every other car dealer in the state. State franchise laws in New Jersey and across the nation were enacted to protect consumers, promote competition for sales, and encourage investment in an extensive network of independently-owned and operated neighborhood new car dealers to handle warranty and safety recall service.

“The simple fact is that, if Tesla management believes the automaker needs more stores to sell more vehicles in New Jersey, the company can quickly and efficiently scale up its retail network at any time, without lobbying for a change in the law, by appointing qualified franchisees to build stores and sell Tesla-made vehicles, just like every other automaker does,” said Joseph Agresta, Jr., Dealer Principal at Benzel-Busch Motor Car in Englewood, New Jersey. “And, if Tesla needs more service facilities to repair vehicles already in operation, there is nothing in the current statute that restricts the number of service facilities Tesla can build to meet the needs of its customers.”

“Every new car dealer in New Jersey is expected to play by the same rules, which are designed to promote investment in communities, like Englewood, and protect consumers,” said Matthew Haiken, Dealer Principal of Prestige Collection in Englewood, New Jersey, who sells Volvo and Lincoln brand cars and trucks. “But not Tesla. And now, for the second time, Tesla is asking state legislators to circumvent consumer and franchise protection laws to give this struggling automaker preferential treatment. I just don’t get it. How does this benefit consumers or communities, like Englewood, that have benefited from local investment in the extensive network of independently owned and operated neighborhood new car dealerships that create jobs and serve our communities?”

“The franchise laws every other dealer operates under were designed to promote competition for sales and service, which benefits consumers and promotes highway safety,” said Tony Fernandez, owner of Englewood Buick GMC and Chevrolet of Englewood. “Tesla’s direct sales model eliminates competition for sales and its vertical monopoly limits consumer access to warranty and safety recall service. This is like putting the ‘fox in charge of the chicken coop’, because automakers see warranty and safety recall work as an expense. Independently owned and operated neighborhood new car dealers, like me, on the other hand, are eager to go to bat for their customers when there are warranty or safety recall issues. That’s because the very state laws Tesla seeks to avoid, require automakers to pay franchised dealers to fix their mistakes,” explains Fernandez.

“New Jersey has a long-standing model for automotive sales that works for consumers and has created jobs and tremendous economic benefits in this community and beyond,” said Norman Dorf, owner of D&C Honda in Tenafly, New Jersey. “I just don’t understand how Trenton lawmakers would think a special carve-out for a Silicon Valley car company benefits New Jersey car buyers or New Jersey communities. It makes me wonder whose side Trenton is really on,” Dorf said.

NJ CAR is the statewide trade association that represents New Jersey’s 500+ neighborhood new car dealers, which employ more than 38,000 people across the Garden State. NJ CAR and its dealer-members welcome Tesla product to the market. But franchised new car dealers object to the special treatment afforded Tesla under the law and simply ask Trenton to demand the company play by the same rules as everyone else and stop playing favorites with Tesla.

Contact:    James B. Appleton, President
                  New Jersey Coalition of Automotive Retailers
                  (609) 883-5056, x330
                  jappleton@njcar.org

                  Brian Hughes, Director of Communications
                  New Jersey Coalition of Automotive Retailers
                  (609) 883-5056, x315
                  bhughes@njcar.org

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