Wall Street and Silicon Valley-backed automakers are looking for special treatment and lobbying to tear down important state franchise laws to pave the way for a direct sales model that harms consumers.
Tesla, Rivian, Lucid and others want to build vertically integrated monopolies to design and build, distribute and retail electric vehicles (EVs). Even some legacy automakers are thinking about bypassing their dealers and setting up their own direct sale operations for EV product.
Proponents of the direct sale model say it is more efficient. They are WRONG!
- Direct sales eliminates price competition for sales and service.
- Direct sales remove local accountability.
- Direct sales reduces local economic benefits.
- Direct sales harms consumer safety.
Debunking The Myths Surrounding Direct Sales
The direct sale model is nothing more than an effort to crush competition and suck profits out of local communities to Silicon Valley and Wall Street. Below, we debunk some of the misinformation being peddled by direct sales proponents.
MYTH: Direct sales is a more efficient way to distribute motor vehicles
TRUTH: Direct sales does not cut out the cost of retailing new vehicles; it simply eliminates competition, local control and accountability. Wall Street and Silicon Valley-backed automakers, like Lucid, Rivian and Tesla favor direct sales because it benefits their shareholders and investors, not because it benefits consumers or the economy of the State of New Jersey. They simply want to establish vertically-integrated monopolies.
MYTH – Traditional dealers don’t do business digitally or online
TRUTH: Traditional dealers are digitally ready, willing, and able to do business with car buyers wherever, however, and whenever the customer wants. They have adopted digital and online retail techniques that consumers want and will find familiar.
MYTH – Traditional dealers are an obstacle to the introduction of new technology or personal mobility options, such as EVs, AVs, subscription services and more.
TRUTH: Franchised new car dealers are — and always have been — the most efficient and reliable go-to-market strategy for new and innovative automotive products and services. Every automotive product or service advancement over the last 100+ years (seatbelts, air bags, lane-assist technology, leasing options, etc…) have been adapted into the ever-evolving auto retail industry by thousands of franchised dealers.
The direct sales model weakens the very consumer protection laws that promote competition and ensure ready access to qualified repair facilities. The franchise system of independent new car dealership promotes competition, ensures consumer safety, maintains local control and accountability, and keeps the economic benefits of this $40 billion per year industry right here in New Jersey.
Please take a few minutes to watch the video below and learn more about why the franchise system is much better for consumers than the factory-direct sales model: