Automobile History Repeats

[Twelvefret]

You may recall that Henry Ford was prevented from manufacturing his product by the ALAM in 1903, http://en.wikipedia.org/wiki/Associa..._Manufacturers

Today Michigan is preventing Tesla from marketing without dealers. http://www.msn.com/en-us/money/compa...id=ansfinreu11

[fazool]

Now I want a Tesla just because I hate the political manipulation of free market capitalism.

I'm pro American and pro Made-in-the-USA. I drove hot rod American muscle cars my whole life, but I stopped buying Detroit cars decades ago after getting screwed.

[HHP]

Wasn't the prohibition of makers selling direct on the books before Tesla was founded?

[Earwitness]

Is Tesla an example of free-market capitalism?

[Twelvefret]

Originally Posted by HHP

Wasn't the prohibition of makers selling direct on the books before Tesla was founded?

ALAM was around before HF wanted to sell his product.

[Twelvefret]

Originally Posted by Earwitness

Is Tesla an example of free-market capitalism?

That's a good question and one I hope we can explore.

[KevWind]

Originally Posted by HHP

Wasn't the prohibition of makers selling direct on the books before Tesla was founded?

Yes almost every state already had some type franchise law that prohibit direct manufacturer auto sales.

However it is interesting that according to the article so far only five states have moved to "clarify" or "enforce" such existing law in direct response to Tesla...

Originally Posted by Earwitness

Is Tesla an example of free-market capitalism?

Perhaps the better question is : Why wouldn't Tesla be just like any other type of "direct sales" it represents simply another avenue or model of free market sales.

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There are in fact multiple issues and questions of consumer and business interests surrounding the situation. Questions like , in the computer age , are the logistical and business reasons still actually as valid as they might have been 50 years ago.

Questions of fairness (except for the auto industry, direct mfg. sales is now a standard business practice in all states) , questions about what really makes for competition, questions of monopolistic practices etc.etc. in todays market.

It will be interesting to see how this actually plays out legally. Many market analysts think that state bans on direct sales of autos will start going away.

The reality being, it is and will continue to be a fairly complex situation, for which simplistic one line answers are inadequate

[imwjl]

I'm smiling here because I've followed or couldn't help knowing the politics of some car dealers in my area. One ran for US senate. Several confused or confused freedom with freedumb. It was all no government and no nanny state until new competition or pressures from the recession came knocking on the door.

I cannot say the dealers added much value the last times (most if not all times) I made car purchases. It was a pleasant surprise when I got my 2013 car via the first time I ever that a salesperson knew the car very well. Many times that's not even been the case.

Fixing a car? Once out of warranty, the dealer doesn't seem to be very important but I have observed some near me have gotten much better including more competitive on price.

This sure says something about the political power of car dealers vs computer dealers. Look what's happened to your local Apple, HP or IBM dealers?

Two areas come to mind where standards or regulations are worth considering. You do want cars safe when it comes to repairs. With so many using credit when they buy a car you want truth in lending. A bad player in those realms can show up anywhere.

[Herb Hunter]

Excerpt from a Car and Driver article titled, Unplugged: Michigan Governor Signs GM-Supported “Anti-Tesla” Bill Into Law.

Our take: Competition in the car market is good for everyone. A direct-to-consumer sales model cuts down on chances for buyers to get hoodwinked—something that’s all too common in the current new-car-sales model. That General Motors, a company that sold more than seven million vehicles worldwide in the first nine months of 2014, feels threatened by a company whose flagship sedan has only just crested 25,000 sales in total, demonstrates the degree to which Elon Musk’s car company is shaking up the car-sales landscape. It’s an industry in desperate need of shaking up, and trying to force Tesla to play by the old cronies’ rules is like requiring the company to put gasoline engines in its cars—a backward-looking hindrance to the future-facing market disruption Tesla promises.

[KevWind]

Here is one market analysis that concludes the laws will in fact change .

http://www.justice.gov/atr/public/eag/246374.htm

excerpt from conclusion

One observer familiar with state auto franchise laws said several years ago that "No matter how strong franchise laws look today, I think they are one rider away from being a non-factor."(27) Whether that prediction comes to pass will be determined by the political process, of which taxpayer-financed TARP funding is now a part. As a matter of economics, arguments for state bans on manufacturer direct sales of autos based on holdup and free-rider problems are not persuasive because competition among auto manufacturers gives each manufacturer the incentive to refrain from opportunistic behavior and to work with its dealers to resolve any free-rider problems. Just as Dell has altered its distribution model in the personal computer industry to better meet evolving consumer preferences, car customers would benefit from elimination of state bans on auto manufacturers' making direct sales to consumers.

[J Patrick]

...its not just automotive history repeating itself...its the history of corporate capitalism in general....capitalism isn't capitalism anymore when players are blocked from the game....when someone works hard to create a successful company its only natural that they would want to protect their position in the marketplace ...but they need to do it with more hard work ....not state sponsored legislation...

[Herb Hunter]

Didn't, Henry Ford, unable to obtain approval from ALAM, simply ignore the ruling against him and manufacture his cars without their license?

[Twelvefret]

Originally Posted by Herb Hunter

Didn't, Henry Ford, unable to obtain approval from ALAM, simply ignore the ruling against him and manufacture his cars without their license?

No, the court moved in his favor. http://inventors.about.com/library/w...arsseldona.htm

[SongwriterFan]

Shouldn't the same franchise laws that apply to gasoline and diesel-powered cars/trucks also apply to electric vehicles?

Once that's been established, THEN you can debate whether the franchise laws should be applied at all to ANY of them.

[michaeljohnr]

Evolve or die. The marketplace will change eventually.