The Missouri Automobile Dealers Association sued the Missouri Revenue Department and now a judge has ruled in their favor on part of their claims in Missouri.
Cole County Judge Daniel Green ruled that the Missouri Revenue Department violated state law when it gave the California-based manufacturer a license for a University City dealership in 2013 and a franchise dealer license for a Kansas City dealership in 2014. That allowed the automaker to sell cars directly to customers instead of through a dealership serving as a middleman.
[...] Tesla has faced similar roadblocks to selling its cars in several states with dealership laws similar to Missouri's. In some of those states, legislators have been looking at ways to tweak laws and let the company operate.
Previously: Tesla Direct Sales Blocked in New Jersey
Related Stories
einar writes:
"New Jersey's governor Christie has decided that all new motor vehicles must be sold through middlemen. This blocks Tesla from directly selling cars, without traditional car sellers. Although, New Jersey decided so this week, they are in good company: 48 states in the US ban or restrict direct car sales."
(Score: 3, Insightful) by Nerdfest on Friday September 02 2016, @04:30PM
I'm sure there were no payoffs though, in creating the law or making this decision.
(Score: 3, Insightful) by bob_super on Friday September 02 2016, @05:57PM
You don't need direct bribes. My town sees 30% of its income (not a typo) come from the (mostly luxury) car dealerships.
If Tesla wants my mayor to welcome them, they should get a law saying the car's sales fees are distributed as if they were a physical dealership. We don't necessarily need the buildings, parking lots, or even the jobs... But threaten the whole town's budget and you're understandably in for a fight.
I hate dealers. I want Tesla to win. But a lot of angry ants depend on the structural integrity of that eyesore of an anthill they're trying to kick.
(Score: 5, Insightful) by JeanCroix on Friday September 02 2016, @06:25PM
If your town were smart, they could double their income by passing a law that dealerships couldn't sell directly to buyers, but could only sell to sub-dealerships who could sell directly to the public. Oh wait, wait... I know how they could TRIPLE their income!...
(Score: 3, Insightful) by davester666 on Friday September 02 2016, @07:08PM
Way back, when cars were first coming out, laws like these requiring dealerships independent from the manufacturer, made sense to fix problems with manufacturers either preventing or abusing dealers, which is why these laws were passed (I'm talking about laws passed 30+ years ago, not recent ones that basically target Tesla specifically). Similar to most cities laws w.r.t. taxicabs.
But now, the rules are being gamed for the benefit of the existing players.
Like every other industry.
(Score: 2) by WizardFusion on Friday September 02 2016, @04:36PM
...you can't have nice things.
(Score: 2) by fishybell on Friday September 02 2016, @04:40PM
How are laws like this one not 100% invalid because of the commerce clause [wikipedia.org]?
(Score: 3, Informative) by GungnirSniper on Friday September 02 2016, @05:23PM
The Commerce Clause gives the Federal government power over these areas only if a relevant law is passed, otherwise the State level law is accepted. The FTC wrote about Tesla's business model in 2014. [ftc.gov]
There are a lot of similar pointless leeches by law in the distribution and sale of alcohol, to the point that small breweries have to sell their own product to these leeches and then buy it back from them if they wish to have tastings or bars in-house. This idiotic internal mercantilism may be expanded into cannabis cultivation, requiring growers to use this wasteful system as well. This is why in some states the local alcohol distribution cartels are pushing for legalization, where other states without leeching by law have cartels that are against it.
Tips for better submissions to help our site grow. [soylentnews.org]
(Score: 3, Interesting) by PocketSizeSUn on Friday September 02 2016, @10:33PM
I know it is unpopular (because it is seen as an unfair requirement to sell indirectly) however it does in fact breakup monopoly pricing.
In this case I have tried running a small wine (importing) business and this is how it works here:
The rule is basically:
Importer cannot be the distributer.
Distributer cannot be the retailer and must:
- Purchase from the importer (or producer)
- Sell at a non-discriminatory price.
- Cannot give a 'Suggested Price'.
This, in the end, gives retailers a level playing field - they can markup the goods however they see fit.
Here for example you will have specialty shops that recognize a very underpriced product and they will
proceed to mark it up dramatically. This leaves competitors that simply price based on cost marginal markup.
The informed consumer that shops around wins, sometimes dramatically. Sure the low price shop may raise
their prices on a specific product but they have to balance that against losing customers.
Here we do have a few larger players that want to sell a branded product.
While the importer, for example TJ's[1], cannot be a producer, importer, distributor and retail directly what they can and do is:
Be the producer and the importer.
The must sell and buy back from a distributor however know both sides of the deal it's hard
for the distributor to hold much profit in this deal. The upside for everyone is that TJ's wants to sell
a self branded product at a low but profitable price which means that if the product is a good seller
the liquor store down the street can buy it from the distributor for the *same price* as TJ's
So in effect the distributor (while making a good profit) is actually blocking monopoly pricing using
a self regulating free market trickery.
So how does this same thing work in a different locale (without the free market hack?)
Let's pick on Hong Kong (yes .. this is first hand, again about 7 years ago now).
In Hong Kong (and many other places in Asia the same holds) here I'll pick on Pernod Ricard, owner of Jacobs Creek.
Estimated cost of Jacob's Creek ex. works at this time ~$2.20 USD
With lesser known competitors at ~$3 USD.
Compared to lesser known Chilean and Argentinean producers at $1.25-$2.00 with significantly better products.
Yep, ex works from Chile you could get a 90+pts rated wine for $2/bottle. MOQ ~1200 bottles.
So in Hong Kong the retail price of Jacob's Creek is $20 USD a bottle.
A comparative price of a much better tasting but little known brand will cost you much closer to $5-6 USD.
In the US market this flips dramatically:
- Jacob's Creek US pricing: $3 to $4.50 from the distributor, or 6 to 9 USD retail.
- Much better (Australian wine ... let's to apples to apples here): $4-5 from distributor, USD $8-10 retail.
The reason for this is actually both simple and smart (from the perspective of Jacob's Creek and Pernod Ricard)
In Hong Kong you can only deal with Pernod-Ricard, you cannot import from that brand from Australia as they will
only sell/ship to themselves. It protects the brand and in the HK market the brand is well advertised what sells well enough. HK never had the US experience of seeing Jacobs Creek as a low end, low priced brand.
So what's the per container pricing? $11 USD / bottle. Yep, more the US retail, anywhere in the US.
Needless to say *that* deal didn't go very well for me :-(.
1 - Just picking on TJ's here because you may be aware of their very low priced and self branded wines[2]. What you may not be aware of is that while they may be exclusives in some other states, in this state any liquor store can sell them at any price they like. In fact any retailer in this state can buy them for the same price TJ's pays the distributor.
2- That said while I find the majority of the self branded bottles too sweet or just a bit off for my taste they do have quite a few other bottles that I enjoy as everyday table wines and few special bottles. I don't shop their exclusively by any means but I do often find that when they do carry the exact same bottle as the local competition they are usually around $1 cheaper.
(Score: 2) by forkazoo on Saturday September 03 2016, @02:45AM
Perhaps on a specific wine, but not on "alcohol" or "beverages" or even "wine in general." Likewise, the dealership laws targetting Tesla may break up monopoly pricing on "2016 Kia Soul Exclaims," but if those are expensive, people will just drive something else. It's like saying Apple has a monopoly on iPhones. Sort of true, but they certainly don't have a monopoly on telephones, mobile Internet devices, pocket computers, or anything like that.
And if you have to deal with a state distributor or retailer, you are handling a monopoly on a specific wine by dealing with a monopoly on all alcohol. (I think Virginia still has a crazy system like this.) With the ability to order stuff over the Internet, local retail monopolies just aren't a very interesting class of problem in almost any product category any more. Even stuff like fresh groceries are starting to be more practical to get delivered if you live in a place that only has one supermarket.
(Score: 0) by Anonymous Coward on Friday September 02 2016, @07:40PM
Wouldn't this also violate antitrust laws? I would think antitrust laws were designed to fight just this sort of abuse of consumers.
(Score: 2) by Whoever on Friday September 02 2016, @09:39PM
Because the Supreme Court has chosen expediency over the actual text of the clause.
(Score: 4, Insightful) by Anonymous Coward on Friday September 02 2016, @04:43PM
Tesla should use this as sales tactic: "It's so revolutionary, the traditional car co's bribed [Your State Here] to ban it"
It gives it a Skunk-Works kind of feel.
It's likely at least one legislator who voted on the ban bills received money from the traditional car makers such that the "bribe" claim can stand up in court.
(Score: 0) by Anonymous Coward on Friday September 02 2016, @09:08PM
That would work, except they don't advertise. They literally sell every vehicle they can possibly make, with almost no advertising costs whatsoever (save storefronts and fancy press releases).
(Score: 0) by Anonymous Coward on Friday September 02 2016, @05:03PM
The free market at work, yay human vice #2 (greed) allowed to run amok. You can't have a free market and then complain when people manipulate it. We need a new market type, where malicious human activity is curtailed and made less likely to succeed. Oh wait, we call the regulation and government oversight... In the mean time we get stupid shit like this where middle men throw their weight around because they don't like the idea of becoming obsolete. They never should have existed in the first place, just a massive overhead bill for buyers.
(Score: 3, Insightful) by GungnirSniper on Friday September 02 2016, @05:36PM
It is not a free market if the local dealerships are sheltered from open competition by law. The malicious human activity here is by those who wish to use the force of the government to protect their inefficient and dishonest system, not by those who are for removing outdated regulations that limit consumer choice.
Most of the hot-button issues today are direct results of government interference.
Cable companies and ISPs are granted government monopolies on the state and local level.
The shortage of medical doctors is caused by high barriers to entry and restrictions on what PAs and NPs can do, like prescribing medicine.
Endless copyright to protect Big Media.
Requiring full cosmetology licenses for braiding hair, thanks to racism.
The War on Personal Freedom to protect enforcers' jobs.
There's probably more that aren't immediately coming to mind.
Tips for better submissions to help our site grow. [soylentnews.org]
(Score: 5, Insightful) by Grishnakh on Friday September 02 2016, @06:22PM
What the fuck are you talking about? Are you insane?
This is NOT an example of a free market in any way, shape or form, and is absolutely a great example of what's wrong with government regulation. The laws requiring carmakers to sell through independent franchised dealerships is a form of government regulation; in a free market, the automakers could just sell directly to consumers without the middlemen.
And before you confuse me with one of those anti-government libertarian nuts, I'm all in favor of good government regulation, like that which various European nations use to have high-quality, low-cost cellular service and healthcare unlike here in the US. But this is not an example of it, it's a great example of the dangers of favoritism and cronyism being passed off as regulation, and not much different from the laws that prop up the taxi industry and allow high prices and terrible service there. In the hands of a good government, regulation can do great things; in the hands of a corrupt government, it does terrible things. Unfortunately, here in the US we only seem to have corrupt governments, judging by the quality of regulation we have.
(Score: 2) by Joe Desertrat on Friday September 02 2016, @08:27PM
In the hands of a good government, regulation can do great things; in the hands of a corrupt government, it does terrible things. Unfortunately, here in the US we only seem to have corrupt governments, judging by the quality of regulation we have.
The trouble is that every jurisdiction wants to gets its fingerprints on it. Politicians rail against Federal regulations, but it is almost always the state, county or municipal governments that cause the most problems for small businesses.
(Score: 3, Interesting) by Grishnakh on Sunday September 04 2016, @09:43PM
That's a good point. I'm not really sure why this is either; you'd think that the national government, being farther away from the voters and having more voters per politician (e.g., some federal legislator who writes laws that affect your isn't likely to live down the street from you or come knocking on your door while campaigning, while your town council members probably live within a few miles or less) would have more problems with corruption, but this doesn't seem to be the case. The laws prohibiting municipally-owned broadband, for instance, always happen at the State level (and seem to be entirely contrary to what the Federal government pushes for; as an aside, I'll hand it to Tom Wheeler; I was totally wrong about him). The laws against Tesla and propping up independent dealerships always come from State governments. And really corrupt, backwards deals (like the one that went to the SCOTUS about municipalities using Eminent Domain to seize property for private interests) come from local governments. And as we all (hopefully) know, it took the Federal government to pass the Civil Rights Act and allow black people to vote, as it was the local and state governments that had all kinds of ridiculous voting rules and poll taxes designed to prevent their suffrage.
The whole idea of "States' Rights" sounds good in theory, and once in a while turns out good (see: marijuana legalization in a handful of states), but most of the time giving power to state and local levels seems to result in more corruption and less freedom.
(Score: 1, Insightful) by Anonymous Coward on Friday September 02 2016, @06:26PM
These laws have been around for a *long* time.
Tesla is not the first to try this model. Pretty much all of the other car manufactures did the same thing at some point. You dont think we just magically got these laws because someone wasn't doing something shady?
They would come in buy all the local dealerships then close most of them. Leaving you with 1 'dealer' if you were lucky. Understandably most people were upset with the poor competition.
Take for example the town I live in. It is the home of Krispy Kreme. You figure there would be several dozen stores in the area selling doughnuts right? For about 50 years there was 1. Now there are 3. After they figured out people were not going to drive for 40 mins to get a doughnut. They very carefully control the stores to make sure there is low competition but high margin. Car dealers have even more on the line.
They do this because lets say I want to buy a Ford. I can go to 4-5 dealers in my area and pick something and even make the dealers compete on their margin to get me to buy. I can substitute a Chevy but it is not quite the same thing. The car manufactures figured out they didn't have to compete on margin. They could just mark whatever because the market for a 'ford' is a monopoly market. But the market for cars is not.
(Score: -1, Offtopic) by Anonymous Coward on Friday September 02 2016, @05:04PM
The question is how long the middlemen will last in a threesome with Musky, when Musky has a biggus dickus more than biggus enough to punch straight through the dude into the chick. Those poor guys. Musky will use them exactly like cock puppets.
(Score: 1, Offtopic) by takyon on Friday September 02 2016, @05:46PM
Have you ever seen Musky's rocket explode? They're gonna be down for months.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 0) by Anonymous Coward on Friday September 02 2016, @06:33PM
Hot.
(Score: 0) by Anonymous Coward on Friday September 02 2016, @07:05PM
So open a few satellite stores with no frills and only one car of each model. No service/parts dept, just a simple showroom. Could be done very cheap.
(Score: 2) by mmcmonster on Friday September 02 2016, @07:12PM
That's actually what's done in states where they are allowed to sell their cars.
I bought mine at the King of Prussia mall. The store was inside the mall, next to the Apple Store. In the store is a Model S and a few kiosks to see the website and a quite area in the back to order the car. The quiet area just has the same kiosk and you buy the car on the regular Tesla website with a purchase consultant at your side to make sure you don't choose a crazy set of options.
The Tesla maintenance centers are nowhere near the mall, by the way.
The problem is that the Tesla stores are company-owned, not a franchise. Because Tesla realized that a franchise model wouldn't work for electric cars unless the car was marked up dramatically. And since Tesla wanted the whole markup for themselves (to cover R&D costs and rollout of supercharger stations), no franchise.
(Score: 1) by FuzzyTheBear on Saturday September 03 2016, @10:42AM
There's no sense in having to have to sell at raised prices by using a middle man. Customer looses .. Why keep dealerships at all ?
I would rather let all the producers sell their cars directly and have them do the service than Joe Blow rake my pockets like they do today.
Check the prices of the parts for your car in a dealership . They are unbelievably inflated and that money is your money. You have to cough
up 4 5 6 10 20 times the price of the part to gt it htrough a dealer. Competition is competition , let the manufacturers sell direct , i dont care
about dealers and thieves in our present day dealerships. All i care about is fair prices .. and THAT we dont get through dealerships.
Let em die and good riddance.