Suck it, dealerships. FTC Rules In Favor Of Tesla, Direct-To-Consumer Sales Legal In 2014, General Motors backed a Michigan law that banned the direct sale of automobiles to consumers. It wasn’t alone; New Jersey and other states have also put similar laws in place. Tesla has experienced meteoric success with its high quality electric vehicles which have caused automakers and dealer networks to quiver in their boots as their formerly secure position in the market was threatened. A direct sale model involves no haggling, meaning that consumers are able to purchase the car for what it is actually worth instead of having to negotiate their way down to what still may not be a fair price. If Tesla can sell directly to the consumer, the pipeline of sales from the automaker to the dealer and then to the consumer would be disrupted. The Federal Trade Commission’s (FTC) new ruling prevents dealers from having a monopoly of the sale of vehicles. It argues that this was not only done in favor of Tesla but in defense of all business entities who desire to sell their products directly. In their public statement, the FTC asserts “blanket prohibitions on direct manufacturer sales to consumers are an anomaly within the larger economy.” The impetus for FTC’s statement is that Michigan State Legislature allowed Elio, a manufacturer of highly efficient three-wheelers, to sell direct. With this amount of inconsistency circulating among state lawmakers and courts, the FTC needed to step in and create a more universal policy. This ruling changes everything for consumers, dealers, and automakers. Consumers have received additional protection because the dealer network is no longer a fact of life, which means in some cases shoppers can buy cars for the price that is listed. Additionally, automakers have the freedom to choose how they sell their cars, and this increases competition which promotes economic growth. Finally, the vise grip independent dealers hold is finally being challenged, which should cause a dramatic shift in the way drivers purchase their vehicles. Tesla has not only pioneered new technology in the automotive world, but it turns out that it has also blown open the doors to a new era of economic competition.
So now I assume Ford can close the hundreds of dealers that they lose money on in rural areas that congress did not allow them to close when they were under 2 dollars a share? Does the government want dealers or not?
The government should be ambivalent. This ruling is about fair trade and the dealerships will now be faced with modernization and competition, as they should be in any true free market. If the market for car sales is there in the sticks and the dealerships close because they can't keep up, someone will find a way to sell cars to the yokels. It's capitalism.
I believe that website is wrong. There is no rule or law passed yet. FTC only sent comment to Michigan suggesting they do something.
Ford isn't allowed to close the dealers when they lose money. They had to fight for every closure in congress during the entire auto crisis. Laws are in place that make it basically impossible to close dealerships without being in bankruptcy which Ford never entered. So when a car company wants to sell cars without a dealership network it is understandable why. It is also understandable why other car companies have a big problem with it.
Does Ford have any ownership in the dealerships - if not, why would they have the right to close them? Or how do they benefit by closing them? I assume they do somehow, since they wanted to close a bunch - but I'm not sure how or why that is.
