A couple of auto dealers take to the op-ed pages to argue that up is in fact down.
The motor vehicle franchise laws in place do not in any way hinder innovation; instead they foster the competition that benefits consumers.
One motor vehicle manufacturer, Tesla Motors, has been seeking an exemption from the franchise laws that require new motor vehicles sold in Texas be sold through a franchised dealer. Franchise laws exist to prevent monopolies and promote competition in vehicle pricing and service to the consumer, provide for the efficient distribution of vehicles and service across the wide geographic area that is our state, and provide a local presence where Texas consumers can have service, warranty and recall work performed even in cases when a manufacturer ceases to do business.
Nothing in state law is currently preventing the delivery of new Tesla vehicles from California to the citizens of the state of Texas who wish to purchase them online. Nothing in state law prevents Tesla from using the exact same model it is using today, with gallery stores and service facilities at other locations, so long as any retail presence is operated through a franchised dealer of Tesla’s choosing.
As business owners, we can tell you first-hand that franchised motor vehicle dealers in Texas are more than eager to help Tesla succeed. In fact, numerous Texas dealers have contacted Tesla seeking an opportunity to retail their vehicles subject to Tesla’s desires. Not only will the franchised dealer absorb any capital outlays required for the Tesla model, but we also believe the franchised dealer can help Tesla sell many more vehicles over the long term.
Increased sales volume without the cost burden is a winning business model, which is why every other major auto manufacturer who sells in Texas participates in the model (not to mention those who already sell electric vehicles).
So why the request for special treatment just for Tesla?
Considering the value of the consumer-protection based system currently in place and the fact that Tesla Motors now has the opportunity to sell its cars to Texans, we do not see any compelling rationale to provide special treatment for Tesla. Other manufacturers produce electric vehicles.
See here and here for the background. Sorry, but it’s the dealers that are asking for special treatment by forcing Tesla to include them in their business model. Plenty of manufacturers are allowed to sell directly to customers. I get the dangers of vertical integration, but the existence of Apple stores doesn’t seem to have hindered innovation in the smartphone market. How would letting Tesla sell directly to customers affect innovation in the automobile market? Frankly, if anything I’d expect it to spur innovation, as it might force a reconsideration in how cars are marketed, sold, and maintained. I’m sorry, but someone who doesn’t benefit from the current setup is going to have to explain to me why it shouldn’t be changed for me to accept the plausibility of that argument.