Fisker helps prove that auto dealerships are useless

[InsanityWolf]

Currently, there are franchise laws in almost every state requiring car manufacturers to go through dealerships in order to sell their cars. Tesla wants to sell direct but auto dealer groups are fighting them every step of the way claiming that dealerships are necessary to protect consumers. Tim Jackson, president of the Colorado Automobile Dealers Association makes the following argument,

"Independent dealerships usually continue in business to provide service even if an auto company or brand shuts down the supply of new cars. If Tesla were to fail, he pointed out, it would close all its company-owned stores and service facilities, leaving Tesla owners without recourse. Owners of Oldsmobiles, Pontiacs, HUMMERs, Saabs, Daewoos, Isuzus, and other vanished makes got varying access to service and parts through independent dealerships long after they disappeared from the market, he maintained."

Well, as it turns out, if a car manufacturer such as Fisker is about to go bankrupt, two things will happen in regards to the auto dealership who sold you your vehicle. First, the dealership won't help honor the warranty. Mike Sullivan, the owner of eight auto dealerships including Fisker Santa Monica has suspended doing any Fisker warranty work as of April 9, 2013 because parts were not available and they were no longer getting reimbursed for performing warranty work. Source

Two, they will service your car but will charge you a premium. This can be seen in various complaints over the FiskerBuzz where a Fisker owner paid $225 to fix loose wiring and another paid $415 to repair a window channel that came loose. Keep in mind that these faults are covered in the warranty, not from auto damage or misuse.

Please consider signing this white house petition: Overturn franchise laws that limit auto manufacturers from selling their vehicles directly to consumers. | We the People: Your Voice in Our Government

 

[JohnQ]

Setting aside the legal discussion of selling through auto dealerships in various states (many are written to prevent manufacturers from going direct to consumers where a franchise structure for that manufacturer already exists, a fair law in my opinion), your example is not really appropriate. Fisker stopped paying warranty claims. You can't expect a dealer to do the work for free if they are no longer being reimbursed. If parts no longer exist, the dealer can't simply manufacture them. Based on what you've written here, Fisker SM's approach is reasonable.

As to inflating prices for simple work, that's a completely different issue and happens at dealerships regardless of make. Happens at independent garages, too.

I don't believe the laws in each state should be overturned en masse, but written to permit a new entrant, like Tesla, to sell directly. To my understanding, only a few states provide a blanket requirement to sell through dealerships ... TX being the poster child. In most cases, the local dealership association is incorrectly trying to use a law to exclude the direct model (such as in MA). Good attorneys and fair judges will sort that out, though it's expensive and time consuming for Tesla.

 

[richkae]

Setting aside the legal discussion of selling through auto dealerships in various states (many are written to prevent manufacturers from going direct to consumers where a franchise structure for that manufacturer already exists, a fair law in my opinion), your example is not really appropriate. Fisker stopped paying warranty claims. You can't expect a dealer to do the work for free if they are no longer being reimbursed. If parts no longer exist, the dealer can't simply manufacture them. Based on what you've written here, Fisker SM's approach is reasonable.

As to inflating prices for simple work, that's a completely different issue and happens at dealerships regardless of make. Happens at independent garages, too.

I don't believe the laws in each state should be overturned en masse, but written to permit a new entrant, like Tesla, to sell directly. To my understanding, only a few states provide a blanket requirement to sell through dealerships ... TX being the poster child. In most cases, the local dealership association is incorrectly trying to use a law to exclude the direct model (such as in MA). Good attorneys and fair judges will sort that out, though it's expensive and time consuming for Tesla.

He isn't saying that Fisker or the dealerships have done anything wrong or out of the ordinary after Fisker has failed. He is saying that the argument that dealerships protect the consumer if the manufacturer fails is entirely false and that the dealerships provide no additional value.

 

[InsanityWolf]

The point is that there is no need for protectionist dealership laws because they are not doing anything for the consumer. They distribute products just like Walmart and Costco. Except the dealerships have a special law where manufacturers are forced to go through them. The dealerships are arguing that this law is justified because they can protect the consumer in case the manufacturer doesn't. But in the case of Fisker, it proves this logic doesnt work. So yeah, dealerships can chose not to honor warranties and they can chose to inflate prices if the manufacturer goes bankrupt. BUT then don't expect special laws protecting you as the middle man if you are no better than Walmart or Costco.

Setting aside the legal discussion of selling through auto dealerships in various states (many are written to prevent manufacturers from going direct to consumers where a franchise structure for that manufacturer already exists, a fair law in my opinion), your example is not really appropriate. Fisker stopped paying warranty claims. You can't expect a dealer to do the work for free if they are no longer being reimbursed. If parts no longer exist, the dealer can't simply manufacture them. Based on what you've written here, Fisker SM's approach is reasonable.

As to inflating prices for simple work, that's a completely different issue and happens at dealerships regardless of make. Happens at independent garages, too.

I don't believe the laws in each state should be overturned en masse, but written to permit a new entrant, like Tesla, to sell directly. To my understanding, only a few states provide a blanket requirement to sell through dealerships ... TX being the poster child. In most cases, the local dealership association is incorrectly trying to use a law to exclude the direct model (such as in MA). Good attorneys and fair judges will sort that out, though it's expensive and time consuming for Tesla.

 

[JohnQ]

The point is that there is no need for protectionist dealership laws because they are not doing anything for the consumer. They distribute products just like Walmart and Costco. Except the dealerships have a special law where manufacturers are forced to go through them. The dealerships are arguing that this law is justified because they can protect the consumer in case the manufacturer doesn't. But in the case of Fisker, it proves this logic doesnt work. So yeah, dealerships can chose not to honor warranties and they can chose to inflate prices if the manufacturer goes bankrupt. BUT then don't expect special laws protecting you as the middle man if you are no better than Walmart or Costco.

You're right, of course, and point conceded. The only thing I'd note is that it's reasonable for a dealership to offer service on a shuttered manufacturer for a price. They can't, and shouldn't have to, pay for warranty work for which they won't be reimbursed.

 

[dsm363]

You're right, of course, and point conceded. The only thing I'd note is that it's reasonable for a dealership to offer service on a shuttered manufacturer for a price. They can't, and shouldn't have to, pay for warranty work for which they won't be reimbursed.

They aren't obligated to of course but their whole argument is they understand the customer and will protect them from the manufacturer. Honoring the warranty work even if they are not getting reimbursed would be protecting the customer and honoring your agreement to the customer even if they are under no obligation to do so. I agree they shouldn't have to do warranty work they aren't getting paid for but then neither would a manufacturer only sales model like Tesla if they were no longer in business. Everyone knows the dealership lobby's argument is fake but it matters who contributes more campaign dollars to local elections and right now, that is the dealership lobby.

 

[AnOutsider]

They aren't obligated to of course but their whole argument is they understand the customer and will protect them from the manufacturer. Honoring the warranty work even if they are not getting reimbursed would be protecting the customer and honoring your agreement to the customer even if they are under no obligation to do so. I agree they shouldn't have to do warranty work they aren't getting paid for but then neither would a manufacturer only sales model like Tesla if they were no longer in business. Everyone knows the dealership lobby's argument is fake but it matters who contributes more campaign dollars to local elections and right now, that is the dealership lobby.

Exactly. As I said elsewhere, the fiasco with Fisker is actually playing out BETTER with independent dealers than it would have if Fisker owned all its service centers. At least folks can get work done, even if it costs. If Tesla disappeared today, how many mechanics outside of the official company know how to work on a Model S?

 

[jeff_adams]

Exactly. As I said elsewhere, the fiasco with Fisker is actually playing out BETTER with independent dealers than it would have if Fisker owned all its service centers. At least folks can get work done, even if it costs. If Tesla disappeared today, how many mechanics outside of the official company know how to work on a Model S?

Free market would take care if it. Plenty of people had Tuckers, Edsels and Delorens worked on.

 

[PRJIM]

Free market would take care if it. Plenty of people had Tuckers, Edsels and Delorens worked on.

Tucker, Edsel & Delorean conceptually had the same powertrain (simple mechanical ICE motor connected to an A/T or M/T). In order to properly troubleshoot a Tesla you need proprietary software and tools. These tools are almost impossible to obtain if you are not an employee of Tesla Motors. Fisker's service model was similar to that of a normal auto manufacturer where a dealer would pay an equipment fee and be able to obtain Fisker specific tools. If Tesla went belly up we all would be in trouble.

 

[richkae]

Tucker, Edsel & Delorean conceptually had the same powertrain (simple mechanical ICE motor connected to an A/T or M/T). In order to properly troubleshoot a Tesla you need proprietary software and tools. These tools are almost impossible to obtain if you are not an employee of Tesla Motors. Fisker's service model was similar to that of a normal auto manufacturer where a dealer would pay an equipment fee and be able to obtain Fisker specific tools. If Tesla went belly up we all would be in trouble.

There are a lot of current and former Tesla employees out there that know how to work on Teslas. If Tesla went belly up they would no longer be bound by any non-competes or other restrictions. The software and tools would be available in the event of a bankruptcy and if not I bet a lot of those engineers could recreate the tools largely from memory. I have accidentally deleted source code, and rewrote ( a better ) system from memory in a tiny fraction of the time it took to make it in the first place.

What we need is a critical mass of cars to make it worthwhile for some of the former employees to set up a business. In this situation if you are in California you are probably safe - if you are not, you may need to go to California or the other nearest place with many thousands of Teslas to get service.
Now that there are almost 10000 Teslas on the road - I think we are safe. In another year there will be 30000 and I think many places outside of California would be fine too.
If you have a super rare car from a different manufacturer - that is one of only hundreds of cars - that may not be enough for even one guy to make a living specializing in - then you are truly screwed.

Service would probably be more expensive, but I think the free market would take care of it.

How do the laws requiring manufacturers to stock replacement parts work?

 

[InsanityWolf]

Exactly. As I said elsewhere, the fiasco with Fisker is actually playing out BETTER with independent dealers than it would have if Fisker owned all its service centers. At least folks can get work done, even if it costs. If Tesla disappeared today, how many mechanics outside of the official company know how to work on a Model S?

I respectfully disagree. These independent dealerships were only able to do minor repairs (and they charged a premium just like any auto repair center). When it came to issues involving proprietary technology such as the battery, they relied heavily on Fisker. And when Fisker couldn't supply the parts, the dealers just stopped work. So they are no better than if we just had manufacturer service centers. The main point is, why are we giving them special protectionist laws if they are not contributing anything to the customer. If the manufacturer failed, the consumer will have to pay a premium for small repairs and not have much options for the propitiatory technology portion either way.