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GM continues to try to stifle competition

Breezy

Member
Dec 15, 2013
451
119
SW Ontario
It quotes a GM spokesman as saying existing law is unfair to GM, Ford etc. because it prohibits companies with franchise dealers from selling direct.

And I don't think that's true. There's nothing in the Indiana Code that I can see which prevents a manufacturer from operating as a dealer, regardless of whether they have franchisees or not.
 

Nomad

Member
Dec 19, 2014
103
54
NE Indiana
And I don't think that's true. There's nothing in the Indiana Code that I can see which prevents a manufacturer from operating as a dealer, regardless of whether they have franchisees or not.

Not quite. There are territory provisions that make opening a manufacturer-dealer establishment an unfair practice under IC 9-32-13. However, it is GM and Ford that voluntarily collaborated with these dealerships in the first place. It was their choice to pursue that business model. Tesla chose a different business model, one that was available to GM and Ford from the beginning. They've made their bed, and they should have to lie in it.

Or. Here's a thought. If the committee is indeed seeking an equitable solution, they should consider eliminating the territory provision that makes it illegal for existing manufacturers with franchises to sell direct to consumers.

Now matter how you slice it, HB 1254 with Amd 3 is not an equitable solution, does not fight for the consumer, and will put undue burden on Tesla Motors. All of that said, I think all but a few of these legislators are just ignorant on the issue. Only a select few, like Mahan and Buck have ill intent at the behest of GM. The others just seem to have a hard time grasping the dealership model as a whole.
 

JadeJaguar

Member
Oct 21, 2015
12
1
South Bend, IN
Here's my email to Sen. Broden.

Dear Senator Broden:

I purchased a Tesla Model S last August at the Tesla showroom in Indianapolis. I sincerely hope you will oppose HB1254 at tomorrow’s meeting of the Commerce and Technology committee.

Chairman Buck stated at last week’s meeting that the bill is not about Tesla; but since Tesla is the only car manufacturer selling direct to consumers in Indiana, the bill has a direct immediate effect only on Tesla.

Senators who questioned Tesla representative Chen at the last meeting seemed unable or unwilling to grasp the fact that in order to make a profit, franchise dealerships need to sell in greater volume than is possible for Tesla at this time. In the early days of the auto business, companies sold direct to consumers, until with the advent of assembly line production sales volume became too great to make sense for the manufacturers to have enough outlets, which led to the franchise dealer system. If Tesla achieves its goal of high-volume sales with its new less expensive Model 3 ($35,000), it may well move to a franchise dealer model. At present, volume is too low for an independent franchise dealer to profit.

Franchise dealers also need to mark up the price of a car. Unless Tesla were to reduce their own profit (which is unlikely since they are currently in startup/expansion mode, spending more than they take in in order to bring out new models and fund R&D), a prospective buyer would have to pay more at an Indiana franchise than in neighboring Illinois or Ohio, where Tesla sells direct. I’d expect this to put pressure on the bottom line of a franchise dealer! Please ask supporters of the bill if they really believe a Tesla franchise would be profitable with low sales volume and adjacent states selling direct for less.

A USA Today article posted just a couple of hours ago (GM-backed bill could block Tesla in Indiana)
quotes a GM spokesperson as saying existing law discriminates against GM, Ford etc. by prohibiting them from selling direct because they have franchise dealers. From what Sen. Buck said, I understood that this is to prevent them from competing against their own franchise dealers.

Does GM suggest that it would like to be able to sell direct? Please ask them at the meeting. The big companies created the franchises to avoid having to create a huge direct-dealer network. Do they regret this, or just claim that it is unfair because they don’t want to compete? Is it a coincidence that the Tesla Model 3 will be a challenge to the Chevy Bolt?

A 2009 paper by the US Dept. of Justice analyzed the effects of the franchise dealer model: Economic Effects Of State Bans On Direct Manufacturer Sales To Car Buyers | ATR | Department of Justice
The paper describes a GM experiment with direct sales of the Chevrolet Celta in Brazil; I don’t know if it is still current. The paper quotes a Goldman Sachs estimate that consumers pay about 8.6% more due to the franchise dealer model. Is this in the interests of Indiana consumers?

In view of Tesla’s current low volume, couldn’t the bill permit them a 10 or 5 year extension? After all, the state allowed them to set up business. How fair is it to change the rules on them? And how fair is it to allow the big established companies force Tesla out of the state in order to ensure their monopoly of the Indiana market?
 
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Lanny

~
Nov 29, 2011
938
1,665
MD
radioindy.png


Indianapolis talk radio FM 93 WIBC will discuss HB 1254 tonight at 6:00 local time.

They will probably take calls. :smile:

Listen online: 93.1 WIBC

Lanny
 

JadeJaguar

Member
Oct 21, 2015
12
1
South Bend, IN
Here's my email to Sen. Broden:

Dear Senator Broden:

I purchased a Tesla Model S last August at the Tesla showroom in Indianapolis. I sincerely hope you will oppose HB1254 at tomorrow’s meeting of the Commerce and Technology committee.

Chairman Buck stated at last week’s meeting that the bill is not about Tesla; but since Tesla is the only car manufacturer selling direct to consumers in Indiana, the bill has a direct immediate effect only on Tesla.

Senators who questioned Tesla representative Chen at the last meeting seemed unable or unwilling to grasp the fact that in order to make a profit, franchise dealerships need to sell in greater volume than is possible for Tesla at this time. In the early days of the auto business, companies sold direct to consumers, until with the advent of assembly line production sales volume became too great to make sense for the manufacturers to have enough outlets, which led to the franchise dealer system. If Tesla achieves its goal of high-volume sales with its new less expensive Model 3 ($35,000), it may well move to a franchise dealer model. At present, volume is too low for an independent franchise dealer to profit.

Franchise dealers also need to mark up the price of a car. Unless Tesla were to reduce their own profit (which is unlikely since they are currently in startup/expansion mode, spending more than they take in in order to bring out new models and fund R&D), a prospective buyer would have to pay more at an Indiana franchise than in neighboring Illinois or Ohio, where Tesla sells direct. I’d expect this to put pressure on the bottom line of a franchise dealer! Please ask supporters of the bill if they really believe a Tesla franchise would be profitable with low sales volume and adjacent states selling direct for less.

A USA Today article posted just a couple of hours ago (GM-backed bill could block Tesla in Indiana)
quotes a GM spokesperson as saying existing law discriminates against GM, Ford etc. by prohibiting them from selling direct because they have franchise dealers. From what Sen. Buck said, I understood that this is to prevent them from competing against their own franchise dealers.

Does GM suggest that it would like to be able to sell direct? Please ask them at the meeting. The big companies created the franchises to avoid having to create a huge direct-dealer network. Do they regret this, or just claim that it is unfair because they don’t want to compete? Is it a coincidence that the Tesla Model 3 will be a challenge to the Chevy Bolt?

A 2009 paper by the US Dept. of Justice analyzed the effects of the franchise dealer model: Economic Effects Of State Bans On Direct Manufacturer Sales To Car Buyers | ATR | Department of Justice
The paper describes a GM experiment with direct sales of the Chevrolet Celta in Brazil; I don’t know if it is still current. The paper quotes a Goldman Sachs estimate that consumers pay about 8.6% more due to the franchise dealer model. Is this in the interests of Indiana consumers?

In view of Tesla’s current low volume, couldn’t the bill permit them a 10 or 5 year extension? After all, the state allowed them to set up business. How fair is it to change the rules on them? And how fair is it to allow the big established companies force Tesla out of the state in order to ensure their monopoly of the Indiana market?
 
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DJ Frustration

Model X Sig, Former Model S, Model 3
Jun 19, 2012
682
135
Miami, Florida
I did my part. Posted to my friends and family in Indiana and sent the following email. Feel free to borrow...even if it is heavy on the 'merica theme.

Esteemed Members of the Indiana Senate Commerce & Technology Committee,

I’m writing you to express my opposition to HB1254. Not only is it against free market principles, it would kill Indiana jobs at an American car company. When I watched the testimony on the bill from Feb 18th, I was saddened to see various Senators attempt to tell a business what their business model should be. The government shouldn’t be in the business of picking winners and losers. These are Republican principles.

Tesla is an American car company that creates Indiana jobs. It uses Indiana suppliers and Indiana residents own their vehicles. What this Committee is attempting to do would cause Indiana residents to lose their jobs. That is a fact!

If you really believe that the dealership model protects the consumer then you should force Apple, Microsoft and every other consumer goods company to sell their products through a franchised dealership. Watch how quickly the cost of everyday items goes up in Indiana. Why are vehicles so special that they can’t be bought and serviced by manufacturers as opposed to franchised dealers? They aren’t. Tesla has proven that to be true. Their customers love their cars and report 99% satisfaction rates for service. Show me another car dealership with such high customer service ratings!

I urge you to oppose HB1254. Please protect Indiana jobs, foster innovation and help our American economy. Encourage free market capitalism. Stand up for your beliefs! Indiana voters expected as much when they voted for you.

Sincerely,
 

stevezzzz

R;SigS;P85D;SigX;S90D;XP100D;3LR;YLR
Nov 13, 2009
6,100
121
Colorado
Quick summary? Any interesting talking points that can be repeated?

Hoping to find a recording of the show later tonight.

He basically reiterated that Indiana state law as it exists today does offer a level playing field for all manufacturers, and that the new bill will give an unfair advantage to GM and others, and be detrimental to the consumer.
 

JadeJaguar

Member
Oct 21, 2015
12
1
South Bend, IN
Quick summary? Any interesting talking points that can be repeated?

Hoping to find a recording of the show later tonight.

I tried twice to post the following email I sent to Sen. Broden. Don't understand why it has not been posted.

As a Tesla Model S owner and longtime WVPE supporter, I beg you to include something tonight or tomorrow morning about the Indiana Senate committee meeting TOMORROW MORNING Feb. 25th concerning HB1254, which seeks to change Indiana law to prevent Tesla Motors from continuing its dealer license beyond the end of 2017. I am forwarding Tesla’s email to Indiana Tesla owners separately. My email to Indiana senator John Broden follows. I know it is very late for you to digest the information, but I hope you can still say something on-air. The USA Today article published this afternoon and referenced in my letter below is informative.

Thanks, and my appreciation to WVPE.


Dear Senator Broden:

I purchased a Tesla Model S last August at the Tesla showroom in Indianapolis. I sincerely hope you will oppose HB1254 at tomorrow’s meeting of the Commerce and Technology committee.

Chairman Buck stated at last week’s meeting that the bill is not about Tesla; but since Tesla is the only car manufacturer selling direct to consumers in Indiana, the bill has a direct immediate effect only on Tesla.

Senators who questioned Tesla representative Chen at the last meeting seemed unable or unwilling to grasp the fact that in order to make a profit, franchise dealerships need to sell in greater volume than is possible for Tesla at this time. In the early days of the auto business, companies sold direct to consumers, until with the advent of assembly line production sales volume became too great to make sense for the manufacturers to have enough outlets, which led to the franchise dealer system. If Tesla achieves its goal of high-volume sales with its new less expensive Model 3 ($35,000), it may well move to a franchise dealer model. At present, volume is too low for an independent franchise dealer to profit.

Franchise dealers also need to mark up the price of a car. Unless Tesla were to reduce their own profit (which is unlikely since they are currently in startup/expansion mode, spending more than they take in in order to bring out new models and fund R&D), a prospective buyer would have to pay more at an Indiana franchise than in neighboring Illinois or Ohio, where Tesla sells direct. I’d expect this to put pressure on the bottom line of a franchise dealer! Please ask supporters of the bill if they really believe a Tesla franchise would be profitable with low sales volume and adjacent states selling direct for less.

A USA Today article posted just a couple of hours ago (http://www.usatoday.com/story/money...cked-bill-could-block-tesla-indiana/80860620/)
quotes a GM spokesperson as saying existing law discriminates against GM, Ford etc. by prohibiting them from selling direct because they have franchise dealers. From what Sen. Buck said, I understood that this is to prevent them from competing against their own franchise dealers.

Does GM suggest that it would like to be able to sell direct? Please ask them at the meeting. The big companies created the franchises to avoid having to create a huge direct-dealer network. Do they regret this, or just claim that it is unfair because they don’t want to compete? Is it a coincidence that the Tesla Model 3 will be a challenge to the Chevy Bolt?

A 2009 paper by the US Dept. of Justice analyzed the effects of the franchise dealer model: http://www.justice.gov/atr/economic-effects-state-bans-direct-manufacturer-sales-car-buyers
The paper describes a GM experiment with direct sales of the Chevrolet Celta in Brazil; I don’t know if it is still current. The paper quotes a Goldman Sachs estimate that consumers pay about 8.6% more due to the franchise dealer model. Is this in the interests of Indiana consumers?

In view of Tesla’s current low volume, couldn’t the bill permit them a 10 or 5 year extension? After all, the state allowed them to set up business. How fair is it to change the rules on them? And how fair is it to allow the big established companies force Tesla out of the state in order to ensure their monopoly of the Indiana market?
 

efusco

Moderator - Model S & X forums
Mar 29, 2009
5,421
666
Nixa, Missouri, United States
Jade Jaguar has been unable to get this to post, doing it for him:

Tom Kosel
Professor Emeritus, Notre Dame

Here is my letter to Senator Broden (my Indiana district):

As a Tesla Model S owner and longtime WVPE supporter, I beg you to include something tonight or tomorrow morning about the Indiana Senate committee meeting TOMORROW MORNING Feb. 25th concerning HB1254, which seeks to change Indiana law to prevent Tesla Motors from continuing its dealer license beyond the end of 2017. I am forwarding Tesla’s email to Indiana Tesla owners separately. My email to Indiana senator John Broden follows. I know it is very late for you to digest the information, but I hope you can still say something on-air. The USA Today article published this afternoon and referenced in my letter below is informative.

Thanks, and my appreciation to WVPE.


Dear Senator Broden:

I purchased a Tesla Model S last August at the Tesla showroom in Indianapolis. I sincerely hope you will oppose HB1254 at tomorrow’s meeting of the Commerce and Technology committee.

Chairman Buck stated at last week’s meeting that the bill is not about Tesla; but since Tesla is the only car manufacturer selling direct to consumers in Indiana, the bill has a direct immediate effect only on Tesla.

Senators who questioned Tesla representative Chen at the last meeting seemed unable or unwilling to grasp the fact that in order to make a profit, franchise dealerships need to sell in greater volume than is possible for Tesla at this time. In the early days of the auto business, companies sold direct to consumers, until with the advent of assembly line production sales volume became too great to make sense for the manufacturers to have enough outlets, which led to the franchise dealer system. If Tesla achieves its goal of high-volume sales with its new less expensive Model 3 ($35,000), it may well move to a franchise dealer model. At present, volume is too low for an independent franchise dealer to profit.

Franchise dealers also need to mark up the price of a car. Unless Tesla were to reduce their own profit (which is unlikely since they are currently in startup/expansion mode, spending more than they take in in order to bring out new models and fund R&D), a prospective buyer would have to pay more at an Indiana franchise than in neighboring Illinois or Ohio, where Tesla sells direct. I’d expect this to put pressure on the bottom line of a franchise dealer! Please ask supporters of the bill if they really believe a Tesla franchise would be profitable with low sales volume and adjacent states selling direct for less.

A USA Today article posted just a couple of hours ago (http://www.usatoday.com/story/money/...iana/80860620/)
quotes a GM spokesperson as saying existing law discriminates against GM, Ford etc. by prohibiting them from selling direct because they have franchise dealers. From what Sen. Buck said, I understood that this is to prevent them from competing against their own franchise dealers.

Does GM suggest that it would like to be able to sell direct? Please ask them at the meeting. The big companies created the franchises to avoid having to create a huge direct-dealer network. Do they regret this, or just claim that it is unfair because they don’t want to compete? Is it a coincidence that the Tesla Model 3 will be a challenge to the Chevy Bolt?

A 2009 paper by the US Dept. of Justice analyzed the effects of the franchise dealer model: http://www.justice.gov/atr/economic-...les-car-buyers
The paper describes a GM experiment with direct sales of the Chevrolet Celta in Brazil; I don’t know if it is still current. The paper quotes a Goldman Sachs estimate that consumers pay about 8.6% more due to the franchise dealer model. Is this in the interests of Indiana consumers?

In view of Tesla’s current low volume, couldn’t the bill permit them a 10 or 5 year extension? After all, the state allowed them to set up business. How fair is it to change the rules on them? And how fair is it to allow the big established companies force Tesla out of the state in order to ensure their monopoly of the Indiana market?
 

sorka

Well-Known Member
Feb 28, 2015
7,858
5,777
Merced, CA
As all Indiana Tesla owners should now know, GM is pushing a bill in the state legislature to drive Tesla out. Current Indiana law does allow manufacturers to hold a dealer license, and the Tesla store in Indianapolis has been very successful. The current bill will strip away the ability for manufacturers to sell directly. I have already written to my state legislators and I would urge others to do so. GM can't compete on quality, performance or customer experience so they need to legislate away competition. I have owned 5 GM vehicles in my lifetime, but will never buy another, even if by some chance I do purchase another ICE.


I used to be on the pro Tesla camp on this but given the crap I've seen about Tesla not selling parts or providing repair documentation, I'm completely on the other side of this now. The model that Tesla has chosen is anti competitive and makes them the sole supplier of everything else related to owning and operating a Tesla after the sale. I know a bunch of you are going to ream me for my opinion but if Tesla was sold through franchised dealerships, you'd never see the kind of walled garden crap we have now.
 

brkaus

Well-Known Member
Jul 8, 2014
7,717
6,250
Austin, TX
I used to be on the pro Tesla camp on this but given the crap I've seen about Tesla not selling parts or providing repair documentation, I'm completely on the other side of this now. The model that Tesla has chosen is anti competitive and makes them the sole supplier of everything else related to owning and operating a Tesla after the sale. I know a bunch of you are going to ream me for my opinion but if Tesla was sold through franchised dealerships, you'd never see the kind of walled garden crap we have now.

May solve the problem your referring to, but I'm not for regulation to dictate customer choice. Especially considering the number of companies in the business and number of cars available as options.

"They make the only car I want" still isn't justification. They may not have this car for sale if not for thief current biz model.

My opinion only.
 

bmanke

Member
Mar 1, 2015
74
28
Chesapeake, VA
I used to be on the pro Tesla camp on this but given the crap I've seen about Tesla not selling parts or providing repair documentation, I'm completely on the other side of this now. The model that Tesla has chosen is anti competitive and makes them the sole supplier of everything else related to owning and operating a Tesla after the sale. I know a bunch of you are going to ream me for my opinion but if Tesla was sold through franchised dealerships, you'd never see the kind of walled garden crap we have now.

And how does the franchised business model change any of this? The manufacturer still holds all the information and decides what is released. Furthermore they like any other manufacturer, they set the price on spare parts. I fail to see how Tesla is really all that different. If anything it is better as there is not a middleman.

I also fail to understand people's comments about Tesla being the sole supplier for parts. Yes, and just like any other car or any other manufactured component. If I need a part for my John Deere I go to John Deere, not CaseIH. If I need a part for my BMW I must get it from BMW. Yes "generic" parts can be sourced from other vendors and how is a Tesla any different here?

While I understand and am also a bit frustrated by the lack of information we can obtain, I also understand that they must go this route to protect themselves both in the marketplace and legally. We don't need to see the headline "Man working on Tesla electrocutes himself".

- - - Updated - - -


Furthermore the person who wrote the bill Kevin Mahan is a State Farm Insurance rep. https://www.statefarm.com/agent/US/IN/Hartford-City/Kevin-Mahan-3XDP04RDXAK

I for one am seriously considering my decision to be insured with State Farm.
 
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stopcrazypp

Well-Known Member
Dec 8, 2007
10,005
4,923
I used to be on the pro Tesla camp on this but given the crap I've seen about Tesla not selling parts or providing repair documentation, I'm completely on the other side of this now. The model that Tesla has chosen is anti competitive and makes them the sole supplier of everything else related to owning and operating a Tesla after the sale. I know a bunch of you are going to ream me for my opinion but if Tesla was sold through franchised dealerships, you'd never see the kind of walled garden crap we have now.
I don't think having dealers solves any of that. Tesla can require franchised dealers to limit part sales as part of the franchise agreement, just as they do with the Tesla certified repair shops right now. Right now Teslas (and EVs in general) are new enough that there is not an aftermarket/third-party parts market, but eventually it'll grow and it's not much of a concern. Also, what covers that is laws like the Massachusetts "right to repair" laws.

Also, for customer blacklists, manufacturers definitely can maintain them even with dealers. It is currently used to block people that buy cars for grey market purposes, but definitely Tesla can use a similar list for their own purposes.
 

sorka

Well-Known Member
Feb 28, 2015
7,858
5,777
Merced, CA
I don't think having dealers solves any of that. Tesla can require franchised dealers to limit part sales as part of the franchise agreement, just as they do with the Tesla certified repair shops right now. Right now Teslas (and EVs in general) are new enough that there is not an aftermarket/third-party parts market, but eventually it'll grow and it's not much of a concern. Also, what covers that is laws like the Massachusetts "right to repair" laws.

Also, for customer blacklists, manufacturers definitely can maintain them even with dealers. It is currently used to block people that buy cars for grey market purposes, but definitely Tesla can use a similar list for their own purposes.

I would never own and operate dealership franchise under those conditions.
 

GSP

Member
Dec 28, 2007
2,565
796
And I don't think that's true. There's nothing in the Indiana Code that I can see which prevents a manufacturer from operating as a dealer, regardless of whether they have franchisees or not.

Years ago Ford bought several dealers in Indiana. I think it was 20 or 30 dealerships. After trying direct sales for a few years, they decided to get out of that business.

Nothing prevented Ford back then, as long as the dealers they bought were not too close to independent dealers. GM or Ford or Honda could open factory stores in Indiana now under current law. In the video of James Chen's testimony in opposition to HB1254 last week, he made this point several times.

GSP
 

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