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"Tesla A Risky Buy Without Dealer Protection" ! says Hartford Courant Op-ed by Dealer

Discussion in 'Tesla Motors' started by bhzmark, Feb 23, 2015.

  1. bhzmark

    bhzmark Active Member

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    From: Tesla a risky buy without dealer protection - Hartford Courant

    You can add comments to: Tesla a risky buy without dealer protection - Hartford Courant


    Tesla, the electric auto maker, wants Connecticut lawmakers to pass an ill-advised bill to allow direct sales of its cars outside of the current franchise dealership model, which has inherent and legal consumer protections.
    Connecticut's car dealers have offered to sell Tesla as we do all other electric vehicles. But Tesla touts its renegade status, and currently consumers can buy a Tesla only from the manufacturer in California. This doesn't offer the consumer protection of using a dealer.
    When it comes to recalls, warranties and securing the lemon law, dealers advocate for consumers when problems arise or car companies fail. The GM ignition switch recall and the collapse of Saab are two recent examples in which dealers advocated for consumers.The Yugo, a car from the 1980s, was briefly all the rage, but when the company went belly up, Yugo owners were left without a safety net.

    Saturn, Saab, Hummer — who expected these successful companies to collapse? Tesla wants to bend the rules without even reaching the business stability of these three cars. I like Tesla's vehicles, but it's a speculative company and the risk of it folding is greater than any other car maker.
    Should Tesla fold tomorrow, there will be a few hundred disappointed people in Connecticut, but the owners of most of these cars are among wealthiest 1 percent and this is typically their third or fourth car. However, if Tesla grows as the company predicts and it offers a less pricey car, then five years from now, many more people may own its cars. Then, should Tesla fold, there will be significant damage to the car owners.

    Why do the Connecticut auto dealers see this risk? Tesla has yet to earn a profit and has been heavily subsidized by the government from its beginning to today. Its business finances are supported by a speculative stock price.
    Here are the details behind that risk:
    •- In 2013, Tesla lost $65 million, its best year yet. Tesla's CEO Elon Musk recently mentioned 2020 as potentially the company's first profitable year.


    •- Tesla says it uses customer deposits for working capital. In its September SEC filing, Tesla had $227 million in customer deposits on future deliveries of autos. Financial disclosures describe these as $2,500 to $5,000 per vehicle, which equates to between 45,000 and 90,000 new cars. The company fell short of its plan to produce 35,000 cars in 2014. So, Tesla uses customers' deposits to help fund the company, but is not on track to produce the cars for which it has deposits.
    •- Tesla said in its 2014 annual report, "Our growth depends in part on the availability and amounts of government subsidies and economic incentives." Each Tesla earns $20,000 to $35,000 in Zero Emissions Vehicle, or ZEV, tax credits that the company sells to other manufacturers. In 2013, Tesla sold $129 million in ZEV credits. With state and federal credits, the subsidy nears $50,000 for each car. The car averages around $100,000 for sale, making it a $150,000 car when you add in the government subsidy. So the company generates profits by taking advantage of environmental credits rather than selling its cars.
    •- In 2013, Tesla issued $450 million in new stock to pay off a $465 million taxpayer-subsidized loan from the Department of Energy. Sounds good, but in turn, Tesla now owes the premium to Wall Street, not the federal government. Tesla sell its stock through great marketing and excitement about the product, but that cash infusion will dry up if it doesn't meet Wall Street's expectations. Monday, Ford was trading around $16, General Motors at $37, Tesla at $208. Ford and General Motors are making a profit.
    Tesla's success would be good for the electrical vehicle market, but we cannot ignore the tremendous risk that the company carries. Today, Tesla can work in the existing dealer system in Connecticut and sell its cars here with no changes to the law. My guess is that they will sell more cars if they try that first.
    James T. Fleming is president of the Connecticut Automotive Retailers Association, based in Hartford.
     
  2. AudubonB

    AudubonB Mild-mannered Moderator Lord Vetinari*

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    Oh, where to start?!!!!!

    1. I guess I sure am happy to have had the protection of those Yugo dealers.

    ​Next!
     
  3. MikeL

    MikeL some guy

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    Yikes! Guess I'll sell my shares and cancel my reservation
    there are so many laugh lines in there it's hard to count them all.
    ... dealers advocate for consumers... he must live on some other planet
    ... Yugo, Saturn, Saab, hummer ... ALL GARBAGE from day one. rebut if you like, doesn't change the argument. Tesla otoh, not so much.
    ... typically their third or forth car ... that's crap - and if it's true, so what? What are you implying? Just stupid
    and Tesla has to sell through dealers because they don't book profit ?! Ok, so what is profit ... The amount you made minus the amount you spent. Tesla is spending to GROW ! uugh when will they figure this out? (They will)
    car dealerships are Universally Despised. This piece, though well worded, is more of the same "rent seeking" nonsense & comes from a position of fear. We will see these guys go the way of the dinosaurs. :smile: ML
     
  4. purplewalt

    purplewalt Active Member

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    Are you sure Mr. Fleming is not a reverse carpet-bagger from Texas?
    Ugh. As in Ugly.

    This is laughable on so many levels and so slanted, he could probably work/write for the NYT Editorial Department.
     
  5. Doug_G

    Doug_G Lead Moderator

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    Yeah right. I've been protected from dealers more than once by the manufacturer. It was Ford that forced my dealer to repair the transmission that they had reassembled improperly - no, that noise was NOT "normal". It was GM that forced a local Chev dealer's repair department to stop ripping off their customers (My own example of their slime: they delayed scheduling my service appointment until just after the warranty ran out, then tried to deny warranty coverage - no doubt so they could double-dip with GM. When called on it, the service manager actually said, "You can't blame me for trying." Sure can.)

    Fisker has demonstrated the worth of dealers for protecting the customer when companies fail - not much. Where are these dealers going to buy the spare parts if there's no one manufacturing them? They aren't. Who is going to cover the warranty? Not the dealer, that's for sure.

    Who is transparent about the cost if the vehicles they are selling? Dealers? Ha!

    None of these arguments hold any water whatsoever.
     
  6. stopcrazypp

    stopcrazypp Well-Known Member

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    I was going to mention the same thing. Fisker owners were left to hold the bag when it went bankrupt. The dealers pretty much scattered and even the ones that wanted to continue servicing them didn't have the parts to do so and they charged out-of-warranty rates for any warranty work.
     
  7. Xenoilphobe

    Xenoilphobe Active Member

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    Reminds me of a Mob Boss scene out of 1950s movie - that model is done... I haven't bought a car through a dealer in years. FJ Cruiser - ebaymotors, VFR800 - ebaymotors, VW Passat - ebaymotors, Tesla, Telsa online store and frankly if there had been more used Teslas at the time I would have used eBay for this purchase... would have saved me $20 in one year depreciation.
     
  8. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    I've had Toyota protect me against their dealers as well. Dealers absolutely do not look after the customer. If any dealer personnel do, they are quickly eliminated. (Had that experience as well).
     
  9. svp6

    svp6 Member

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    And that is for a company that sold less than 2,000 cars worldwide, with most of the dealerships being shared with other brands - meaning the dealer did not get out of business when Fisker went belly-up. Can you imagine how it would be for a car company of significant size. So many lies from dealer cartels....

    I am among the ones somewhat disappointed with the Tesla delivery - no giant bow or photo opportunity, lack of communication with my DS. I would rate my overall delivery experience as a C (passing grade was for entirely due to my product specialist, who was fabulous, and compensated the rest). Even then I still prefer Tesla over the classic dealership model. If BMW or GM sold directly to consumers I would order online in a heartbeat...
     
  10. sandpiper

    sandpiper Active Member

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    I both agree and disagree with your comment on the Tesla delivery. Because Tesla showrooms aren't dealers, you're quite simply not going to have the same level of enthusiasm that you're going to have in a dealership where commissions, and particularly the big margins that they get on the extras, are on the line. That was absolutely evident to me.

    The folks I dealt with were 100% polite, knowledgeable and helpful. But on the other side, I asked repeatedly about upgrading my wheels to cyclones and never got an answer. Similarly I was looking to buy a few knick knacks. No interest or response. I asked about the service plan. "Oh you can do that online". There was just an overall sense that the folks there weren't as hungry for the sale. On the positive side, there was no pressure and I didn't feel like a slab of beef among the wolves. On the whole I'd say the difference is positive, but not 100%. I'd say 80%.
     
  11. TexasEV

    TexasEV Active Member

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    OK, let's take the dealers at their word and agree it's a good thing that they continue to offer warranty protection for the cars they sell if their manufacturer goes out of business. I assume they wouldn't mind that responsibility be written into the dealer franchise law, right?. Of course if the manufacturer they represent goes bankrupt the dealers are likely to follow, so they would need to purchase insurance to cover this guarantee to the consumers. As dealers are all about the "level playing field", this consumer protection they claim to offer would need to be included in state law to be certain all dealers offer this financial backstop.
     
  12. AudubonB

    AudubonB Mild-mannered Moderator Lord Vetinari*

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    Any Courant letters-to-the-editor replies to that birdcage lining?
     
  13. liuping

    liuping Active Member

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    That is a great idea. If they are going to talk the talk, force them to walk the walk!
     
  14. evme

    evme Member

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  15. flankspeed8

    flankspeed8 Member

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    now it is only 97% in favor....
     
  16. HankLloydRight

    HankLloydRight Fluxing

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  17. brianman

    brianman Burrito Founder

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    This is the kind of stuff that I hope Tesla's legal arm is mulling over. "You want it in the law, let's put it in the law -- in crisp, clear language."
     
  18. evme

    evme Member

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  19. lonewolf313

    lonewolf313 Member

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    The cars delivered by the Sydney Australia Tesla showroom have large bows and photo oportunities.
    See thread line here: Forum - TMC Community - Asia/Pacific - Australia & New Zealand - Spotted


    And a listing below from another member (inc photo attachment)

    - - - Updated - - -

    Here is another Sydney Tesla showroom photo attachment by another Sydney owner

     
  20. HankLloydRight

    HankLloydRight Fluxing

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    Jebus.. what a tool. Where do these people come from?

    Yikes.. this guy really is a tool.. Change the date of Halloween?? Seriously?

     

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