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Tesla reaches settlement with state of Michigan


HotRunrGuy

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I fully supported tesla in direct to consumer sales....if you do not want to deal with dealers or sales antics you should have the freedom to buy directly...this is a good win for consumers...detroit needs to get out of 1950's mentality but i am afraid its never going to happen....

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Texas has restrictions similar to Michigan's banning manufacturer direct sales of new cars to consumers. Last year, the Texas legislature also tried to ban Tesla from operating service centers as well, but fortunately the applicable bill was amended allowing Tesla to keep the service centers in Texas running.

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Just now, rperez817 said:

Texas has restrictions similar to Michigan's banning manufacturer direct sales of new cars to consumers. Last year, the Texas legislature also tried to ban Tesla from operating service centers as well, but fortunately the applicable bill was amended allowing Tesla to keep the service centers in Texas running.

This just reeks of cronyism... 

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There is no question dealers are scared of tesla's business model...yea, to heck with that anti-consumer franchise crap...i dont even really care if tesla puts out crap or the run into trees on auto pilot (?ach E will be doing the same)..they did right for consumer purchasing freedom and that is something i can fully embrace

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17 minutes ago, akirby said:

Purchasing freedom?  You mean having only one dealer and one price to choose from nationwide?

It would actually increase competition...all that franshise crap does is protect dealer turf and does zilch for consumer.....i see no problem with kia dealer selling fords across the street from the regular ford guy or bubbas lawn mower sales being able to order me a truck...ford actually would win....ford can set up service centers like tesla does...

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46 minutes ago, akirby said:

Purchasing freedom?  You mean having only one dealer and one price to choose from nationwide?

You forget competition. 

 

Nothing is stopping ford from raising prices right now, not even franchises. Now if they raise prices above perceived market value, they're going to lose sales to other brands.

 

The market is capable of correcting itself, it doesn't always need more regulation. 

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1 hour ago, snooter said:

It would actually increase competition...all that franshise crap does is protect dealer turf and does zilch for consumer.....i see no problem with kia dealer selling fords across the street from the regular ford guy or bubbas lawn mower sales being able to order me a truck...ford actually would win....ford can set up service centers like tesla does...

 

1 hour ago, probowler said:

You forget competition. 

 

Nothing is stopping ford from raising prices right now, not even franchises. Now if they raise prices above perceived market value, they're going to lose sales to other brands.

 

The market is capable of correcting itself, it doesn't always need more regulation. 


Ford sets wholesale prices but dealers set the retail price not Ford.  
 

Tesla sets both the wholesale and retail prices and there is no competition between independent dealers.

 

It would be like a Ford requiring all dealers to sell at MSRP.

 

I hate franchise laws and I’m not saying franchise laws protect the consumer.  I’m saying the Tesla sales model is the OPPOSITE of purchasing freedom.  If you want a Tesla there is only one source and one price.

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...the issue is not teslas one price/one source business structure approach to car sales (japanesse been doing that for decades)..its the removal of the dealer in the buying process and allowing consumers to do direct purchase is what has dealers worried....if the consumer gains that ability with ford it would lower car prices and if ford thinks there product is premium consumers could go elsewhere...right now only dealers can buy cars from ford and that guts competition....the dealers have the monopoly and the consumer has little recourse...there is no reason my implement dealer should not be able to order me a new ford truck from ford (or other brand)....the consumer actually lost more power when ford started closing down small town dealers and funneled everybody into a dealer outside there area......direct sales with service centers is a novel concept that makes sense on many levels for the consumer....tesla is niche vehicle right now...soon as ford makes available ?ach E tesla can either continue its one price structure or start lowering price to see what market will bear...franchised dealers are not needed...tesla has done extremly well eliminating that step in the buying process..

Edited by snooter
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Tesla is relatively small compared to Ford.  It can do things Ford can’t just due to size and volume.

 

Ford doesn’t want to sell direct - they would have to invest hundreds of millions to make that work from vehicle storage to sales staff to all the systems to make it work.  
 

Basically you’re saying you hate dealers and would prefer to cut them out and I get that - I feel the same way sometimes.  But that doesn’t mean it’s a good business model.

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19 minutes ago, akirby said:

Tesla is relatively small compared to Ford.  It can do things Ford can’t just due to size and volume.

 

Ford doesn’t want to sell direct - they would have to invest hundreds of millions to make that work from vehicle storage to sales staff to all the systems to make it work.  
 

Basically you’re saying you hate dealers and would prefer to cut them out and I get that - I feel the same way sometimes.  But that doesn’t mean it’s a good business model.

I am saying tesla's approach is proven to work....allowing anybody to order from ford would benefit ford as well...its not about "hate"...its about tilting the power away from dealers to the consumer....no arguments against what else you posted...i would say you are right..tesla has positioned itself well in the market

 

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I can't imagine how hard it would be to have a service center, with a parking lot for new vehicle deliveries, as well as a modest showroom big enough to display the current lineup.  

 

The biggest disadvantage of this model, would be the loss of sales jobs... The human cost. Plus you might have older buyers who value the interaction and dance of negotiating with an actual person. 

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58 minutes ago, snooter said:

I am saying tesla's approach is proven to work....allowing anybody to order from ford would benefit ford as well...its not about "hate"...its about tilting the power away from dealers to the consumer....no arguments against what else you posted..


What “power” does a Tesla buyer have?  Zero.  Here is a Tesla - take it or leave it.   Dealers don’t have any power - they’re just hard to deal with in some instances.  At least you can go to a different dealer if one is bad.

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25 minutes ago, probowler said:

I can't imagine how hard it would be to have a service center, with a parking lot for new vehicle deliveries, as well as a modest showroom big enough to display the current lineup.  

 

The biggest disadvantage of this model, would be the loss of sales jobs... The human cost. Plus you might have older buyers who value the interaction and dance of negotiating with an actual person. 


It’s not hard, just logistically challenging and unbelievably expensive.  You’d need several hundred of those centers.  Let’s say 300 at a cost of $10M each - that’s $3B plus staff and annual operating costs.  And all the headaches of running those places.  

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57 minutes ago, akirby said:


It’s not hard, just logistically challenging and unbelievably expensive.  You’d need several hundred of those centers.  Let’s say 300 at a cost of $10M each - that’s $3B plus staff and annual operating costs.  And all the headaches of running those places.  

Wouldn't it actually be cheaper? Since you eliminate much of the sales staff?

 

The service centers already exist, and pay for themselves. 

 

I do agree the transition to such a system would be a big challenge. It will be interesting to watch Tesla in this regard.

 

Maaaybe this will be one of the few things get right? 

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1 hour ago, akirby said:


What “power” does a Tesla buyer have?  Zero.  Here is a Tesla - take it or leave it.   Dealers don’t have any power - they’re just hard to deal with in some instances.  At least you can go to a different dealer if one is bad.

The first part of your rebuttal is tesla buyers do not care...the question detroit needs to answer is why...it could be tesla buyers think its "cutting edge technology" to they "dont trust anything out of detroit".... tesla buyers are willing to pay the take it or leave price.(forget stock price..wall street considers tesla to be only company able to deliver the innovation)...tesla's business strategy is to eliminate dealers for a simple reason (tesla did show it can be done)..musk wants full control....he already showed his hand when he sent his space engineers off to try and find a way to eliminate cobalt from the battery (cathode)....for arguments sake anybody able to purchase a new car thru ford would have to pay wholesale price (thats a given)...the consumer gain is anybody from a lawn mower repair service (example) to the implement dealer could set up credit with ford (or other) to buy a vehicle for consumer sale (immediate vast competition)...that would benefit consumers (and ford) as now they have no choice but to visit a ford dealer...more players involved in selling ford products would benefit the consumer....the whole lawsuit that started this thread is dealer angst over them not being able to get there hands on the money (tesla buyers) thru franchise laws...the setlement speaks volumes as to where that lawsuit would have ended up....i dont see much of an issue with ford setting up the service centers either...its more defeatism than reality...

Edited by snooter
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8 hours ago, probowler said:

Wouldn't it actually be cheaper? Since you eliminate much of the sales staff?

 

The service centers already exist, and pay for themselves.

 

You're confusing dealerships with Ford.  Ford doesn't own any dealerships or sales staff.  Every person Ford would have to hire to run this "service center" as well as the land, buildings and everything else would be a new cost for Ford to the tune of billions.  You'd essentially be duplicating the existing dealer network on a smaller scale.   It would cost Billions even if franchise laws were revoked to allow it.

 

Also Ford now has to deal with almost 2 million individual buyers per year not to mention all the service and warranty customers.   That would require a big staff increase.

 

None of this would give customers more "purchasing freedom" which was the original statement.   Tesla gets away with it because of their low volume and their cult customers but that won't scale.

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8 hours ago, snooter said:

The first part of your rebuttal is tesla buyers do not care...the question detroit needs to answer is why...it could be tesla buyers think its "cutting edge technology" to they "dont trust anything out of detroit".... tesla buyers are willing to pay the take it or leave price.(forget stock price..wall street considers tesla to be only company able to deliver the innovation)...tesla's business strategy is to eliminate dealers for a simple reason (tesla did show it can be done)..musk wants full control....he already showed his hand when he sent his space engineers off to try and find a way to eliminate cobalt from the battery (cathode)....for arguments sake anybody able to purchase a new car thru ford would have to pay wholesale price (thats a given)...the consumer gain is anybody from a lawn mower repair service (example) to the implement dealer could set up credit with ford (or other) to buy a vehicle for consumer sale (immediate vast competition)...that would benefit consumers (and ford) as now they have no choice but to visit a ford dealer...more players involved in selling ford products would benefit the consumer....the whole lawsuit that started this thread is dealer angst over them not being able to get there hands on the money (tesla buyers) thru franchise laws...the setlement speaks volumes as to where that lawsuit would have ended up....i dont see much of an issue with ford setting up the service centers either...its more defeatism than reality...

 

Ford is not changing their wholesale prices and there are 3000 ford dealerships so there is no lack of competition nor would this lower prices - you can already buy most Fords within 3% of the dealer wholesale cost.   Best Buy makes more on a 4K TV than a Ford dealer makes on an Escape.

 

The dealers don't want Tesla selling direct because it could set a precedent for Ford and other mfrs to do the same and skirt the franchise laws.  You'd do the same thing if you owned a dealership.

 

And with that I'm done.  You guys argue amongst yourselves.

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11 hours ago, akirby said:

Ford doesn’t want to sell direct

 

For good reason. Ford has experimented with that before. In the 1990s Ford tried to merge dealerships in certain markets, obtain a minority ownership stake in the dealerships, and operate them as joint ventures with the dealership owners. The program was called Ford Retail Network and later Auto Collection. These dealerships promoted sales and marketing techniques like what Carmax, Tesla, and Carvana use today such as computer based transactions to make shopping and buying more efficient, a no haggle one price model for all vehicles, and customer satisfaction guarantees. 

 

Even that halfway attempt for Ford to be involved in retail sales of its vehicles made a lot of Ford dealers very mad. Ford completely abandoned the program by 2001. https://www.autonews.com/article/20030616/SUB/306160820/retail-misadventure-struck-a-nerve-with-dealers

 

Quote

"The Ford Retail Network, later named the Auto Collection, infuriated dealers, who feared factory-owned stores would get special treatment.
 

Dealers heckled Ford executives at the 1999 National Automobile Dealers Association convention in San Francisco. The son of a Ford dealer stood at Ford Division's make meeting saying, "I thought we were your Ford Retail Network." The comment drew hearty applause from those packed into the room.

Ford's effort to manage dealerships tottered. The Auto Collection stores cost Ford sales, and the company's 1999 attempt to overhaul them by dropping no-haggle sales and returning to commission-based pay failed.

State dealer associations lobbied state legislatures for restrictions on factory-owned dealerships. By 2000, most states barred manufacturers from owning dealerships."

 

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2 hours ago, rperez817 said:

 

For good reason. Ford has experimented with that before. In the 1990s Ford tried to merge dealerships in certain markets, obtain a minority ownership stake in the dealerships, and operate them as joint ventures with the dealership owners. The program was called Ford Retail Network and later Auto Collection. These dealerships promoted sales and marketing techniques like what Carmax, Tesla, and Carvana use today such as computer based transactions to make shopping and buying more efficient, a no haggle one price model for all vehicles, and customer satisfaction guarantees. 

 

Even that halfway attempt for Ford to be involved in retail sales of its vehicles made a lot of Ford dealers very mad. Ford completely abandoned the program by 2001. https://www.autonews.com/article/20030616/SUB/306160820/retail-misadventure-struck-a-nerve-with-dealers

 

 

 

I recall this.  It was a Jac Nasser idea.  We tend to hate the guy today, but he was thinking ahead.  

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1 minute ago, mackinaw said:

 

I recall this.  It was a Jac Nasser idea.  We tend to hate the guy today, but he was thinking ahead.  

 

They also tried to help dealers sell used cars by advertising them on the internet, then sending the vehicle to the nearest dealer to test drive and complete the transaction.

Dealers sued, even though they were getting the sales.   They won.

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