Any TeslaMondo reader should have seen this coming long ago. Today the National Automobile Dealers Association has begun some public opinion massage therapy, posting a video about the wonderfulness of the car buying experience thanks to the wonderfulness of franchised dealers. This wonderfulness would be lost, you see, if Tesla’s factory-direct precedent were to become a contagion and lead to a repeat of 1999, when the likes of Ford and GM tried to cut out the middleman and run their own dealerships. Those efforts failed. And they resulted in stronger franchise laws to prevent a repeat.
However . . .
Some recent commentary by the Alliance of Automobile Manufacturers, representing 12 automakers, suggests factory-direct selling may leave the back burner and come forth again. The Alliance says dealer protectionism is going too far. “At the request of local dealer groups, states set up a labyrinth of protectionist laws that make the car-buying experience difficult and costly for our customers. It’s understandable why Tesla or future competitors would want a simpler sales process. When we look at the big picture, we may be at a tipping point. If dealer groups continue their push for more onerous franchise laws, we will be forced to keep an open mind about how best to serve new-car buyers in the future.” That’s a rather ominous warning from Alliance spokeswoman Gloria Bergquist. Sounds like automakers consider dealers a burden, not a benefit.
The Federal Trade Commission, a consumer watchdog agency that guards against anti-competitive practices, is no friend of car dealers either. Here’s an excerpt from a recent FTC blog post: “Regulators should differentiate between regulations that truly protect consumers and those that protect the regulated. We hope lawmakers will recognize efforts by auto dealers and others to bar new sources of competition for what they are—expressions of a lack of confidence in the competitive process that can only make consumers worse off.”
But perhaps the harshest rebuke of all is this open letter from a posse of 70 law professors and economists, which dissects and defuses every single argument dealer groups try to make about their indispensability. Seems car dealers can’t find a friend anywhere. How about the consumer? No dice. The annual Gallup poll measuring honesty and ethics in various professions shows near-zero trust in dealerships.
So this new NADA campaign was inevitable. But is it effective? Well, the timing could be a lot better. The current General Motors recall crisis belies the NADA claim that dealers advocate for consumers on safety issues. Such advocacy, if any, was totally ineffective for the last, oh, decade or so.
Hear that clock ticking? This may take a decade or more, but American auto retailing is bound to molt its century-old skin. Litigation can’t stop natural metamorphosis, nor can propaganda videos.