New Jersey's Crony Capitalism: Protectionism For Franchised Car Dealerships

By Amy Alkon


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from Advice Goddess Blog.

New Jersey’s Crony Capitalism: Protectionism For Franchised Car Dealerships
In banning automakers’ direct-to-customer sales, who are they hurting? Just the customer, who will likely pay more for cars this way.

This is like telling Apple they can’t open and run their own stores; they have to let some guy open an Apple store instead.

From the WSJ, Christina Rogers and Mike Ramsey report on another great move by New Jersey, the traffic jam state (among other states who have done similarly), stopping Tesla’s direct-to-consumer sales:

Tesla Motors Inc. TSLA -2.87% will stop selling its luxury electric cars in New Jersey on April 1, after the state said Tuesday it wouldn’t license the company to sell vehicles directly to consumers, bypassing franchised dealers.

The defeat for Tesla, which owns its own stores, came despite a furious 11th-hour lobbying effort. A senior Tesla executive had accused New Jersey Gov. Chris Christie of breaking a deal to hold off on a rule change requiring all car retailers in the state to have a franchise agreement with an auto maker. The New Jersey Motor Vehicle Commission approved the rule change Tuesday.

Mr. Christie’s spokesman countered that Tesla knew that it was operating outside state laws.

Tesla has been battling in New Jersey and other states to defend its direct-sales model against attacks by franchised dealers representing rival brands.

Tesla’s problems have their roots in decades of mistrust between independent car dealers and auto makers. Over the years, dealers have fended off efforts by the auto makers to set up company-run stores that could compete with them. The dealers have pushed for–and won–state legislation to protect their franchises.

Dealers fear Tesla’s model could cause directing selling to spread to other manufacturers, ending a century-old system that protects the sales territories and investments of many independent businesspeople.

Crony capitalism! It’s what keeps your car payment higher!

Related: Crony capitalism in the sky — keeping your airline ticket prices higher.

…read more

Source: Donkeyrock_BlurBlog

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