Tesla Wants to Know: Who Needs Car Dealerships Anyway?

We buy everything else online – so why not cars?

By Brenda SalinasFebruary 22, 2015 8:58 pm

Tesla Motors wants to sell their cars directly to consumers. But they can’t do that in Texas.

Legislation that would change that is being considered at the Capitol. But Bill Wolters, president of the Texas Automotive Dealers Association, makes the case for why Elon Musk’s plan to sell Teslas directly to consumers should get shut down.

Here are some highlights from his interview with the Texas Standard:

On how the automobile industry differs from other sorts of retailers:

“Dealers do all the things that all the other retailers do; the big difference is that they’re selling a product that has to be titled, registered, and safety inspected – it’s very different than buying something from Amazon or Apple.”

On whether it’s more cost-effective for consumers to cut out the dealerships:

“It’s very disingenuous when anyone says ‘if I can buy directly from a manufacturer, I will save money.’ Even if the process was cheaper, which it is not – because the dealers add no cost to the process – the manufacturer is not going to pass that savings on to their customers, they’re going to dividend that out or put it to their bottom line, or support their stock price.”

On the benefits of dealerships within the state:

“When we have 1,257 principally family-owned dealerships across our state that make a profit-that stays in Texas. When a corporation owns a retail outlet and they make a profit, it goes to their headquarters somewhere or to their stockholders.”

On the downside of a corporation entering the market:

“When you open that door and you give manufacturers the opportunity to own dealerships in competition with family-owned businesses, then they control not only production, distribution, pricing; but also the retail.”

“(Dealerships) are very different than a corporation that wants to come in and remove capital from our state-and that’s what Tesla wants to do. And if they were given that exception to our law-to create a monopoly- for them to sell cars exclusively, with no other owners of their dealerships but Tesla, then that opens the door to some things that are simply not good for Texas.

This story was prepared with assistance by Megan Jo Olson