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April 25, 2014

Time to Gas Auto Sales Laws: FTC

Legislation a Hindrance for Competition

The Federal Trade Commission building.

State laws are hindering the sales of one company’s vehicles and the Federal Trade Commission is grinding its gears over the matter.

Three commissioners — Andy Gavil, Debbie Feinstein, and Marty Gaynor — discussed the matter in a blog entry focused on the sale of Tesla vehicles and how changing times aren’t necessarily assisting the fledgling auto maker.

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“For decades, local laws in many states have required consumers to purchase their cars solely from local, independent auto dealers. Removing these regulatory impediments may be essential to allow consumers access to new ways of shopping that have become available in many other industries,” the trio wrote in Thursday’s entry.

Tesla is pursuing a direct-to-consumer sales strategy that doesn’t involve those local, independent dealers. Essentially, this means the auto company’s hands are being tied by this archaic laws that regulate how consumers shop.

It’s unfair to both the company and the consumer. And, it means Tesla’s possibly not meeting its full potential.

Last year, there were 15 million cars sold in the United States. How many of those were Tesla models? A mere 22,000.

“This hardly presents a serious competitive threat to established dealers,” the blog states. “What it could represent is a real change to the way cars are sold that might allow Tesla to expand in the future and prove attractive to other manufacturers, whether established or new ones that have yet to emerge, and consumers. Efforts to litigate, legislate, and regulate to eliminate Tesla’s perceived threat have forced it to battle jurisdiction-by-jurisdiction for the simple right to sell its automobiles directly to consumers.”

The laws that currently are in place were enacted back when the auto industry was in its infancy. Appropriate legislation for an appropriate time. But times have changed and, with it, so too should the laws, argue the trio in their entry.

“Change is a critical dimension of that competitive process. Manufacturers in a variety of industries now reach consumers directly through websites, providing extensive information that was once only available from dealers or by phone or mail inquiry. And consumers routinely turn to the Internet as a convenient way to comparison shop and buy products and services,” they wrote.

Any change, admittedly, would mean a shifting of thought for established dealers but the benefits to consumers and the industry outweigh any negatives.

“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,” the blog stated.


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W. Brice McVicar is a staff writer for SiteProNews.

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