Corruption Index: If A State Moves To Ban Tesla Direct Sales, It's A Sign Of Corruption

from the the-most-logical-explanation dept

Wed, Mar 12th 2014 5:03am — Mike Masnick

A year ago, NPR's Planet Money podcast had a show detailing one of the most horrific consumer experiences around: buying a car. The main reason it was deemed that the process was so ridiculous and unpleasant was a variety of state laws that ban car makers from selling directly, and instead require a network of dealerships. A research paper highlighted how these state laws have been a massive boon to the owners of dealerships, but have seriously harmed automakers themselves. It has also shown how these laws are open to significant corruption issues, since dealers generate tremendous local tax revenue:

States earn about 20 percent of all state sales taxes from auto dealers, and auto dealerships can easily account for 7-8 percent of all retail employment.... The bulk of these taxes (89 percent) are generated by new car dealerships, those with whom manufacturers deal directly. As a result, car dealerships, and especially local or state car dealership associations, have been able to exert influence over local legislatures. This has resulted in a set of state laws that almost guarantee dealership profitability and survival--albeit at the expense of manufacturer profits. Given these laws, manufacturers do have a financial interest in closing down new car dealerships, and in choosing which ones wil close. Additionally, available evidence and theory suggests that as a result of these laws, distribution costs and retail prices are higher than they otherwise would be; and this is particularly true for Detroit's Big Three car manufacturers--which is likely another factor contributing to their losses in market share vis-a-vis other manufacturers.

There is basically no valid reason for such laws. They serve no purpose other than to enrich local car dealership owners and state tax coffers at the expense of everyone else -- especially the public.

And yet, because these laws benefit both the politicians in charge and local dealerships, which tend to have strong lobbying power, they stay in place. That fight has been getting more notice lately, in large part because of Tesla, the innovative electric car company that has wowed nearly everyone who's driven one. A few years ago, we wrote about dealerships starting to complain about Tesla and it's plan to sell direct via the web, but with company-owned "showrooms." Tesla reasonably argued that these are not dealerships, and such laws didn't apply. Car dealers have flexed their political muscle to get various states to basically make it illegal to buy Teslas. This has even reached insane levels, with dealerships claiming that Tesla's website violates California DMV rules.

Things have been heating up quite a bit in the past few weeks. In late February, New York moved forward with some anti-Tesla legislation. On Monday of this week, Bloomberg had a long article about how dealers were freaking out about Tesla, with various challenges in Texas, Ohio, Arizona and elsewhere. Then, Tuesday morning Tesla itself announced that it may be forced to close the doors on its showrooms in New Jersey, after dealers went to the NJ Motor Vehicle Commission to complain about Tesla daring to sell direct. By late Tuesday afternoon, the Commission had officially approved the regulation banning Tesla from selling the car in the state.

This is insane on any number of levels. Not only is the car better for the environment, reviewers write about the car and talk about how it may be the best car ever built.

In response to this, entrepreneur/investor Paul Graham put it succinctly that banning Tesla "is an index of the corruptness of state governments" in the same manner as cities banning Uber or other disruptive new services. As in nearly all of those cases, the dealers are (laughingly) trying to argue that this is a "consumer protection issue." Again, the research linked above notes there's basically nothing to that argument, and safety reviews of the Tesla have suggested the car is incredibly safe. Besides, what does the safety of a car have to do with dealerships? Dealers try to claim that local dealers are "more committed to taking care of that area's customers." And yet they provide no evidence to support that -- mainly because there is none.

What's particularly hilarious, is that this move comes just days after New Jersey Governor Chris Christie talked up the power of the free market and against government intervention in business:

“We need to talk about the fact that we are for a free-market society that allows your effort and ingenuity to determine your success, not the cold, hard hand of the government.”

Right up and until the biggest supporters of state taxes demand your own government kills off sales of an innovative new competitor. Then, the "cold, hard hand of government" smacks you down.

The facts here are pretty simple: Tesla has built an innovative car, and gone with a pretty standard way of selling almost every non-automobile product: sell direct to a public who wants it. Dealers and state politicians, on the other hand, are basically teaming up in a corrupt manner to harm everyone (especially the car buying public) but themselves, and then having the gall to claim that they're doing so for the sake of "consumer protection"? No one's buying that excuse. Beyond the research above, plenty of others have pointed out the absurdity of this argument. Last year, professor Dan Crane debunked that basic claim:

A second argument is that having local dealers is necessary to ensure that customers are adequately served. For example, Bob Glaser of the North Carolina Automobile Dealer’s Association has asserted that the restrictions are a form of “consumer protection,” since “a dealer who has invested a significant amount of capital in a community is more committed to taking care of that area’s customers.” The obvious rejoinder is that Tesla has as much or more of an interest as the dealers in seeing that customers get the level of service they’re willing to pay for. If Tesla gets a bad reputation for quality, it will fail. I suppose that one might worry if Tesla were a fly-by-night operation selling customers an expensive durable good at a high price and then fleeing with its profits and leaving customers without support. But that’s obviously unlikely of a company that’s pouring billions of dollars into the creation of a new product and a recharging and battery swapping infrastructure. Car manufacturers make considerably larger fixed capital investments than do dealers and I’m sure that the dealer failure and exit rate is considerably higher than that of manufacturers.

A related argument is that dealers play an important role in complying with local laws regarding titling and safety inspection. But this argument doesn’t work either. First, observe that at present most states only prohibit manufacturers from opening their own dealerships—they don’t prohibit online sales from outside the state. (North Carolina recently passed a statute banning online sales as well). There’s no reason why a manufacturer-owned dealership should be less capable of complying with local laws than an independent dealer. Second, why should Internet sales involve evasion of state titling and safety inspection laws? Internet sales can just as easily be subject to the same titling and inspection requirements as dealer-initiated sales.

Furthermore, if it were true that consumers were harmed by letting companies sell directly, you'd think consumer advocates would be supporting the dealers. But they're not. They're supporting Tesla:

Jack Gillis, with the Consumer Federation of America, disagrees. Customers actually don't like haggling over prices, as evidenced by the fact that we haggle over almost nothing else except cars. A one-price system, like Tesla's, is fairer, Gillis said, because it's more transparent and doesn't put less belligerent shoppers at a disadvantage. If the price is too high, customers just won't buy the product.

In the end, New Jersey's actions just confirm what lots of people already knew, that New Jersey is hopelessly corrupt. But, this is nothing new. As Dan O'Connor points out in his story about all of this, a century ago, people did the same thing against the automobile, and in favor of horses. The (I'm not joking) Horse Association of America was created more or less to fight back against those evil cars, and presented talking points like the following:

If the extended displacement of horses and mules by motors resulted in economic gain to the nation as a whole, the campaign of the Horse Association of America to increase the production and use of horses and mules would not be warranted. The Association states that ample evidence has already been secured to prove that in many instances, such displacement is economically unsound, resulting in less reliable, less efficient service at greater cost. Consumers, grain dealers and grain producers alike suffer from such substitution, which, according to a leading traffic manager in New York City, is due chiefly to ignorance on the part of business men regarding the actual cost of operating horse drawn and motorized equipment.

That sounds mighty familiar. A century ago, politicians mostly saw through the insanity of it. But there wasn't so much money at stake back then. Today is different, and we all suffer because of it.

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Filed Under: auto dealers, car dealers, cars, competition, corruption, new jersey, selling, selling direct, state taxes
Companies: tesla

91 Comments

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Ninja (profile), 12 Mar 2014 @ 3:56am

That sounds mighty familiar. A century ago, politicians mostly saw through the insanity of it. But there wasn't so much money at stake back then.

History repeats itself. Copyrights, patents, Govt granted monopolies... This is but the tip of the iceberg.
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mcinsand, 12 Mar 2014 @ 5:21am

the irony!
Last week, someone from the US government was calling Russia's government a kleptocracy. Oh, the irony!
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That Anonymous Coward (profile), 12 Mar 2014 @ 5:27am

"more committed to taking care of that area's customers."
By using contracts to make them pay more for substandard service that is offered by other businesses. Dealer work on cars is tremendously more expensive, time consuming, and annoying.
But but but the free market they scream, while making sure that their piece is secure.

Given the huge failures in many legacy players in all sectors to meet consumer demand, while using their considerable influence to kill off anything that might force them to actually compete.

We need to stop letting players rest comfortably on their asses, perhaps the tax base would be better served by introducing efficiencies into the local governments and cut the fat. The public is forced to accept less and less, while these politicians take more and more. Perhaps the biggest savings would be hitting them with the same cuts they want everyone else to bear.
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Anonymous Coward, 12 Mar 2014 @ 5:35am

the problem with this is the same as just about every other legacy industry. it wont change because it has become so used to getting it's own way. there may have to be a few thousand more dollars thrown at politicians, but it doesn't take very much to have laws enacted that benefit the old and screw the new! the best examples are with Hollywood and the entertainment industries that have got politicians and even governments in some places, to do whatever they want so as to keep the business models in the dark ages as far as distribution is concerned and therefore dictating that everything new is a danger to whatever they can think of when in reality, it's simply them that want to remain in the past and in control while screwing the customers they rely on for existing!
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Anonymous Coward, 12 Mar 2014 @ 5:48am

"Customers actually don't like haggling over prices, as evidenced by the fact that we haggle over almost nothing else except cars."

Just this week I haggled with a auto garage over the total price of a repair, a roofing company over the cost of re-roofing my home, a furniture store, an insurance company for an auto policy, a medical group for an upcoming medical procedure, farmer's market vendors, etc., etc.

From my perspective haggling is alive and well across a broad spectrum of business selling a wide diversity of products and services to the public.

Perhaps it be more accurate to say that people have forgotten how to engage in the art of haggling, which is too bad unless they are satisfied paying more than what could otherwise be the case.
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Anders K. Nielsen (profile), 12 Mar 2014 @ 5:56am

Wait, I might have missed something here, but what is the issue here? Is it that the company are not allowed to sell directly to the public, or that other cardealers are not allowed to sell their product?
I don't see how the goverment can legally block a company from skipping the middle man, as long the middle man is still allowed to sell their products.
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Anonymous Coward, 12 Mar 2014 @ 5:58am

Next up....BestBuy challenges NewEgg, Amazon, and MonoPrice over consumer protection rights.

Stand with me. We, the people, demand and deserve a local infrastructure to sell us overpriced mouse, digital cables infused with oxygen, and other stupid gadgets without a reasonable way of prepurchase review.

It is pure blasphemy that I, as a consumer, have the options to either purchase with immediate reward, or wait until tomorrow for my purchase with more buying options.

Stand with me and support your our monopolies! They paid a lot of money to get where they are, and they deserve it!
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Anonymous Coward, 12 Mar 2014 @ 6:04am

Re:
the dealers are mad that Tesla won't sell to the dealerships. The dealers want to "add value" to the Tesla - with the options to rotate tires and pin stripes and such. The cars are delivered from the local Tesla warehouse (a couple in each state), which also has the supercharger stations.

The dealers feel they "own the rights" to the state (TX and NJ now), and are refusing Tesla to sell in the state.

As as result, buyers of said $100,000 vehicle search hard to find a $300 plane ticket and fly to a neighboring state and pick up there (purchase online, deliver locally).

This is infuriating the dealers.
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Anonymous Coward, 12 Mar 2014 @ 6:22am

Re:
I call bullshit on the garage and the auto insurance.
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Anders K. Nielsen (profile), 12 Mar 2014 @ 6:25am

Re: Re:
Ahh, well I don't see that is a problem, it's their product, they can sell it to whoever they want to imo. I don't see how the dealerships can be entitled to the right of buy it.

I actually believe that the problem is that the dealerships can't buy the cars at engross prices, but have to pay the same price that Tesla sells the cars to the public, and that's what gets their tits in a twist.

Dealerships, get over it, you are a customer, nothing more, nothing else. You are not entitled to any special deals.
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jsjohnson, 12 Mar 2014 @ 6:30am

Missing the point here...
This isn't REALLY about banning Tesla folks...look deeper. What happens if a manufacturer earns the legal right to sell in a state (I'll give you a minute). That's right, the big three, or any other manufacturer could, at their sole discretion pull any or all franchises licenses and open their own shops. They would have tighter control over prices and inventory, better margins, and could offer as good if not better experience with no haggle pricing (read:Carmax). How could current dealerships compete with that model...hint they can't.
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Anonymous Coward, 12 Mar 2014 @ 6:38am

Re: Re:
I bet Tesla would be happy to sell to the dealers, at the nominal retail cost.

If they really offered such a great service, they could then beat Tesla on the service end.
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Anonymous Coward, 12 Mar 2014 @ 6:42am

"The main reason it was deemed that the process was so ridiculous and unpleasant was a variety of state laws that ban car makers from selling directly, and instead require a network of dealerships."

And if it isn't in place already you can sure bet that the MAFIAA will do everything to make sure the same applies to their movies in that they can only be sold through the middlemen rather then allow anyone to buy direct from somewhere else at a cheaper price.
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Carl Legg, 12 Mar 2014 @ 6:45am

Beer and Cars
Same story in the beer industry. The manufacturer (say, Busch) cannot distribute the beer. In fact, by law, a number of independent beer distributors must handle that task in any state. And the distributor cannot sell to the public. Sales must be by retail outlets (bars, liquor stores, etc.).

This 3-tier sales system was originally put in place because of organized crime corruption which effectively owned the entire chain, from production to sales. But cars are not beer. And the only organized crime today seems to be the breathtaking collusion between state lawmakers and auto dealers.
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MacCruiskeen, 12 Mar 2014 @ 6:46am

"The facts here are pretty simple: Tesla has built an innovative car, and gone with a pretty standard way of selling almost every non-automobile product: sell direct to a public who wants it. "

This is a standard way? When was the last time you bought something direct from Proctor & Gamble, Nabisco, or Unilever? Did you order your camera direct from the Nikon or Canon factory? Probably not. Now, it is true that it is not illegal for them to do so, or to have company-owned retail stores if they want them (such as the Sony and Apple stores). But it is far from standard for most consumer goods. Even now, where many manufacturers have web sites where you can order direct, these sites are usually managed by a third party with fulfillment from a distributor.
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John Fenderson (profile), 12 Mar 2014 @ 6:47am

Re:
"Perhaps it be more accurate to say that people have forgotten how to engage in the art of haggling, which is too bad unless they are satisfied paying more than what could otherwise be the case."

I can haggle with the best of them, but calling it an "art" seems dubious at best. I absolutely loathe haggling, though. It's incredibly unpleasant.

There's more to the cost of a thing than the number of dollars involved. There's also the cost of the hassle, aggravation, and time. And it's always possible to get a better price if you're willing to pay more in hassle, aggravation, and time.

That's the nut of it, I think. It's not that people have forgotten how, it's that haggling sucks so much that for lots of people, the cost of doing it is high enough that you won't get enough of a price reduction to come out ahead.

It's much more pleasant to just look at the asking price and walk away if it's more than it's worth to you.
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zip, 12 Mar 2014 @ 6:49am

Tesla just needs to "get with the program". It's lobbying and campaign "donations" that grease the skids and get things done in these good-old-boy networks. And it's not some secret process or exclusive club, as there are plenty of professional 'power-brokers' that can be hired by anyone, "consulting" firms specifically designed to help new businesses get on the good side of government officials. It's the cost of doing business, though getting a seat at the table often does not come cheap (though it might be a lot cheaper than fighting a war with the auto dealers' associations and whoever else feels cut out). What kind of fools were they to think that free enterprise actually existed?

Consider Segway, maker of motorized scooters that were heavily promoted a decade ago. Despite being a small startup firm, the company lobbied extensively in state and local governments all across the country to get new laws passed to legalize what had for ages been illegal -- to drive a motorized vehicle (of any kind) on a public sidewalk (And to hell with pedestrians getting run over). And of course the loopholes were custom-designed for the Segway, but not other similar types of vehicles.

Success in business is to large degree the ability of a company to 'work over' the government officials to give them whatever they want. Obviously Tesla has not been doing its homework.
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John Fenderson (profile), 12 Mar 2014 @ 6:50am

Re: Missing the point here...
And this is a problem how?
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John Fenderson (profile), 12 Mar 2014 @ 6:51am

Re: Beer and Cars
I'm not so sure how universal that is. I've purchased a number of kegs directly from distributers.
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Carl Legg, 12 Mar 2014 @ 6:55am

Re: Mackruskien
The difference, Mackruskien, is that there is no law against consumer goods companies from selling direct to consumers. In fact, there are only one other industry I can think of that is mandated by law into a multi-tier sales system. Beer. Maybe you can think of others?
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Anonymous Coward, 12 Mar 2014 @ 7:00am

Cars versus Telcos
One thing that bothers me about this situation is that I've often seen it said that consumers would be better off if the telco industry were split into two industries: wireline and data/ISP. We have a similar split with electricity in Texas, one company does wire construction/maintenance and then we're free to pick our provider.

What this article seems to be advocating is the reverse, allowing the manufacturers to sell directly. This would be analogous to the ISP providing wireline. All combined to 1.

Am I understanding that correctly, or is it more nuanced than that?
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Anders K. Nielsen (profile), 12 Mar 2014 @ 7:01am

Re: Re: Missing the point here...
Yeah, I was thinking the same, that's the problem? It would be the same saying that Gamestop couldn't compete because game companies only sells digital directly from their own servers and so what? The middleman was not there first, the company who made the product was... Like the lice wouldn't be there without the dog.
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Carl Legg, 12 Mar 2014 @ 7:03am

Re: Re: Beer and Cars
Perhaps some states allow two-tier sales of beer. In California, I can't purchase a case of beer from a distributor. Has to be a retailer, but there is an exception for on-site craft brewers selling directly to consumers.
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Anonymous Coward, 12 Mar 2014 @ 7:12am

Tesla needs to stay out of larger cities if this corruption bs continues ... find smaller towns with no dealerships within city limits and no direct business loss for competitors ,you can't hurt whats not there. or simply call teslas electric horses and set up a tesla corral.
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Argonel (profile), 12 Mar 2014 @ 7:13am

Re: Re: Missing the point here...
More specifically, Car salesmen and Politicians compete fiercely for the titles of most hated and least trusted. I really wouldn't feel bad about watching them lose their jobs.
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Wally (profile), 12 Mar 2014 @ 7:14am

Tesla does go through dealerships sometimes...Columbus, Ohio has a dealership called The Toybarn that acts sort of like a broker to direct sales of super, hyper, and exotic sportscars.
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Anonymous Coward, 12 Mar 2014 @ 7:21am

What's going throught he dealerhsip's minds:

FBLTHP!
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PRMan, 12 Mar 2014 @ 8:07am

Re: Cars versus Telcos
Nope. You've just summed up TechDirt's hypocrisy beautifully.
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jupiterkansas (profile), 12 Mar 2014 @ 8:30am

Re: Re:
I want to do business with someone that offers the best price, not with the worst haggler.

Haggling to me just feels like bullying someone until I get my way, or using their ignorance of a subject to dupe them. i.e. car dealers.
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John Fenderson (profile), 12 Mar 2014 @ 8:32am

Re: Re: Cars versus Telcos
Please explain the hypocrisy -- I'm not seeing it.

The two cases are very different -- in the case of telcos, the problem is that they have an effective monopoly.
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John Fenderson (profile), 12 Mar 2014 @ 8:40am

Re: Re: Re:
Yes, yes, very well said!

I've always thought that haggling was as close to scamming someone as you can get without technically scamming them. The resemblance to bullying is also unmistakable.
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anon, 12 Mar 2014 @ 8:49am

Interstate Commerce
So what stops someone from buying a car across state lines?
I assume this is perfectly legal if people want a car baly enough. If NJ or NY won't allow it, there's PA, MD, DE, CN, RI,MA a hop skip and jump away.
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John Fenderson (profile), 12 Mar 2014 @ 8:59am

Re: Re:
I don't. I know people who have haggled for both of these things.
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jupiterkansas (profile), 12 Mar 2014 @ 9:01am

Re: Re: Re: Re:
The only time haggling makes sense to me is when you have something to offer besides money, like volunteer time or some goods to trade. That's where haggling came from, after all. The whole point of currency is to eliminate that.

When you're just arguing dollar amounts, it's down to whoever is most forceful or persuasive.
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Anonymous Anonymous Coward, 12 Mar 2014 @ 9:10am

Re: Interstate Commerce
Well, you see, NJ just does not like to collect sales taxes on $100,00+ items. However, if they are like some other states, you pay the sales tax where you bought the car, and then pay it again to register the vehicle in NJ.

For those of you who may find themselves in this situation, South Dakota does not care if you live in their state, nor even if you have a fixed address, just a social security number, and they will title and register your vehicle. You may then have issues with your local state requiring you to register the vehicle locally. Or you could just keep on the move.
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Anonymous Coward, 12 Mar 2014 @ 9:26am

Re: Cars versus Telcos
You know, this used to be a thing here in Brazil... When you got a DSL connection, you not only paid the telephone company, but you were also forced to pay a separate provider. Which made no sense, since it was the telephone company which did everything; the connection did not pass through the provider.

If I recall correctly, the justice ruled that this was "venda casada" (since you were forced to pay the provider when paying the telco), and the law which caused that mess is no more. A quick web search confirms what I am recalling: Usu�rios do Velox n�o precisam pagar por provedor, decide Justi�a.
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Carl Legg, 12 Mar 2014 @ 9:26am

Re: Re: Interstate Commerce
Is that true? NJ requires you to pay sales tax on the value of a car when you register it for the first time in the State? That doesn't sound right. If I'm a NJ resident who buys a new Tesla in NY, pay the NY State tax and register the car in South Dakota, and then drive it around for a few months, it's now a USED car.

Are you saying, if I registered a USED car in NJ, I would have to pay the equivalent sales tax on its value? Or would I just pay the normal registration fee?
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Anonymous Coward, 12 Mar 2014 @ 9:28am

Re: Re: Cars versus Telcos
So views must always be the same on everything regardless of details? There is a word for your kind of thinking: extremism
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Anonymous Coward, 12 Mar 2014 @ 9:31am

Re: Re: Cars versus Telcos
There isn't any hypocrisy at all. That fact you choose to see it as hypocrisy is boggling. One is about Monopolies the other is about middle men. Their isn't a single vehicle manufacturer. You think Ford and Kia came from the same company? If dealerships didn't exist you will still have store fronts of manufacturers selling there goods and you could buy whatever model you want. Telco's you are locked in with one choice. I only have one option for internet and that is Comcast and I despise their practices. They are pretty much a monopoly.
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ltlw0lf (profile), 12 Mar 2014 @ 9:37am

Re:
By using contracts to make them pay more for substandard service that is offered by other businesses. Dealer work on cars is tremendously more expensive, time consuming, and annoying.

I had a vehicle that lived under one of these contracts (extended warranty.) If I used anything other than the dealer for any car repairs, the contract was null and void and I'd be on my own for future repairs. This included oil changes and routine maintenance, which they required every three months or every 3000 miles. The vehicle was primarily a "vacation vehicle", which had very low mileage. But, following the rules, I did my best to comply with the contract. While the jiffy-lube down the street can take your car in at a moments notice for an oil change, and usually costs far less, I'd be a chump and schedule my maintenance every 3 months or 3000 miles weeks in advance, and would deliver the car at 8am to be picked up around 5pm (they wouldn't schedule any less than a full day, even if the change took 30 minutes.)

The company went out of business and the contract became null and void, despite my efforts. Another company "bought" the contract, but failed to hold up their end of the bargain. I didn't find this out until I had an issue with the vehicle that needed work, so I took it to them only to find out they were gone, and the replacement company wouldn't honor the contract. The end result, my extended warranty was cancelled even though I paid an arm-and-a-leg and lots of heartache to keep up my end of the bargain (and then paid even more to fix problems that would have been covered by the warranty.)

A year ago, the vehicle had a recall, and I was told to take it to another dealer to fix a problem that the company would pay for. When I took it in, they screwed up the repair, and then told me that there was a bunch more stuff wrong with the car that needed to be repaired right then and there, because it was unsafe for me to drive the vehicle away without repair. I laughed, because stuff they said was broken was stuff my mechanic just fixed (including "balding tires" that were just replaced a month before, with the sales slip still sitting in the car.) I took it back to my mechanic, who fixed their shoddy work and checked the car over again to make sure that all the stuff they said was wrong wasn't. Their $450 bill turned out to be about $80 worth of work by my mechanic, and that was just fixing what they broke. A scam, pure and simple.

I swore off extended warranty's from that point forward, since I see them now as little more than a carrot to keep you paying them. I will never take a vehicle, recall or otherwise, to the dealer. I could have taken it to my mechanic all along, who I trust, who schedules stuff better and takes walk-ins, and who charges me far less for far better work.
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John Lambert (profile), 12 Mar 2014 @ 9:39am

Contradiction
"There is basically no valid reason for such laws. They serve no purpose other than to enrich local car dealership owners and state tax coffers at the expense of everyone else -- especially the public."

This seems like a silly argument to me. The taxes on the dealerships enrich the State coffers, without which, the public would need to be taxed by some other means to make up the shortfall or State services would have to be reduced to the public by an equal amount.

The public in States with car manufacturing might benefit but the public in States without car manufacturing would suffer. Does not the current system more evenly distribute the tax revenues between States?
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Anonymous Anonymous Coward, 12 Mar 2014 @ 9:40am

Re: Re: Re: Interstate Commerce
I don't remember about NJ, but about a decade or so ago I did some research on how states treated their residents with regard to taxes. Property taxes, income taxes, fees and registrations, etc. Several states had the clause that kept them from loosing out on income just because you bought across the border, but I do not remember which ones specifically.
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Anonymous Coward, 12 Mar 2014 @ 9:46am

Re: the irony!
All governments are kletocracies.
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Anonymous Coward, 12 Mar 2014 @ 9:50am

Re: Missing the point here...
What do you mean 'look deeper?' That's exactly the thing everyone knows they're trying to stop.
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ltlw0lf (profile), 12 Mar 2014 @ 9:52am

Re: Re: Re: Beer and Cars
Perhaps some states allow two-tier sales of beer. In California, I can't purchase a case of beer from a distributor. Has to be a retailer, but there is an exception for on-site craft brewers selling directly to consumers.

That isn't because of legal reasons...but contractual or a policy by the distributor. California does not have a Three-Tier Distribution system (though I can guarantee the majors are trying to corrupt the system pushing for the same three-tier scam they have with other states,) and brewers can sell the beer directly to you or directly to a retailer without going through a wholesaler.
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John Fenderson (profile), 12 Mar 2014 @ 10:00am

Re: Re:
"I had a vehicle that lived under one of these contracts (extended warranty.) If I used anything other than the dealer for any car repairs, the contract was null and void and I'd be on my own for future repairs"

Wow!

I thought this was a national thing, but perhaps it's a state thing -- but in my state, this is overtly illegal. The law specifically states that the terms of a warranty cannot require that you use a specific entity for repairs or maintenance -- it can only require that the entity be certified.

Auto dealerships will, however, lie about this and they do tell their customers that they have to use the dealership or approved shops. But that's a lie, and pretty much every independent garage calls this out in signs on their premises, in their advertising, and will go to bat on your behalf if warranty coverage is denied.

It's yet another in the long list of reasons why car dealers are scumbags.
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John Fenderson (profile), 12 Mar 2014 @ 10:05am

Re: Re: Re: Re: Re:
True. I don't even think of this as haggling (even though it is). I think of it as an inescapable part of the bartering process -- the people involved have to determine the relative value of the things they are bringing to the barter, after all.
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John Fenderson (profile), 12 Mar 2014 @ 10:09am

Re: Re: Interstate Commerce
"However, if they are like some other states, you pay the sales tax where you bought the car, and then pay it again to register the vehicle in NJ."

Another reason why sales taxes are terrible, and I'm glad I live where there isn't one!
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John Fenderson (profile), 12 Mar 2014 @ 10:15am

Re: Contradiction
I don't think I understand the point you're making here.

"without which, the public would need to be taxed by some other means"

Yes, so? That doesn't contradict "They serve no purpose other than to enrich local car dealership owners and state tax coffers at the expense of everyone else"

"Does not the current system more evenly distribute the tax revenues between States?"

Since the taxes we're talking about are state taxes, not federal, no -- this system does nothing about more evenly distributing tax revenue between the states. And why would that be a good thing even if it did?

I see no contradiction here. The assertion that you say is contradictory is "There is basically no valid reason for such laws". Even if everything you said is correct, none of it represents a "valid reason for such laws".
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btr1701 (profile), 12 Mar 2014 @ 10:55am

Dealers
I really have never understood why we can buy every other product in America directly from the company that makes it-- Nike makes a shoe and sells it to me; Apple makes a computer and sells it to me; Bic makes a pen and sells it to me; Coke makes a soda and sells it to me-- but with cars, Ford can't make a car and sell it to me. That's illegal. It has to sell it to a dealer, which then sells it to me, adding nothing but a lot of useless red tape and price markups.

It such a bright line example of regulatory capture and political corruption I'm amazed that it's survived this long. As the article points out, all the lame 'reasons' the dealer industry asserts for why this is necessary (for cars and nothing else!) are so easily debunked it's almost insulting that they feel we're so stupid we'll believe them.
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btr1701 (profile), 12 Mar 2014 @ 10:59am

Re: Re:
Of course now they're trying to use DRM and DMCA copyright circumvention clause to prevent your mechanic from accessing your car's computer systems, thereby forcing you to only use an 'authorized dealer' for repairs and maintenance.
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Anonymous Coward, 12 Mar 2014 @ 11:01am

The whole thing is a scam! MVC is part of executive branch, and cannot create laws. End of the story.
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jsjohnson, 12 Mar 2014 @ 11:49am

Re: Missing the point here...
I should have mentioned in my original post that I fully support the right of Tesla to operate in a direct-to-consumer fashion be it online or physical location.

The analogy of health and beauty products is not a particulary good comparison. The scale and ration of individual h&b products:consumers dwarfs the car industry and as such, it's impractical for manufacturers to absorb the costs to get a bottle of shampoo directly to a consumer much less manage the returns process.
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JDLambert (profile), 12 Mar 2014 @ 11:51am

Re: Re: Contradiction
The main contradiction I am trying to point out is that "no purpose of than" lists two purposes as if those purposes are insignificant and therefore any local political support of dealerships must imply corruption. However, one of those two purposes is a substantial purpose, that of enriching the State coffers. There is also an additional purpose of maintaining jobs. These valid purposes disprove the implication that local political support of dealership laws proves political corruption.

For example, if NJ politicians were to vote to remove dealership monopolies, NJ would have fewer jobs and less revenue, according to the original post above. Why would a NJ politician want to reduce local jobs and local tax revenue? If they reduce tax revenue, they have to charge higher taxes elsewhere or provide their citizens with fewer services. What will happen to local politicians who cause fewer jobs, an increase in taxes, or reduced services? They are likely to not be reelected. So local politicians might vote to support dealerships even if dealerships did not contribute to their campaigns, simply because they do not want to lose the jobs and tax revenue for their State.

I assert that maintaining jobs within a State and enriching State tax coffers are both valid reasons for such laws.

I am not saying there are not disadvantages to such laws or that I would support such laws despite their disadvantages, such as possible lower car prices. I am saying that supporting such laws does not require or prove political corruption.
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Anonymous Coward, 12 Mar 2014 @ 12:17pm

Re: Contradiction
"The taxes on the dealerships enrich the State coffers"

No one said that the state can't tax the sale of a car from the manufacturer. If your argument is that they don't tax it enough and the dealership adds more tax revenue then all the state has to do is to increase the tax paid when an order from the manufacturer is placed. Better yet, since the dealer isn't required a cut if the car is ordered from the manufacturer the government may even charge a greater tax and still have the consumer pay less (to the extent that people order from the dealer directly because it's cheaper).

So, no, this serves absolutely no purpose other than to provide job security to a business that could otherwise be a complete failure in a free market because it can't pull its own weight.

Your argument is that the state tax structure is currently set up to tax dealers, there is no reason the state tax structure can't be set up to tax manufacturers the same.
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Anonymous Coward, 12 Mar 2014 @ 12:19pm

Re: Re: Contradiction
(that is, less money going to the dealer from the sale of a car is more potential money that the government can collect and and more money that the consumer can save. Money going to the dealer when a car is sold is less money the government can collect. Econ 101).
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Rekrul, 12 Mar 2014 @ 12:21pm

Customers actually don't like haggling over prices, as evidenced by the fact that we haggle over almost nothing else except cars.

People don't haggle over the price of most products because they're not allowed to. Try going into Target and haggling over the price of a microwave. They'll look at you like you're crazy. Or try haggling over the price a movie ticket. Or a burger at McDonald's. You may be able to haggle over the price of a service and in fact the person/company offering the service often starts the haggling if you seem reluctant, but for most things, haggling isn't allowed.
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Anonymous Coward, 12 Mar 2014 @ 12:29pm

Re: Re: Re: Contradiction
Your arguments about less tax revenue seems to lack a basic understanding of how algebra works

To simplify things lets assume I buy a car for $100. Of that $5 goes to taxes and $5 goes to the dealer. Only $90 is going to the manufacturer.

Cut the dealer out of the equation and now I can pay $98 for the car and the state government can charge $6 in taxes and the manufacturer can make $92

The manufacturer gets more, the government gets more, and the consumer pays less.
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JMT (profile), 12 Mar 2014 @ 12:32pm

Re: Missing the point here...
Thanks for pointing out what everybody already knows, and exactly why car buyers want manufacturers to be able to sell directly to them. I doubt there'd be much sympathy for dealers struggling to compete after decades of gouging the car-buying public.
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Anonymous Coward, 12 Mar 2014 @ 12:40pm

Re: Re: Re: Contradiction
"There is also an additional purpose of maintaining jobs."

Oh, job creation. For that I have an equally useful solution. Why doesn't the government simply hire a bunch of people to dig up holes and fill them back up. The effect is essentially the same, money is being artificially directed to a nonsense activity.

Your argument is basically that these laws are a form of welfare. Well, we already have a welfare system so why do we need to create another welfare system? If your argument is that we need to adjust our existing welfare system somehow then that's a separate issue. But we don't need to make an alternative welfare system.
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Anonymous Coward, 12 Mar 2014 @ 12:47pm

Re: Cars versus Telcos
For one thing, telcos and electric provide a service, rather than a product. In other words, you don't buy an electric service for your house, you pay the electric company an ongoing fee in exchange for them continuing to provide power to your house. When you buy a car, you own the car; it's not like you get to drive a subsidized car for as long as you pay your monthly driving fee.

For another, telcos and electric require a large network to function. In the case of electric, there's really no way to make it work without stringing wires everywhere; telcos require wires/fiber/microwave towers/etc. There are huge sunk costs to build one of these networks, there are fairly high costs to maintain these networks, and you really only need one network per region. It would be utterly daft, for example, to have five separate (and non-connected) electric grids for five separate electric providers.

There's a fairly simple reason why people think that telcos should split their services. When a single company owns both the network and the service that is provided over the network, it's very easy for that company to prevent competition. A telco that controls the network can so very, very easily drive their competitors out of business. This is why most regions have a single option for phone/DSL, a single option for cable, and so on.

For cars, then, the only analagous network would be the road system. Roads are generally already in the public domain, they aren't built by the car manufacturers, and there's typically no restrictions as to what brand of car can drive on which road. Imagine if Chevy built the interstate highway system, then said that only Chevy trucks were allowed to drive on it for free, and charged Ford users high fees for driving, and used those fees to maintain the roads until Ford went out of business, and then stopped doing road maintenance entirely. That's pretty much the current situation with telcos, and it's why people are pissed.
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Anonymous Coward, 12 Mar 2014 @ 1:00pm

Re: Re: Cars versus Telcos
we have a system like that now. if any company wants to provide billing services, the consumer can switch to the new dialtone provider. the telco is required by regulation to provide fair and equal access to the line. In this way, the consumer has more choice than simply the regional telco/bell.

This is changing.

As verizon/att are ditching their POTS lines...the lines that truely provide a dial tone...they are replacing those lines with digital lines that they own. Meaning that the competition is dwindling.

Why? they are tired of providing a service (dial tone), and would rather provide a product (FIOS/uVerse), or Internet.

As far as large network to function - Google Fiber jumps right to the top of my mind. Also, there are more in California (name?). These startups & Google took some money and took some dark fiber and provided competition to the area...forcing the local incumbents to lower pricing.

the incumbents don't like the competition, and have lots of laws stating that one cannot lay a competitive network unless it is profitable within 2-3 years.

So, I would suggest that this is slightly similar...the incumbents don't like competition. Even when the barrier is money, the people succeed.

Please tell me Aereo and CBS/Comcast/TWC are entirely different also.
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Anonymous Coward, 12 Mar 2014 @ 1:06pm

NJ the anti-environment state...
I'm sure NJ welcomes with open arms any polluter as long as it fills the coffers. The state lives in the past and resists any attempt to better the environment. What a shame! The environment has always been low on political priorities when compared to turning a profit.
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Anonymous Coward, 12 Mar 2014 @ 1:13pm

Re: Cars versus Telcos
Sorry that analogy falls flat on it's face... where else can you buy a Tesla certainly not GM or Ford dealer. Also most dealerships are focused on one brand and do not offer the best competing products but you are forced to buy only their brand when shopping for a new car. A better analogy is buying direct from the farmer who actually grows the food. You always get a better deal and product. Same for Tesla... you get a better product and deal. I would love to buy direct from Ford or GM (or Honda or Toyota). But the the dealership cartel (which slaps on a hefty service fee) prevents me.
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Anonymous Coward, 12 Mar 2014 @ 1:22pm

"�a dealer who has invested a significant amount of capital in a community is more committed to taking care of that area�s customers.�"

So are you saying that laws should be passed based on the assumption that businesses care about their communities and will do what they think is right?

If you honestly think that a dealership cares about its community then you never worked sales before.
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Anonymous Coward, 12 Mar 2014 @ 1:35pm

Re: Cars versus Telcos
The problem with broadband is that there is a single entity that has a government monopoly over existing infrastructure and the ability to build new infrastructure and they are allowed to charge whatever prices they want. They are basically given an unregulated monopoly over the ability to provide a service.

Having a system where the government builds and maintains the infrastructure and allows providers to compete over connectivity allows for more competitive prices. Or we can have a legal system where anyone can build new infrastructure (though that maybe more expensive overall if these infrastructures are a natural monopoly). Or we can regulate it like a utility, like electricity, and allow one company to provide service but have the government set fair market prices (not monopolistic prices).

In the case of having a manufacturer selling a good the difference is that, ideally, the government doesn't pass laws to limit the competition of car sales. This way manufacturers can compete on price, service, features, and quality and the consumer can pay a fair market price for what they buy.
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Anonymous Coward, 12 Mar 2014 @ 2:09pm

Re: purchase from manufacturer
The Dealers argument is buy from us, we are local, don't buy from the manufacturer they might be in another state, or further away. But
The big but.

The internet has changed our society, A buyer can connect directly to the manufacturer, and the middle man becomes redudant.

sooner or later artificial monopolies collapse.

however there is systemic corruption influencing the law.
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anon, 12 Mar 2014 @ 2:24pm

Musk
When Elon Musk was talking about this in one of his speeches he was almost in tears, he could not understand why a new innovative car would be blocked from being sold anywhere. He did not understand why States would block the growth of one of the most popular car manufacturers in the last 100 years.

Maybe he should start talking about leaving the Us and investing in some other country that allow him to sell his cars to whoever wants to buy them from him.

I can understand the dealers not wanting to lose their corrupt business plan and not want to lose their piece of the pie, just as the Politicians don't want to lose their piece of the pie.Damn maybe Musk should just give all the politicians a car maybe then they would support him 100% and forget about the other bribes being offered, damn if anything maybe he should just pay them big wads of money and explaining to shareholders that bribes are a part of doing business in the US.

In all his efforts to improve the electric car and provide a car that as stated is the best car ever built i doubt he thought the government would be his biggest obstacle.

Maybe if he moved to Europe and took all the jobs he is creating and investment he is creating to Europe , maybe then he could stop manufacturing in the US , why do the manufacturing where you are not wanted, Hey maybe he could sell cars in the US(exporting from elsewhere) through their corrupt system and just increase the price to cover bribes to sell them, Let the American people bear the brunt of allowing their politicians to be bribed so easily.

I am sure a quick move of his new battery plant to The UK, maybe to a small city , where there is land i know would be given to him and where he would probably get much better deals and be closer to suppliers, well he just needs to contact me, i know exactly where he can build his battery plant , damn i have a place with all the infrastructure in place, roads electricity supply and most of that green electricity.

Give the US a scare let them know they could lose the many jobs and the taxes from manufacturing in the US.
Damn my local council would welcome him with open hearts if he was looking at creating even 5000 jobs which is at the low level of what can be expected.
If your reading this Elon know that it is time to maybe spend a little time investigating other places more business friendly than the US, where Bribery is not part of the process of doing business.
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ltlw0lf (profile), 12 Mar 2014 @ 2:48pm

Re: Re: Re:
I thought this was a national thing, but perhaps it's a state thing -- but in my state, this is overtly illegal.

It may have been illegal here, but since it was a contract thing, it probably would have been a civil matter. I never tried to fight it (until they told me the contract was dead anyway because the company was out of business.)

Auto dealerships will, however, lie about this and they do tell their customers that they have to use the dealership or approved shops.

I suspect it was very much a lie. I suspect if I had taken it to my mechanic (who is certified and runs his own garage,) they probably never would have known. But I wasn't willing to test it at the time.
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anon, 12 Mar 2014 @ 2:48pm

Re: Re: Contradiction
If anything i am sure Tesla would pay tax to the state that the purchaser resided in. This is not about state tax it is about the middleman paying bribes so they do not lose their piece of the pie.
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JDLambert (profile), 12 Mar 2014 @ 2:52pm

Re: Re: Re: Contradiction
I have read all the attempted rebuttals to my comments to this point in time, and they all fail to recognize my point, let alone address it.

The original article's focus is on political corruption and asserts that State-level voting to maintain new car dealership monopolies is directly correlated to corruption. That is what I am disputing, and no one has offered anything to correct my position.

My comments are not intended to support or oppose new car dealership monopolies, because that is not the issue I am addressing. "Rebuttals" that imagine I am arguing for such laws are meaningless because I have not made any such argument.

There are reasons why State-level politicians can vote for maintaining new car dealership monopolies that do not involve direct or indirect bribery, therefore the premise of the original article is incorrect.

Concerning a politician's character, it does not matter if the non-bribery reasons of the politicians are factually correct or incorrect if the politicians believe they are correct. If the politician votes for what they think is in the public's best interest, they are not corrupt, even if they are incorrect about what is in the public's best interest.
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Anonymous Coward, 12 Mar 2014 @ 4:00pm

Re: Re: Re: Re: Contradiction
This is an opinion blog, it is in the opinion of the blogger that these laws are a result of corruption. These laws are not in the public interest and all politicians will claim that their intent in passing any law is to serve the public interest regardless of the true intent. What do you expect them to claim? If you really believe everything a politician tells you then you are very naive. Yes, there is always the very slight possibility that the politicians that passed these corrupt laws did so with good intent but it's very unlikely. Intent is hard to prove absolutely and if we needed absolute proof before drawing any conclusions we would never be able to draw any conclusions. That's why this is an opinion blog.

Anti-competitive laws are not in the public interest and politicians do not pass them to serve the public interest. They know better and they aren't as dumb as they make themselves out to be. They pass them to serve the interests of those that want and lobby for these laws the most. These laws aren't 'honestly mistaken' they are corrupt.

" If the politician votes for what they think is in the public's best interest, they are not corrupt"

For a politician to pass such laws without even considering the corrupt nature of these laws is itself corrupt. One of the things that politicians should be expected to do when being elected is to at least make a minimal amount of mental effort to discern what a corrupt law is before passing it and if they can't even do that then their lack of effort itself is corrupt. They're not doing their job.

These laws are obviously corrupt, on the face of it, only a morally bankrupt person would not be able to discern this and if they can't even discern this then they should be replaced.

Your argument is almost akin to saying "murder is OK so long as the intent is good". No, that doesn't make murder OK and if someone is so morally bankrupt to think that it's OK then they should be in a psych ward or something. Likewise, when politicians are so incompetent as to not know that passing anti-competitive laws that obviously do nothing to serve the public interest and do a lot to harm it then that is indistinguishable from corruption and they shouldn't be politicians. We can unreasonably conclude that these politicians are completely incompetent and don't know any better, and yes this is technically a possibility, but I think a much more reasonable conclusion is that the politicians know that these are bad laws and are passing them anyways. and that's corruption.

"I have read all the attempted rebuttals to my comments to this point in time, and they all fail to recognize my point, let alone address it."

Not true. Your "local dealership laws allow them to collect more taxes" has been rebutted. They can just tax the manufacturer more. So that's a nonsense argument.

Your "job creation" argument has also been rebutted because it essentially results to passing these laws to serve as an alternate welfare system.
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JDLambert (profile), 12 Mar 2014 @ 4:20pm

Re: Re: Re: Re: Re: Contradiction
"I have read all the attempted rebuttals to my comments to this point in time, and they all fail to recognize my point, let alone address it."

Not true. Your "local dealership laws allow them to collect more taxes" has been rebutted. They can just tax the manufacturer more. So that's a nonsense argument.

Your "job creation" argument has also been rebutted because it essentially results to passing these laws to serve as an alternate welfare system.

Wrong. "Local dealership laws allow them to collect more taxes" and "job creation" are not my arguments. They are someone's arguments, but not mine. I do not assert them as true, I assert that others assert them as true.

At least you are the first to actually address my actual argument, but I disagree with your apparent definition of a corrupt politician. What you describe is what I would term an incompetent politician or possibly an uncaring politician. Here is the Wikipedia definition of political corruption: "Political corruption is the abuse of public power, office, or resources by elected government officials for personal gain, e.g. by extortion, soliciting or offering bribes. It can also take the form of office holders maintaining themselves in office by purchasing votes by enacting laws which use taxpayers' money."

I am arguing that a politician can vote, even foolishly, without doing it for personal gain.
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John Fenderson (profile), 12 Mar 2014 @ 4:27pm

Re: Re: purchase from manufacturer
"The Dealers argument is buy from us, we are local, don't buy from the manufacturer they might be in another state, or further away."

Which is a weak argument, since the dealerships buy the cars from the faraway manufacturer themselves. They're just arguing that they deserve to tack on a surcharge because they're local, even if they're terrible.

Good dealerships wouldn't have a problem competing with direct-from manufacturer sales because they would actually add value that would justify the surcharge.
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Anonymous Coward, 12 Mar 2014 @ 4:44pm

Re: Re: Re: Re: Re: Re: Contradiction
and I am reasonably arguing that what the politicians are doing here is not in good faith. Yes, there is the slight possibility it is but it's highly unlikely.
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Anonymous Coward, 12 Mar 2014 @ 5:21pm

Re: Re: Re: Re: Re: Re: Contradiction
""Local dealership laws allow them to collect more taxes" and "job creation" are not my arguments."

No?

"However, one of those two purposes is a substantial purpose, that of enriching the State coffers."

No, it does not serve these purposes. (more) Taxes can be collected from the manufacturer directly so this does nothing to serve the purpose of enriching state coffers.

"There is also an additional purpose of maintaining jobs."

So, you didn't make this argument?
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Anonymous Coward, 12 Mar 2014 @ 6:28pm

Re: Re: Re: Re: Contradiction
Also, because more people would be willing to buy an item at a cheaper price (demand curves are downward sloping) the government could collect more tax revenue due to the sale of more items.

So, to simplify, if 10 people are willing to buy cars at $100 and the government gets $5 per sale then the government would get only $50 in tax revenue. But if 11 people are willing to buy cars at $98 and the tax revenue is $6 per sale then the government gets $66 in tax revenue. More money both because they can charge more (while still saving the consumer money) and because they can collect taxes on more cars being sold.

So to say that tax revenue is a reason for governments to artificially maintain car dealerships is to lack any understanding of how economics works. This is something you learn in an introductory economics class and these concepts have been around for quite some time now.
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JDLambert (profile), 12 Mar 2014 @ 7:12pm

Re: Re: Re: Re: Re: Re: Re: Contradiction
""Local dealership laws allow them to collect more taxes" and "job creation" are not my arguments."

No?

"However, one of those two purposes is a substantial purpose, that of enriching the State coffers."

No, it does not serve these purposes. (more) Taxes can be collected from the manufacturer directly so this does nothing to serve the purpose of enriching state coffers.

"There is also an additional purpose of maintaining jobs."

So, you didn't make this argument?

You seem to confuse supporting statements with arguments, and you are treating two different statements as the same. I am trying to make one argument with several supporting statements. Again, my argument is that the premise of the original opinion is incorrect that if a State-level politician votes to support maintenance of new car dealership monopolies it must reflect corruption.

To make my case all I need to do is show that such a politician might have one or more motivation other than personal gain.

To show such possible alternative motivation I point out that, as it says in the original article, the established dealerships enrich the State coffers. That is not the same as claiming that the tax revenue from the existing dealerships would be "more" than it would be without such monopolies. That is not what I said. I have not said anything in these comments about what I believe regarding the economics or finances involved, because that is not what the title and main thrust of the original article is about. I have been addressing the corruption claim, not the economics.

To further show such possible alternative motivation I pointed out an issue that the original article did not address, that of maintaining jobs. It was meant as an a priori truth, not as a topic for disagreement. I think it should be obvious that the existing dealerships provide many jobs. That is a simple fact. I said nothing about what policies would provide the most jobs or best jobs or any other characteristic. I cited the fact that dealerships provide jobs as a possible alternative motivation for a politician that might support the dealership monopolies instead of being bribed for personal gain. My statement about jobs is not my argument, it is a simple statement in support of my argument regarding corruption.

Since you or some other Anonymous Coward keep returning to the economics aspects of the context, which I have not addressed at all, rather than focusing on the issue of corruption, I will now state a summary that I personally support maximum commercial competition because I believe that is how to best serve the entire public. Since that is not what the original article is about, I will not discuss the secondary issues of economics or finances any further in these comments.
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Carl Legg, 12 Mar 2014 @ 7:47pm

Re: Re: Re: Re: Beer and Cars
I think California is indeed a 3-tier beer state. A beer distributor is not allowed to sell to the public at retail, but as you say, there may be an exception for kegs.

http://www.cbbd.com/threetier_drives.html
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Dannie blaze (profile), 13 Mar 2014 @ 2:37am

Used Cars?
I'm guessing this bizarre regulation doesn't apply to used cars, right?

So, have Tesla set up in a state where they are allowed to actually sell their cars. Sell one to an employee for a dollar, then have aforementioned employee drive to a state with these idiotic laws and sell it as a 'used' car with a nudge and a wink.
Job done. Corrupt polticos left with egg on their face, equally corrupt dealerships left fuming. Tesla get to show everyone up. The public wins.
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Anonymous Coward, 13 Mar 2014 @ 5:52am

Re:
The thing about haggling to quote the memetic line "ain't nobody got time for that". Seriously it is a waste of time, needless uncertainty and unnecessary stress.
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Matt, 13 Mar 2014 @ 8:05am

Re:
The problem is everyone is mad that New Jersey didn't unilaterally change existing law to cater to the sexy tech company of the day. Auto manufacturers need to have franchised dealerships in New Jersey. Tesla was told this when they began operating here. They were also told that they needed to go to the state Legislature and either have the law changed or get a special exemption. They did neither and now claim they were "railroaded".
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Anonymous Coward, 13 Mar 2014 @ 10:47am

Re: Re: Re: Re: Re: Re: Re: Re: Contradiction
"You seem to confuse supporting statements with arguments"

You are merely arguing semantics here.

You made the argument that having these dealerships allows the government to collect more taxes and I simply proved it wrong by saying they can simply tax the manufacturer more. You then proceeded to use your first argument as a supporting statement to your second argument, that the motives could have been pure and so we can't conclude, with absolute certainty, that our politicians are corrupt. But your supporting statement to your second argument is wrong so your whole argument falls apart.

"To make my case all I need to do is show that such a politician might have one or more motivation other than personal gain."

But this is always the case. There is always the possibility that the politician was told by the archangel Gabriel that this is in the public interest and if the politician passes law X he will make us a fruitful country with great weather and excellent crops.

The possibility of an alternative explanation doesn't negate the fact that the most reasonable explanation is corruption. This country is corrupt to the core. We have anti-competitive laws all over the place not because politicians have any interest in the public interest but because they are corrupt and have no moral standards whatsoever. They know very well that the laws they are passing are not in the public interest but they don't care.
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Pragmatic, 14 Mar 2014 @ 6:52am

�We need to talk about the fact that we are for a free-market society that allows your effort and ingenuity to determine your success, not the cold, hard hand of the government.�

Yeah, about that... if you see how the "free market society" actually works up close and personal, you discover that the cold, hard hand is of the people running it.

Effort and ingenuity should determine your success, but at what? I don't like the way the party of Lincoln and Eisenhower is going.

That said, the way car dealerships have monopolized distribution of vehicles is absurd and there is no good reason for it.
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ml, 14 Mar 2014 @ 1:19pm

Re: Missing the point here...
and numerous studies have shown the average car price is 8.6-15% higher through the dealer franchise network than if sold via direct sales.
so who is really out for the consumer? not the dealer one iota.
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Cliff, 6 Apr 2014 @ 7:03am

Banning Tesla
Very interesting! I was wondering just this morning, why Tesla was being banned from direct sales. Your answer makes perfect sense. Why should ANY company be banned from direct sales of it's own products? Taxation can be the only possible answer and it needs to be stopped.
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linda, 18 Apr 2014 @ 10:52am

if i want to order a car directly from a manufacturer shouldn�t i have the freedom to do so? trying to spin this as protecting the consumer and lowering prices is a joke. the sole reason for passing this bill is via lobbying by the dealership community to put a quick end to the practice of going around the middle man that is them. as long as it�s legal it shouldn�t matter who i buy my car from or how its serviced. the government has NO business sticking their noses in the middle of this. imagine if the government said you can no longer buy anything on the internet unless you bought it through our state sanctioned 3 web portals? preposterous. http://www.cdl4sure.com/blog/dealership-vs-direct-sale-cars-in-new-jersey/
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AnImEfAn24 (profile), 22 May 2014 @ 10:04am

The one thing I don't understand why this is a big deal is why the car automobile industry is set up this way? When shopping for food, bikes, boats, electronis, toys, books, and aircraft, w as consumers have the option of buying from the manufacturer or from the middle man. So what is the deal? Not only does it better the competition but also convienece.
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Nop (profile), 21 Jul 2014 @ 8:22pm

Re: Re: Re:
It's amazing what you can haggle over, especially expensive stuff. I've haggled over purchasing an apartment, then over the agent fees when I sold it a couple of years later - I made a profit of around 25%. In both instances, I was presented the original prices as though they were handed down by god, & not negotiable. In general, you can haggle when the seller is getting a commission, or is the owner of the item or service being sold.
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CAguy, 10 Sep 2014 @ 1:44pm

Lets talk Auto Groups
An Auto Group is a company that owns by design the entire region via dealers and brands. Meaning your Toyota Dealer locally and your Toyota dealer 100 miles away have the same Boss regarding sales practices and yes even set Price for specific vehicles.

Meaning for example in CA where we cannot purchase new cars outside of CA and bring them home yes another law passed by Dealer network Lobbyists. You face in some cases a 500 mile region of CA where EVERY major Brand is owned by one or one of three Auto Groups based in LA.

Yes they do fix prices and they even dare I say it create certain model scarcity to drive up prices ie competition with the consumers. You cover 500 miles and park all your X models in a warehouse and only put one on the lot and you easily can push buyers into paying a higher perceived price due to its perceived scarcity.

Even with many models parked out on the lot it makes no difference if you call around given the Auto Group set the minimum price the dealers are allowed to sell that car for. Yes price fixing in a given region.

You can even get a sales rookie to say "Your Welcome to drive 500 miles out of our controlled region to look for a better deal" I've actually had a sales manager say those exact words to me.

So when is the CA DA's office going to look into price fixing by Dealer Networks? Probably never way too much money being filtered into the STATE Coffer via the Dealers.
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Anonymous Coward, 11 Dec 2017 @ 4:14pm

Re: Re: Re: Re: Re: Contradiction
This is how this really works,

The manufacturer tells the dealer it wants 92$ for the vehicles cause it can make that if the dealer is out of the question. The dealer agrees to the 92$ and knows it needs to stay in business.

The dealer corrupts the politicians to enact laws to keep it's self in business but the politician knows that it needs to charge 6$ in taxes to keep the expenses of the state in check.

You walk into the dealer thinking you will walk away with the car for 100$ but the dealer needs more than that to pay for the corruption and it's large profits. The dealer gets you to pay 110$ through high pressure tactics and intimidations because they are a monopoly in the area. The only other dealers they have to compete for business are the dealers in some other county or state with a set of other politicians.

The dealer does not like competition so they invest more in corruption and to limit and double tax vehicles from outside the jurisdiction.
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