Haven’t we heard this one before? An auto manufacturer opens a dealership owned by them (and not a franchise) and gets called out by various dealer organizations and state governments for violating franchise laws. Tesla is now coming under fire for that very reason.
Automotive News is reporting that the manufacturer-owned stores that Tesla has been opening up across the country are in a direct violation of various states’ franchise laws. Some states completely prohibit dealerships run by automakers, while others – like California – require a certain amount of distance between factory-owned and dealer-owned stores.
Dealer groups are worried that “If a manufacturer sees that Tesla is successful with this kind of business model, who’s to say they don’t break out their own EV product lines and create a separate system that bypasses dealers?” Bob O’Koniewski, the executive vice president of the Massachusetts State Automobile Dealers Association, told AN.
Despite saying that it does not want to revolutionize the car-buying experience, Tesla has taken a different tack from other automakers. The upstart automaker hired George Blankenship as the VP of sales to head up the retail experience – Blankenship previously created the look and feel of Apple’s retail stores and has given Tesla’s in-mall retail shops a similar feel. Litigation against Tesla is currently being pursued in Oregon, Massachusetts, and New York; however, some states (such as Texas) has no laws regulation car dealership ownership.
Chrysler faced the same kind of scrutiny that Tesla is now facing when it opened a factory-owned dealership in California last year. After a legal battle, Chrysler acquiesced and sold the retail store to a local dealer.
Source: Automotive News (Subscription required)