Status of NJ's New Car and Truck Industry Motor Vehicle Franchise Model Direct Sales Model Consumers have an advocate against OEMs on safety and recall issues YES NO Consumers have an immediate partner to make OEMs accountable YES NO Consumers benefit when dealers compete YES NO Dealers compete on pricing for sales & service YES NO Consumers' purchases align with local jobs and local interests YES NO Employ 36,000+ New Jersey residents YES NO Generate $36 billion in sales YES NO Represent over 500 local rooftops YES NO Large network of factory-authorized sales and service points YES NO Support local charities, internships, and employment programs YES NO Complete solution for consumer's needs (sales, trade-ins, on-the-spot financing, large parts inventory, complete maintenance, warranty and recall repair) YES NO Assume advertising, building and personnel costs YES YES Tesla Claims Reality Independent Dealer Locations can only be achieved in direct sales. In a franchise system, Tesla could determine locations. Large inventories are unsuitable for Tesla. In a franchise system, Tesla could dictate inventory sizes. Only direct sales allow for high-volume, fast-paced sales. In a franchise system, Tesla could mandate the training and staff for its sales standard. Franchised dealers would not know how to profit from a Tesla, because they profit from ancillary services (trades, financing, service contracts, parts, services). In a franchise system, franchise candidates determine the risk of investing, but would look to Tesla to provide the franchise proposition. Franchised dealers selling EVs conflict with ICE vehicles. In a franchise system, Tesla could establish exclusive dealerships. Franchised dealers rely on advertising. In a franchise system, Tesla could continue to rely on its brand recognition or engage in conventional advertising as competition increases. Franchised dealers profit from mark-ups. In a franchise system, Tesla dealers would want to succeed! Currently, Tesla’s mark-ups go directly to Tesla. A CRITICAL FIGHT WORTH HAVING Despite franchised car and truck dealers’ role in the sale of the full spectrum of clean vehicles (EVs, HEVs, and PEVs), an effort has been undertaken to marginalize their contribution. Some EV-only manufacturers have been knocking on legislators’ doors across the country, asking them to change state laws to suit their direct-sales business model. In the last year, they have lobbied legislatures across the country to legalize the direct sale model for EVs. Encouraged by the prospect of a sales model that will increase their shareholders’ profits, some legacy original equipment manufacturers (OEMs) are analyzing the prospects Source: MK&A, 2017 of similar transitions for themselves. This is a critical fight worth having, and dealerships must remain engaged to ensure any legislation that would undercut their franchise(s) is defeated. New Jersey already authorizes direct selling for EVs, but only for Tesla. In 2015, New Jersey enacted special legislation that allowed an EV-only manufacturer, licensed by the New Jersey Motor Vehicle Commission (NJMVC) on or prior to January 1, 2014, to sell directly to consumers. This legislation is only applicable to Tesla since they were the only EV-only manufacturer licensed by the NJMVC at the time. Tesla went on to seek similar special legislation from other states. But Tesla's claims for direct sales are based on fiction. WRONGLY CONFLATING continued on page 20 The direct sale model is not a requirement for EVs. It is, however, harmful to New Jersey’s consumers and economy. Put simply, no components in an EV require that the car be sold using the direct sale model. It is a choice made by OEMs. All EVs can currently be sold throughout the country under the laws that exist today in every state. Some OEMs want the laws to change to favor their profit-centered choice despite the negative consequences to consumers and local economies. The direct sales model does not favor the consumer. In contrast, the franchise model is consumer-centric, as you can see in the following graphic: N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 19 N J C A R . O R G new jersey auto retailer
RkJQdWJsaXNoZXIy MTU2MTQwNg==