Auto Dealers Try Charm: Why Tesla Direct Sales Hurt Buyers, They Say (Video)

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The battle between Tesla Motors, which sells its electric cars directly to buyers over the Internet, and the nation's auto dealers--who want to make that practice illegal--is now in its fifth year.

And for the very first time, the dealers' national trade organization has embarked on a charm offensive to make its case directly to the public.

With a website and various marketing activities, the National Auto Dealers Association (NADA) highlights the many benefits it suggests auto dealers offer to car buyers, their local communities, and the industry at large.

Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]

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The campaign, entitled Get The Facts, is intended to "inform the media, opinion leaders and consumers about the numerous benefits of America's franchised new-car dealer network."

While Tesla and its direct-sales model are never mentioned, the campaign echoes themes that dealer lobbyists made been making for years.

Some of those themes were articulated by Tim Jackson, president of the Colorado Automobile  Dealer Association, in an interview with Green Car Reports almost two years ago, in which he explained why it was in the car buyer's own interest that his group had gotten legislation passed in 2010 to prevent Tesla from opening any further stores in his state.

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The centerpiece of the NADA campaign is a friendly two-and-a-half-minute animated video (viewable below) called "A Good Deal For All." It asks the question, "Will dismantling the car-buying experience help consumers or hurt them?"

Tim W. Jackson, president, Colorado Automobile Dealers Association

Tim W. Jackson, president, Colorado Automobile Dealers Association

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The initiative appears to be aimed at women; the car buyer is referred to as "she" throughout the video. That may be a smart choice, as women are often the decision-makers on what car is ultimately bought by families that are headed by a man and a woman.

The cartoon dealerships are shown in a friendly green, while the automakers are represented by grim black factories with multiple smokestacks.

NADA's video makes several points about the benefits it believes local dealerships offer.

Among them are price competition, consumer safety during vehicle recalls, after-sale support and service even if a manufacturer pulls out of the market, local jobs and tax revenue, and simple convenience.

Competing on price

First, the NADA video notes that consumers benefit by having a wide array of pricing information available, and being able to shop among competing dealers to get the best price.

"Some want to let automakers bypass dealerships, eliminating competition," it warns.

"A distant corporate office indifferent to local markets would set prices--prices you can't negotiate," it says.

"Some call this 'factory-direct, implying that so-called 'middleman costs' would be eliminated. That's a myth that's just plain wrong."

It names costs like showrooms, lots, test drives, trade-ins, inspections, titling and registration, and the staff to do it all. (The profit earned by each local dealership is omitted.)

Automakers would have to absorb those costs--for which, the video suggests, buyers will still pay--but without the benefit of dealers trying to undercut each other on price.

Nonetheless, NADA itself indicates that car buyers only visit an average of 1.5 dealers today--against five dealers about a decade ago--due to the benefits of online research, as noted by Ward's Auto. Completing the transaction and buying the car itself, however, cannot be done online.

Parts involved in GM ignition switch recalls

Parts involved in GM ignition switch recalls

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Hurting consumer safety?

Then, there's safety--obviously a hot topic amidst the current GM ignition-switch recall fiasco.

"Bypassing dealerships would also hurt consumer safety," NADA suggests. "Since factories pay dealers to perform warranties and recall work, dealers are incentivized to service their customers' vehicles.

"Automakers don't have this incentive; for them, warranties and recalls mean more costs," it says.

That may be the most inflammatory point in the video. Automakers--from GM to Tesla, and the rest too--would likely take severe exception to the idea that it's only dealerships that are preventing them from killing or injuring their buyers.

Indeed, it's not at all clear that dealerships played any significant advocacy role in the decade-old GM ignition-switch safety debacle. Although if they did, that might well be a good example for NADA to use in support of its assertion.

Makers depart, dealers remain

Third, "even if manufacturers stop doing business, like Saab, Suzuki, or Fisker, dealers are still there for that work--giving extra accountability for the process."

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