Dealers save $500 for car buyers, lobby group claims; 'false,' says Politifact


George Matick Chevrolet, Redford, Michigan

George Matick Chevrolet, Redford, Michigan

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Tesla Motors' direct-sales model for electric cars has rankled franchised auto dealers.

Dealer associations have attempted to block Tesla direct sales in multiple states, and have undertaken public-relations campaigns extolling the virtues of the franchise model.

One of the latest claims made by franchised dealers is that the traditional model saves consumers an average of $500 per car.

DON'T MISS: What it took to buy an electric car in Texas: the good, the bad, and the ugly

But popular fact-checking website Politifact investigated the $500 savings claim, and rated it "false."

The claim was made in a tweet by the Texas Automobile Dealers Association (TADA), in response to a tweet from the account @teslaintexas alleging that "auto dealers profit off the current system."

The Texas Automobile Dealers Association has fought efforts by Tesla to legalize direct sales in the Lone Star State, although Tesla maintains "galleries" there that display cars, but don't facilitate sales.

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

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

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Current Texas franchise laws prohibit direct sales, and efforts by Tesla and supporters to change the laws during the 2013 and 2015 Texas legislative sessions failed (the Texas legislature meets every other year).

Politifact determined that the $500 savings claim touted by TADA was taken from the abstract of a March 2015 policy paper published by the Washington, D.C.-based Phoenix Center for Advanced Legal & Economic Public Policy Studies.

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Using the Honda Accord as an example, the abstract stated that "increasing the distance between Honda dealerships by 30 miles raises the price paid by consumers by about $500."

Rather than comparing franchised dealerships and direct sales, the paper actually focused on the level of competition between franchised dealerships selling the same car brands.

Tesla Store - Portland OR

Tesla Store - Portland OR

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The $500 figure was referenced as the amount consumers saved when there were multiple dealerships in close proximity.

Because Tesla isn't allowed to sell cars in Texas, there is no real way to make a comparison between savings for direct sales and franchised dealerships in the state right now, experts consulted by Politifact said.

MORE: Tesla Vs Franchised Car Dealers In Texas, Arizona: Battles Continue (Feb 2015)

TADA president Bill Wolters stood by the savings claim, though, arguing that franchised dealers are more likely to build showrooms in a wider range of areas than manufacturers selling directly to customers would.

But because Tesla does not sell cars directly to customers in Texas, it is hard to gauge which model is actually better for consumers.

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