Dealers still don’t exist because someone asks, really, but because of state franchise laws, which largely prevent car manufacturers from selling directly to consumers. Which means that any threat from those laws will get dealers very, very hot under the collar. The latest evidence of that is a new lawsuit against Illinois, Rivian and Lucid.
The suit was submitted on Thursday on behalf of a dealer group, the Illinois Automobile Dealers Association, and numerous other plaintiffs, primarily individual dealers in the state.
The suit aims to prevent Rivian and Lucid from selling directly to consumers in Illinoisas the dealers claim this is against the law. Tesla currently operates locations in Illinois under an agreement it entered into in 2019, which the dealers agreed to because they believed the Illinois franchise law would be more strictly enforced in the future. Thursday’s color is an attempt to stop any possibility of Lucid and Rivian, who is based in Normal, Illinois play by Tesla rules.
“We welcome new manufacturers to Illinois, especially those building innovative vehicles,” said David Sloan, president of the Chicago Automobile Trade Association, another party in the suit. “Our franchise members already sell dozens of electric and hybrid vehicles. We ask manufacturers to sell them in Illinois under state law. We are not requiring them to cease operations in the state, just that they franchise a dealer. “
And while the civil complaint filed by the dealers offers plenty of legal reasons why they should win – Illinois’s agreement with Tesla does seem odd indeed – the dealers are also claiming to be doing this on behalf of consumers, which is where they’re talking to me lose a beat. .
G / O Media can receive a commission
Via their press release:
It’s about the consumer and economic benefits of Illinois generated by more than 700 dealers operating 2,300 franchises in the state. Those benefits include:
- Consumer Protection: Dealers maintain service centers with trained personnel to perform all recall and warranty repairs, with the dealers acting as consumer advocates to the manufacturers.
- Parts and Service Availability: Dealers maintain a parts inventory and provide timely service to consumers who depend on the day-to-day use of their vehicles.
- Price Competition: Consumers have many choices, with competition between dealers saving buyers money. Direct sales from manufacturers result in a monopoly that does not provide a price advantage.
- Community Benefits: The franchise dealers are long-established local businesses that generate millions of dollars in revenue and economic development, employ 42,000 people statewide, and support many local causes and events.
All of these arguments are pretty silly, but my favorite is theirs claiming direct sales results in a kind of monopoly. No wonder Tesla is doing so well.
Anyway, for my money dealers are better off admitting who they are: textbook intermediaries.We exist because we have the law on our side for now and we will fight to keep it that way, “ they might say. It wouldn’t be the most appealing argument, but at least it would be fair.
Below you can read the full complaint.