Tesla’s sales model, with factory-run outlets selling directly to customers, is coming under fire while dealer groups such as NADA are citing the apparent illegality of factory-owned sales outlets.

Dealers are worried that Tesla’s method, which allows for online reservations of vehicles in addition to the shopping mall showrooms, will marginalize their way of selling vehicles. This fear was articulated by Bob O’Koniweski, executive VP of the Massachusetts State Automobile Dealers Association, who told Automotive News

“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?…It’s extremely problematic.”

Tesla has apparently bypassed existing dealer franchise laws by offering online reservations if sales cannot be conducted on site. Dealers have asked four states to conduct investigations into the legality of Tesla’s sales model. Meanwhile, the chairman of NADA issued this rather ominous statement

“Tesla may not yet recognize the value of the independent, franchised dealer system, but as its sales increase, NADA is confident it will re-examine its business model…Other companies such as Daewoo did. All companies should be complying with existing laws in the same way dealers are required to.”

Tesla has denied that it is trying to reboot the existing sales model, with George Blankenship, their VP of Sales, telling AN ”That’s the last thing on our agenda.”

Said Jonathan Banks, senior analyst with the National Automobile Dealers Association (NADA) Used Car Guide:

“The trend of rising prices for used cars will reverse course in June because of declining gasoline prices combined with a normal seasonal slowdown in consumer demand for used cars.”

Nada figures that  used-car values will decline by about 2 percent, while truck values will fall by about 1 percent. Prices for used compact and midsize cars will fall by an average of 2.4 percent, Nada predicts.

Five years ago, car dealers throughout the country were hit hard by carmageddon. Now, they are about to get hit again where it really hurts: In the workshop, where the real money is being made. The auto sales collapse of 2008 winds its way through the years like a diet through an anaconda. While showrooms were empty five years ago, now it’s the service bays that are deserted.

Says a J.D. Power and Associates study quoted by Automotive News [sub]:

“The number of vehicles in operation that are 5 years old and newer will dip to 63 million this year, forecast to be the low point of the industry’s downturn and recovery, according to J.D. Power and Associates. Late-model vehicles traditionally represent the sweet spot for repair and maintenance work for dealership service departments.”

Why will this be more painful than empty showrooms? In 2011, the service and parts business represented 13 percent of overall sales for the typical dealership but contributed 72 percent of dealership operating profits, according to the National Automobile Dealers Association (NADA). Used car sales often contribute one third of the profits, new car sales often are loss leaders.

Dealer workshops would have no problem surviving the trough if they would have held on to owners of older vehicles. The servicing of older vehicles can be the most profitable part of the business, new vehicles on the other hand need less and less service. However, owners of older vehicles typically give dealer workshops wide berth.

If your car is out of warranty and still being serviced by a dealer, watch for serious upselling. They need your money more than ever.

Already, deals on new cars are not as common as a few months ago when carmakers splurged with incentives. Now, the National Automobile Dealers Association (NADA) Used Car Guide predicts that trade-in values on used cars will go all acme on you within the next few weeks.  Said Jonathan Banks, executive automotive analyst at NADA:

“The most advantageous time this year to trade in a used car will be April through May because values will be higher. Last year, used vehicle prices remained high through July because of a new-vehicle shortage stemming from the natural disasters in Japan, which led to a spike in demand for used vehicles. This year, used-vehicle prices will return to a more normal seasonal pattern.”

On the other hand, if you are not eager to sell, don’t. Keep in mind that NADA is the club of automobile dealers, and they want you to buy new even more than sell used. Because of carmageddon, supply of clean cars under five years is low and will remain low for a while.

Ford brought two pieces of good news for their dealers at this year’s NADA meeting: The dealers will get more cars. And they will get more cash. But wait, there will be less …

Ford will increase its production targeted at its U.S. dealers by 13 percent this quarter. If the market wants more, Ford will make more. They will even lay on more shifts, says the Wall Street Journal.

What usually makes dealers much happier: Ford will dole out extra spiffs. Ford dealers will get $50 for every vehicle they order with Sync and $75 if they order cars equipped with Sync and MyFord Touch. This “technology allowance” is meant to reimburse the dealers for the extra time it takes to teach customers how to use the in-vehicle technology.

Dealers had been complaining that the new technology eats up their precious time. Automotive News [sub] wrote recently that “delivering a new vehicle used to take a dealer 45 minutes. It now could take up to two hours for some. That’s productivity time lost by the salesperson who could be making another sale instead of teaching a customer three different ways to turn on or adjust the air conditioning.”

So that was the good news. “Later Sunday, Czubay and Jim Farley, Ford’s global marketing chief, told Lincoln dealers that Ford wants to reduce the retail network from 434 showrooms to about 325 in the country’s 130 largest markets,” writes the Freep. There had to be a catch.