By on November 7, 2014

AutoNation CEO Mike Jackson

Though the anti-Tesla legislation recently signed into Michigan law is only a clarification of a previous anti-direct sales law, AutoNation CEO Mike Jackson finds the whole thing as “unnecessary protectionism.”

The Detroit News reports Jackson said the bill couldn’t protect Tesla, as the EV automaker had no franchises that needed protection, further proclaiming CEO Elon Musk could sell his cars as he saw fit:

If Elon Musk wants to make a mistake and go with an inefficient distribution system, that’s his right as an American. Let him do it. I’m not afraid… my phone will ring someday when he really wants to sell some cars.

On the other hand, Jackson — whose franchise network consists of over 220 stores nationwide and 500,000 units sold annually — took Tesla to task for lobbying against “government intervention… and protectionism,” as the automaker’s foundation was built upon state and federal incentives all around.

Other targets in his meeting with the Detroit Economic Club Thursday included fracking, the Obama administration, and the two-pronged recall parade led by General Motors and supplier Takata. Regarding the recalls, Jackson said more government intervention is needed to better handle current and future actions.

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21 Comments on “Jackson: Michigan’s Anti-Tesla Legislation “Unnecessary Protectionism”...”


  • avatar
    STRATOS

    Why should all those states requiring franchise dealers should suddenly change their laws to accommodate Elon Musk? Then they would have to do the same for the others.

    • 0 avatar
      danio3834

      Because everyone loves fixed pricing, of course.

    • 0 avatar
      healthy skeptic

      >> Why should all those states requiring franchise dealers should suddenly change their laws to accommodate Elon Musk? Then they would have to do the same for the others.

      Tesla is getting “accommodated” by certain states because, unlike other manufacturers, they don’t have existing franchises who might get hurt by the competition of direct car sales.

      In some states, the franchise laws have been loosened a bit to recognize this aspect. In Massachusetts, a court ruling favored it. In other states, such as the recent law change in Michigan, this was already the case by default, so the laws have been tightened to prevent even manufacturers with no current franchises from selling direct.

      Personally, I think all manufacturers should be allowed to sell directly, immediately and without restriction, across the entire U.S. But that’s not going to happen soon in the real world (sigh). In the meantime, if Tesla is the only one allowed to do so for the time being, and it cracks the door open for others to follow, I’m all for it.

      • 0 avatar
        ect

        I agree with your sentiment, and your assessment that it’s not going to come about.

        Car dealers make a lot of money, in part because of state franchise laws. They have consistently shown that they are willing to spend significant sums to “persuade” state legislators to keep the OEMs out of their market.

    • 0 avatar
      stuki

      Because “requiring” and “free country” are antithetical. Musk’s just a particularly media darling Canary.

    • 0 avatar
      Vulpine

      Most of those states do NOT have laws requiring franchise dealers, only laws that prevent the automakers from having private dealerships IN COMPETITION with franchise dealerships of their brand. This is how Tesla has managed to establish itself in many states AND is why the dealers are complaining so loudly now–because it might–only might–inspire the manufacturers to revoke their franchises.

    • 0 avatar
      axual

      Dealers are afraid if they allow this, that their manufacturers will do the same. It’s bad law and goes against the free market. If dealers are afraid of competition, then they need to innovate … starting with educating their sales reps on new products. It’s pretty poor when I can walk off the street and teach sales reps about their own vehicles. The dealership model is broken. They don’t want to fix it, so protectionism is the only way last century businesses know how to compete; the compete by preventing others from competing using government.

  • avatar
    healthy skeptic

    As much as I resent these protectionist laws for car dealers, I’ll at least give Jackson credit for not being a hypocrite. Most car dealer advocates make the following two arguments simultaneously.

    A) The current franchise system is the greatest way to distribute cars, hands down, case closed, and any effort by manufacturers to sell direct would surely crash and burn in the free market.

    B) If manufacturers were allowed to sell direct, the current franchise system would collapse like a house of cards, as there’s no way franchises could compete. Therefore, we need protectionist laws!

    Pick one, dealers, ’cause you can’t have both. Jackson picked A. NADA and others are dithering hypocrites.

    I think the real situation is a modified B. Dealers would still be around in the event of unrestricted direct sales by manufacturers, but their share of new car sales would drop substantially from the 99% that it is now, perhaps along with profit margins. Thus the fierce resistance by dealers.

    • 0 avatar
      Dr. Kenneth Noisewater

      Indeed. If the argument for the middleman is one of utility for OEMs (who don’t need to pay for real estate, retail employment, etc., and act to help manufacturers pump up their production figures and accounting profits by carrying inventory) and consumers (“savings” off MSRP), let them prove that utility in the free market and send Tesla back to the drawing board while licking its wounds. If that business method is inherently superior then it needs no special protections.

    • 0 avatar
      Pch101

      Franchises make it cheaper and easier for OEMs to focus on the business of making cars. The OEMs got into the franchising business for a reason.

      At the same time, the OEM has far more resources than any dealer, plus it controls the inventory. The small fish has good reason to fear that the big fish would swallow it if they begin to compete against each other.

      So both points are correct. They are not at all contradictory.

      • 0 avatar
        wolfinator

        Everyone always brings up Apple, but…

        Kind of like how Apple deliberately destroyed a lot of independent retailers? First, they forced everyone to sign special agreements on pricing (“prices will not go below X, regardless of wholesale”). Then they rolled out their own stores, killing off most independents who could now not compete on price, inventory, warranty service, or appearance (as Apple had lots of capital to put into stores).

        Not sure how I feel about that. Consumers definitely have worse pricing than they used to. But they also seem utterly unaware of that, and really happy with the shiny stores and color-coded employees.

        • 0 avatar
          Vulpine

          I would imagine that you haven’t had anything to do with Apple’s products at any time over the last 35 years, have you? I had to put up with those independent resellers pretty much from day one and while some were great stores, others were abysmal. Worse, when you would try to get warranty work done on an Apple computer, said ‘independent reseller’ would charge a diagnostics fee up front–despite the fact that Apple clearly stated in their sale literature AND in their contracts with these ‘independent resellers’ that there would be NO up front fees of any kind–especially under warranty. I experienced this issue first hand with THREE different ‘independent resellers’ in my area which were not connected in any other way and complained to Apple–who immediately cross-shipped me a new machine to replace the defective one at no cost to me.

          Apple as a company earned my trust over 35 years of being an Apple customer and to be quite blunt their modern computers are even now less expensive by price than they were 20 years ago while retaining a high standard of reliability over any other brand I have used (I am a private computer consultant who works primarily on Windows machines.) Their pricing is NOT worse than it used to be and their service and reliability are far superior to any other brand’s.

          Yes, I do agree that Apple’s computers are more expensive than the generic Windows machines–but you’re paying for far more than JUST a computer or gadget when you buy an Apple; you get service and support unmatched by any other brand. Apple has EARNED it’s place at the top of the list of Most Valuable Companies.

          Tesla intends to join Apple up there.

          • 0 avatar
            highdesertcat

            Vulpine, I and my family own quite a few Apple products and Apple as a company nor as a product are any better or more capable than that of their competitors. Each have their fans.

            For instance, we own and use both an Apple iPhone and a Samsung Galaxy S4. They’re about the same capability, nothing that sets each apart from the other.

            We also own an iPad, iPad Air, a Samsung Tablet and a Google Notebook, and the only thing noteworthy is that the iPad Air is thinner and lighter than the others.

            I could go on but my point is that exclusivity, like beauty, is all in the eye of the beholder.

            One of the irritants with Apple is that you have to marry the company and swap spit with them by opening up an account in order to do anything at the store, even for freebies. With iOS 8.2 Apple did drop the requirement for a credit card but you still have to give away your personal info which can be intrusive if you’re a business (which my wife and her family are).

            If Tesla wants to aspire to be where Apple is, I say that’s cool, but it doesn’t make me want to rush out and buy a Tesla anything.

  • avatar
    Volt 230

    I always liked this guy, no-nonsense executive.

  • avatar
    Big Al from Oz

    Retailing isn’t much different than production. Throughout history changes have been made to accommodate more efficient methods to maximise current technologies.

    The people who complain about competition are the uncompetitive. They now are the lowest common denominator in the bigger picture. They fear for their futures.

    I’m totally am against protectionist measures as they work against the consumer and progress.

    If a business makes a poor decision and will lose money. That’s what business is all about. The strongest survive. This society we live in now propping up the ineffective and weak will be our downfall.

    The simple solution to this is allow freedom of business. A free market will find the best method for production, distribution and sale of products most competitively.

    • 0 avatar
      highdesertcat

      Although I am not a fan of EVs, PEVs and Hybrids for myself, I would like to see more and better avenues for selling these vehicles to the buying public that actually wants them.

      I, too, believe in that the strongest will survive and the market will shake itself out.

      But I can also see where the dealer-establishment will fight this tooth and nail. Personally, I would like to see Elon Musk be empowered to sell directly to the public.

  • avatar
    jimbob457

    Whatever its merits or demerits, there is no point on spending political money to block Tesla. Fracking and the associated cheap oil have, for the time being, killed the electric car.

    • 0 avatar
      mcs

      >> Fracking and the associated cheap oil have, for the time being, killed the electric car.

      The EV isn’t just about economy or the environment. The P85D, McLaren P1, and Porsche 918 use electric power to out-accelerate ICE cars. For luxury, you can’t beat the torque, quiet, and smoothness of an electric – especially compared to the turbo 4 cylinders the luxury manufacturers are pushing these days. How many Tesla buyers do you think really care about the price of gasoline? Leaf buyers maybe, but I doubt the price of gas effects individuals in the Tesla’s income bracket.

  • avatar
    VoGo

    The price of oil may soon become irrelevant. Here’s why: the price of oil, like any commodity, is bound by expectations of demand and supply. Right now, people expect low demand because the US is one of the few major firms in a solid recovery – economies in Europe and much of Asia are pretty flat. At the same time, fracking and Libyan oil, now online after the Arab Spring, are increasing supply.

    But there are other rules that describe pricing. We’ve all heard of Moore’s law – that the capability of things like computer ships double every 18 months. What is exciting about energy today is that solar cells are now following Moore-s law, meaning that in a couple of years, solar will be the cheapest form of energy. That is great news for just about everyone regardless of their political stripe. Except coal plant owners.

    The question that is outstanding is whether people like Musk can get batteries to follow Moore’s law. The jury is still out, but there are hopeful signs that all the R&D into batteries is starting to really pay off.

    Even Derek might agree that this would be a ‘game changer.’

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