For most of the world, it’s simply difficult to imagine that in some states in the US, Tesla is not allowed to sell its vehicles directly to customers because of laws banning automakers from operating dealerships – even automakers that have never been part of the third-party franchise dealership model before.
But I think this video of Don Hall, president of the Virginia Automobile Dealers Association (VADA), will help people understand what Tesla is up against in those states. A video of Hall addressing the members of his dealership association following Tesla’s request for a dealership license is a great example of the mentality of the car dealership when it comes to their monopoly on selling vehicles.
First of all, let’s remember that the direct sales laws were first enacted to protect franchise dealerships from their own automakers trying to set up competing stores in their markets after the franchise dealerships invested to promote and establish a retail presence for those same automakers.
For the most part, that makes sense, but now those same dealers, and sometimes even other automakers, are using those same laws to instead block new automakers from selling cars directly to customers, even though they never had any franchise deals and therefore, they are not unfairly competing with any franchisees.
What the dealerships are doing is protecting their monopoly on car sales and it was never clearer than in this unlisted Youtube video recently uncovered by the Washington Post’s Virginia desk. Here are some quotes from the video with a wartime-like message setting:
“For the last 29 years, I have fought as a gladiator to protect the rights of Virginia auto dealers and their franchise system … This system is under attack by the likes of Tesla and many others out there who believe the franchise system is a dinosaur and no longer works. . . . Let’s all strap on whatever it takes to win and let’s win this fight to protect the franchise system.”
Of course, Hall’s speech raises the question that if the franchise dealership model is not a “dinosaur” and really works, then why would it be a problem to compete with Tesla’s direct sales model? If their system really works, VADA wouldn’t have a problem letting Tesla get its dealership license and compete with its dealership members.
Here’s VADA’s video in full:
Tesla’s application for a second dealership license in the state of Virgina is still under review by the DMV. A decision is expected next month, but either way, it looks like it will go to court since neither Tesla or VADA seem to be willing to back down. Tesla is currently fighting in courts over direct sales in several states, including Utah and Michigan.