Dealers don’t exist yet because someone asks for them, really but because of state franchise laws, which largely prevent carmakers from selling directly to consumers. Which means any threat to these laws makes dealers very hot under the neck. The latest evidence of this is a new lawsuit against Illinois, Rivian and Lucid.
The dress was presented Thursday on behalf of a group of dealers, the Illinois Automobile Dealers Association, and many other plaintiffs, primarily individual dealers located throughout the state.
The lawsuit seeks to prevent Rivian and Lucid from selling directly to consumers in Illinois, as traders argue that doing so is against the law. Tesla currently operates locations in Illinois under an agreement it made in 2019, which dealers agreed on because they thought Illinois franchise law would be more strictly enforced in the future. Thursday’s lawsuit is an attempt to stop any possibility of Lucid and Rivian, based in Normal, Illinois playing by Tesla’s rules.
“We welcome new manufacturers in Illinois, especially those who build innovative vehicles,” said David Sloan, president of the Chicago Automobile Trade Association, another member of the process. “Our franchised members already sell dozens of electric and hybrid vehicles. We ask that manufacturers sell them in Illinois according to state law. We do not demand that the operations in the State cease, only that they franchise a concessionaire ”.
And while the lawsuit filed by dealers offers many legal reasons why they should win (Illinois deal with Tesla seems odd), dealers also claim they do it on behalf of consumers, which is where I get it. they lose instantly.
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Through its press release:
The issues involved are the benefits to consumers and the Illinois economy generated by more than 700 distributors operating 2,300 franchises statewide. These benefits include:
- Consumer protection: Distributors maintain service centers with trained personnel to perform all withdrawal and warranty repairs, where distributors act as consumer advocates with manufacturers.
- Parts availability and service: Dealers maintain a parts inventory and provide timely service to consumers who depend on the daily use of their vehicles.
- Price competition: Consumers have many options, competition between distributors saves money for buyers. Direct sales from manufacturers result in a monopoly that offers no price advantage.
- Community Benefits: Franchise dealers are long-standing 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 selling gives rise to some kind of monopoly. No wonder Tesla is doing so well.
Anyway, for my money distributors would be better served by admitting who they are: textbook intermediaries. “We exist because at the moment we have the law by our side and we will fight to keep it that way. “ they could say. It wouldn’t be the most appealing argument, but at least it would be honest.
You can read the full complaint below.