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Author Topic: New Cars Must Have Middle-Man  (Read 2418 times)

Tinman57

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New Cars Must Have Middle-Man
« on: December 20, 2012, 08:45:53 PM »
[ Only in the U.S., where it's illegal to sell a car from the factory.....]
Quote
Tesla's sales model? It's simple: don't sell cars
Tesla Motors sells direct to consumers, which has prompted car dealerships to cry foul. Could the electric automaker change not just the cars we drive, but also how we buy them?

http://www.smartplan...e-dont-sell-cars/873

Renegade

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Re: New Cars Must Have Middle-Man
« Reply #1 on: December 20, 2012, 09:12:30 PM »
Quote
“Over the years, other manufacturers have tried operating their own retail networks, but have concluded that the franchised new-car dealer system is the best method of serving the public for its vehicle transportation needs,” he says.

Oh, consumers are best served paying more for cars to dealers?

Please tell that to Michael Dell.
Slow Down Music - Where I commit thought crimes...

Freedom is the right to be wrong, not the right to do wrong. - John Diefenbaker

TaoPhoenix

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Re: New Cars Must Have Middle-Man
« Reply #2 on: December 20, 2012, 11:53:11 PM »
I thought it was all about regulatory reasons and anti trust so factories couldn't undercut indy dealers then go all Standard Oil afterward.

4wd

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Re: New Cars Must Have Middle-Man
« Reply #3 on: December 21, 2012, 12:42:51 AM »
I thought it was all about regulatory reasons and anti trust so factories couldn't undercut indy dealers then go all Standard Oil afterward.

But if a factory has no independent dealers for its product, how can it undercut them?

Renegade

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Re: New Cars Must Have Middle-Man
« Reply #4 on: December 21, 2012, 01:26:55 AM »
I thought it was all about regulatory reasons and anti trust so factories couldn't undercut indy dealers then go all Standard Oil afterward.

But if a factory has no independent dealers for its product, how can it undercut them?

None of it really matters. It just shows that the US is a PS of legalism where neither sanity nor the rule of law has a place. It's more important to punish people and keep them servile and poor rather than allow people to freely interact with each other in peaceful, productive ways. The US has been openly hostile to small businesses for a while, with raids with tens of officers armed with fully automatic weapons for things like, oh, running a legal business, or just being guilty of existing. If anyone wants, I can dig out information about federal raids on businesses. Perhaps one of the better known companies is Gibson Guitars. Look it up. You'll want to vomit.
Slow Down Music - Where I commit thought crimes...

Freedom is the right to be wrong, not the right to do wrong. - John Diefenbaker

40hz

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Re: New Cars Must Have Middle-Man
« Reply #5 on: December 21, 2012, 08:55:48 AM »
@Ren - I think some of that may be just a little too simplistic...  :P ;D

I believe the franchise laws were introduced more to keep car manufacturers (who originally set up dealership arrangements in order to avoid the costs and administration needed to set up their own retail system) from screwing over their dealerships once they no longer needed them.

That and to avoid an inevitable price war (since dealers rather than manufacturers set the street prices) from erupting among the very small number of car brands. Something which would likely end with only one company holding a virtual monopoly on domestic automobile sales.

Don't forget, in an ideal (and therefor nonexistent :mrgreen:) free market capitalist economic system all businesses will eventually become "natural monopolies" since bringing about "efficiency" through a doctrine of "survival of the fittest" is the ultimate goal.

There are no easy solutions in economics. Consumers can get hurt just as much (or more) from a lack of regulation as they can from over-regulation. The best you can hope for is to minimize and equitably share the "hit" all parties feel.
 8)
« Last Edit: December 21, 2012, 09:02:01 AM by 40hz »

CWuestefeld

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Re: New Cars Must Have Middle-Man
« Reply #6 on: December 21, 2012, 12:14:42 PM »
This is what's known as "regulatory capture", and it's an inevitable result of a system that's based on the idea that State regulators are better able to decide how things should run than the private sector.

Consider this. Somebody sees that industry X is doing something that might be bad for the society (and maybe that person's even right). So the government creates and agency designed to keep an eye out against industry X being abusive.

But who is going to work for that agency? You aren't going to hire any Joe off the street, you need somebody who understands how the industry works. And where are you going to get that except from people who used to work for the industry?

The thing is, those people who used to work for industry X -- even if they're trying to be impartial and above corruption -- will naturally have a certain view of the importance of that industry, and are likely to have preconceived notions that it needs to operate in some manner close to the status quo.

Once you've gone through a few terms with such people running that agency, you'll find that the regulations that are being passed tend to ensure that business keeps getting done more or less the same way, because that's what they understand about the industry. And even more to the point (and even more likely), their view of the industry's importance will lead to creating of rent seeking regulations that fortify the power of the industry's leaders, protecting them from any kind of competition.

And like I said, it's pretty much inevitable. It's a natural consequence of the fact that for the regulators to do anything that makes sense at all, they need to have industry experience. And anybody with some experience is bound to have established ideas already, and they're bound to have a world view that considers the industry very important (even if they've left the industry because of disagreement with certain businesses within it).

The only way to prevent businesses from capturing the regulatory agencies like this is to strictly limit the power of those agencies, so that there's nothing there to be abused.

So pick your poison: a system in which industry X is largely free to do business however its customers will let it get away with; or a system in which the leaders of industry X are virtually guaranteed continued power, because the regulators ensure that nobody can shake them loose.

Skeptical? Look at the finance industry.

40hz

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Re: New Cars Must Have Middle-Man
« Reply #7 on: December 21, 2012, 12:45:02 PM »
^+1! w/CW :Thmbsup:

The financial and banking sector would agree 100% with either no regulation - or regulations drafted, interpreted, and enforced (voluntarily) by themselves or former industry insiders.

Oh wait...as CW just hinted, they pretty much already have that don't they? :-\

CWuestefeld

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Re: New Cars Must Have Middle-Man
« Reply #8 on: December 21, 2012, 01:54:22 PM »
in an ideal (and therefor nonexistent :mrgreen:) free market capitalist economic system all businesses will eventually become "natural monopolies"

That's not really true. In the short term it sure sees that way. But that's because our models don't have any way of foreseeing disruptive technologies and creative destruction.

I mean, 15-20 years ago, could you imagine that Microsoft would be virtually on the ropes, unable to cope with the onslaught of Google and Apple?  Or prior to that, that IBM would be at the mercy of Microsoft?

Kodak used to be the kings of the photo industry, from film to cameras; now they're bankrupt and selling off their patents to Samsung and others. GM and Chrysler went bankrupt despite all sorts of protective regulations from the government because they couldn't deal with superior products and production methods of foreign competitors. Lotus used to own the spreadsheet market, and WordPerfect similarly with word processors; when was the last time you used a product from either company? Looking much farther back, what about Bethlehem Steel or the railroads; they used to virtually run the country, right?

It turns out that over time the primary vendor will frequently take control of the market for a particular commodity, and competitors are all but locked out. That's true.

But they grow ossified, which prevents them from reacting (or even noticing, perhaps) when their inability or unwillingness to change their product (changing would itself make them vulnerable to competition!) leaves them with a product that nobody's much interested in. They're still kings of that market, but it's a market that nobody much cares about anymore.

Renegade

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Re: New Cars Must Have Middle-Man
« Reply #9 on: December 21, 2012, 07:05:27 PM »
The auto-dealer issue could easily have been solved through contracts. Passing laws was not necessary. Contract law was already in place to protect the dealers.
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Freedom is the right to be wrong, not the right to do wrong. - John Diefenbaker

TaoPhoenix

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Re: New Cars Must Have Middle-Man
« Reply #10 on: December 21, 2012, 07:09:46 PM »
The auto-dealer issue could easily have been solved through contracts. Passing laws was not necessary. Contract law was already in place to protect the dealers.

Renny you know better than that! Why would Contract Law have any force if we can't even follow our own Consitution?!   :o

Renegade

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Re: New Cars Must Have Middle-Man
« Reply #11 on: December 21, 2012, 07:14:22 PM »
The auto-dealer issue could easily have been solved through contracts. Passing laws was not necessary. Contract law was already in place to protect the dealers.

Renny you know better than that! Why would Contract Law have any force if we can't even follow our own Consitution?!   :o

You know, every time I think of the US Constitution, I'm jealous. It's by far the best one ever written, which makes its evisceration all that much sadder. :'(
Slow Down Music - Where I commit thought crimes...

Freedom is the right to be wrong, not the right to do wrong. - John Diefenbaker