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Monday, March 24, 2014

To the People of New Jersey

On Tuesday, under pressure from the New Jersey auto dealer lobby to protect its monopoly, the New Jersey Motor Vehicle Commission, composed of political appointees of the Governor, ended your right to purchase vehicles at a manufacturer store within the state. Governor Christie had promised that this would be put to a vote of the elected state legislature, which is the appropriate way to change the law. When it became apparent to the auto dealer lobby that this approach would not succeed, they cut a backroom deal with the Governor to circumvent the legislative process and pass a regulation that is fundamentally contrary to the intent of the law.

It is worth examining the history of these laws to understand why they exist, as the auto dealer franchise laws were originally put in place for a just cause and are now being twisted to an unjust purpose. Many decades ago, the incumbent auto manufacturers sold franchises to generate capital and gain a salesforce. The franchisees then further invested a lot of their money and time in building up the dealerships. That’s a fair deal and it should not be broken. However, some of the big auto companies later engaged in pressure tactics to get the franchisees to sell their dealerships back at a low price. The franchisees rightly sought protection from their state legislatures, which resulted in the laws on the books today throughout the United States (these laws are not present anywhere else in the world).

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2 comments:

Anonymous said...

If you think that buying from a dealer instead of direct is a better dealer then ask yourself this question, how many dealers are multi-millionaires, and who made them that way?

Answer: they are middle men that mark up the sale price of the product and you pay for it.
Have a problem with the product? The dealer will be the first to wash his hands of it and refer you to the manufacturer.
Time for this license to steal by dealers to end!

Anonymous said...

Tesla is a threat to all the other car companies, they are trying to circle the wagons and preserve the status quo.