Energized by the prospect of Tesla Motors Inc.'s factory-owned stores, state auto dealer-association chiefs plan to tout the benefits of the dealership franchise system to the media, lawmakers and the public this year.
On Dec. 31, a Massachusetts court ruled that the state dealers association and others did not have standing to sue to block Tesla's factory-owned store in that state.
Tim Jackson, vice president of the Colorado Automobile Dealers Association in Denver, asks, "If Tesla were to go out of business tomorrow," and the factory-owned stores closed, "where will the local customer be served?" He has scheduled a series of presentations to Rotary clubs and other organizations across Colorado to spread the word.
Tesla CEO "Elon Musk and other new-age entrepreneurs are trying to discredit the franchise model," says Jim Appleton, president of the New Jersey Coalition of Automotive Retailers in Trenton, N.J.. "They are trying to do that by making it appear dealers are politically and economically too powerful."
Appleton says the franchise system benefits consumers and communities. The system, he says, provides guaranteed warranty work to customers and handles product recalls in the interest of public safety, while dealers provide jobs, community charity support and a strong local tax base.
"There's a consensus and a growing recognition among [state association heads] and others who are involved in advocacy for dealers that we have not done an adequate job articulating the economic, consumer and public-safety benefits of the franchise system," says Appleton. "Collectively, we've all resolved to do more."
He adds: "I have no reservations whatsoever going toe-to-toe in the court of public opinion" against those "who want to argue this system has outlived its value and usefulness to the marketplace."
Jim Fleming, president of the Connecticut Automotive Retailers Association in Hartford, Conn., says the state's 265 dealerships combined have about $9 billion in annual sales.
"That's nearly 14 percent of the state sales tax," he says. "We are small businesses, but we are big business when you put us together."