California Car Dealers Go Crying To DMV About Tesla's Website

from the (no)-sympathy-for-the-devil dept

Auto dealers have been dealing with disruption just about as well as any other legacy industry has. Instead of attempting to compete, dealers have chosen to respond to Tesla’s refusal to cut them in on the middleman action by throwing up as many regulatory roadblocks as possible. Sadly, this antagonistic attitude toward both their competition and the car-buying public somehow makes sense to them, and they seem very willing to bury both the upstart and their last remaining shreds of goodwill at the same time.

In many states, the usual course of action for car dealers is to lobby for protective legislation. Many states have already hooked up car dealers and made it illegal for manufacturers to sell vehicles directly to the public. The remaining states that haven’t are being pressured to follow suit.

However, Tesla’s direct sales are completely legal in California. Rather than mount an attempt to push protectionist legislation through, the auto dealers have decided instead to attack Tesla’s direct sales website, accusing the company of deceptive marketing and pricing. (via Slashdot)

The association’s letter to the California DMV (PDF) complains Tesla violates several sections of various Federal and California codes and regulations:

“Tesla fails to provide required information and shatters the notion of comparison finance shopping by including the potential availability of incentives, gas savings, and tax savings into final payment quotes for prospective customers. This scheme is most blatantly demonstrated by the general ―$580 per month after gas savings advertisement found on several of its internal web pages.”

It also notes that Tesla’s quoted new-car prices net out a $7,500 Federal income-tax credit for purchase of a plug-in electric car. According to the California dealers, just 20 percent of all car shoppers qualify for that credit–and the group attributes that statistic to the Congressional Budget Office.

The complaint also attacked the way Tesla calculates resale value of its cars, the financial value of savings in commute time by using HOV lanes, and the methods used to calculate the savings of powering a car with electricity versus gasoline.

The letter (which runs nine pages alone and includes 11 pages of exhibits) also takes issue with Tesla’s widely criticized “cost calculator” and its usage of “net pricing” to show potential buyers a pretty much unattainable ticket price. The letter includes screenshots of Tesla’s website, some of which include tons of fine print that would seem to indicate that the rosy picture being painted above, which utilizes all possible incentives and rebates, actually comes with several catches.

But while the letter goes long on “deceptive pricing” and “arbitrary numbers,” it conveniently ignores the fact that auto dealers have long held a monopoly on those tactics as well. The reputation of car salesmen ranks somewhere between lawyers NSA officials and Ponzi scheme operators. For most people, buying a car is a process is roughly on par with going in for a full body wax — you’re just hoping to escape with as little pain and bleeding as possible. (Escaping with any dignity intact is out of the question…)

Everything Tesla’s being accused of has been the standard operating procedure for countless car dealers around the nation. That doesn’t make Tesla right, but it hardly makes the car dealers — who are fiercely defending their profitable “gatekeeper” status — look like the lesser of two evils.

This seems to be a whole lot of effort to be expending in order to grab a percentage of a higher-end niche market. The auto dealers would be better off approaching their “benefactors” (especially the Big Three) and asking them why they’re not producing highly desirable, groundbreaking products at bonus-spiking profit margins. Instead, they’d rather approach the situation in the worst way possible — attacking an upstart with a righteous fury that’s completely oblivious to the obvious hypocrisy of the accusations.

Certainly Tesla should conform with applicable laws, but its website — which to most people will still look like amazing prices attached to pages of fine print — is pretty much similar to any car dealer’s online cost calculator. People who think they’re going to get the low monthly payment (and low percentage rate) splashed across TVs and newspapers (and websites) are rarely surprised to find out they don’t qualify for the promotional rates. What the auto dealers are pointing to as the epitome of deception in this letter is really nothing more than “another day at the office” at nearly every sales operation anywhere: if something looks too good to be true, it probably is. And most consumers are able to see through these advertising tactics without the help of protectionist laws, just as surely as they’ll recognize the auto dealers’ “concern” for what it truly is: self-interested and desperate flailing.

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Companies: tesla

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Comments on “California Car Dealers Go Crying To DMV About Tesla's Website”

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33 Comments
Ninja (profile) says:

I have to disagree with the article. You made a very dangerous mistake when you dethroned the lawyers and put NSA officials there. Lawyer jokes don’t sound as funny if you replace lawyer with NSA officials.

Furthermore (now that’s a word lawyers love) car dealers are attacking Tesla for using Hollywood Accounting? operationalized in their super Quantum Calculator? (patents pending on round corners due to Apples) when they themselves are using the same tactics making them some sort of bad combo between lawyers, NSA officials (?!) and bad Hollywood movies. The horror!

I say we need to start making jokes with car dealers too.

RyanNerd (profile) says:

Here's a few eclectic ones I found

I saw the most beautiful cars in the window of a dealership. A salesman came out and said “come on in. They’re bigger than ever and they last a lifetime!” Later I discovered he was talking about the payments.

How is buying a used car like going to a whorehouse?
You’re pretty sure you’ll get screwed.

A man walked into a tavern and sat next to a very attractive, smartly
dressed woman perched on a bar stool.
“Hi there, Good Looking. How’s it going?” he asked.
The woman looked him straight in the eye and said, “Listen, I’ll screw
anybody, anytime, anywhere, your place, my place, it doesn’t matter. I’ve
been doing it ever since I got out of school, and I just love it!”
“No kidding?,” said the man, “I’m a salesman too! What dealership are you with?”

Q. What’s the difference between a used car salesman and a software salesmen?
A. Only the used car salesemen knows when he lying.

Anonymous Coward says:

I'm still waiting for them to prosecute Jetta for similar lies

They won’t do anything to Tesla. The government STILL hasn’t done anything to Jetta for running commercials blatantly lying about their government Miles Per Gallon rating.

In case you don’t know what I’m talking about, Jetta ran commercials claiming you could get over 50 MPG while going ‘Vroom Vroom” (in their own words) as much as you want, despite the fact that the government gave them only a 35 MPG rating. So where did the 50 MPG rating come from? They paid 2 guys to break a world record with really careful driving/etc to get insanely high MPG (which almost requires going VERY SLOW), and they managed to squeeze 50 MPG out of a Jetta. The Government MPG ratings were especially specifically to avoid the kind of false advertising that Jetta was running.

Anonymous Coward says:

Re: I'm still waiting for them to prosecute Jetta for similar lies

In the past, there were “Truth In Advertising” laws.
Today it is a no holds barred environment. Politicians are somewhat hesitant to pass laws which disallow lies, for obvious reasons. There is nothing new about ads containing outright lies, it is expected – and laughed at.

out_of_the_blue says:

SO, can't complain of deception, 'cause... it's innovation!

Seems to be your point here: that a new company can’t be held to the same old fair trade practices…

Your last paragraph is “they’re all crooks”, but has this contradictory slapdash: “People who think they’re going to get the low monthly payment (and low percentage rate) splashed across TVs and newspapers (and websites) are rarely surprisedYeah, they’re all lying crooks but we don’t need no stinking consumer protection laws!

Maybe those two self-contradicting sentences popped out and got past your review because you were writing to an agenda for hire instead of from your own beliefs.

negruvoda (profile) says:

Re: SO, can't complain of deception, 'cause... it's innovation!

And again reading comprehension is not your strong point.

Technologically Tesla is an innovator. Marketing wise…..not so much.

The crooks (the car dealers association) are trying to stifle a technological advancement by complaining that the marketing methods are…. surprise surprise, crooked. This is either hypocrisy or a really deep set case of lack of self awareness.

Seems to be a case of the new company should not get the same protection as the old, because the old, well they just don’t like it. They all deceive, but the old guys have been doing it for longer, so don’t go after them.

The article only points to the incongruence of one crook accusing another of being a crook. It may be true but it is disingenuous. But so are you in your comments, so I guess your comment is just your usual.

Oolong Kaloofid says:

I demand capitalism on my terms. If someone make money I should have a share. That’s what wrong with this country. Everybody is entitled to what they don’t make or earn. Everybody is special. There is a name for this misguided thinking. It’s called Communism and Socialism…

Now one of your readers can correct me – as I know they will because they too are special.

Elie (profile) says:

The insurance industry survives, so will cars

I have an exceptional interest in this. Co-owning an insurance agency, my competition is the internet and direct corporate sales along with other brokerages. I’ve always thought it unfair that while I can “build” a car online, I cannot buy it. The fact that this problem needs to be solved was made apparently to me last year when the dealer I eventually bought my new car from all but refused to get me the car I wanted and I haven’t been as happy with it as I had hoped to be as a result.

Insurance agencies everywhere are not only still in business but profiting quite nicely, even though anyone can purchase almost any insurance online and without benefit of human interaction. Why are we still around? We back up our sales with service. And if a client doesn’t get the service they want, the agent risks losing the client to a competitor who will give better service. And if a client feels they can never get what they want from an agent, then can buy direct from the company.

I think car dealers need that same competitive risk. I know for me it would have made my latest car-buying experience more positive. Dealers will do just fine. They’ll lose a small amount of sales. If insurance is an indication, only a small and not really growing percentage of most insurance is purchased online. The majority is still bought and sold face to face. Car dealers will always have customers who wish to purchase via relationship-selling.

nubwaxer (profile) says:

Re: The insurance industry survives, so will cars

i can buy my insurance online from geico or progressive confident that i can call customer service anytime and get immediate customer service. i see allstate ofices around but i tried to buy insurance from allstate online and they sent me a large envelope full of forms so i guess if i went to their office i’d face the same cumbersome process. they even wanted something filled out by the dmv. ridiculous.
dealers provide the constant authorized service to maintain the cars under warranty. i’m thinking tesla cars need very little maintenance and therefor one of the main reasons for dealerships has been eliminated.
the hypocrisy is so obvious when corporasts have fought against regulations that prevented them from running amok but now they’re all for crushing a tiny competitor that produces a great car.

John Fenderson (profile) says:

I'll wait until they're used

This is clearly a case of the pot calling the kettle black.

The only reason I have never purchased a new car (and probably never will) is because I’d have to interact with dealerships in some way. Doesn’t matter if it’s Tesla or not.

I think it’d be pretty cool to drive a Tesla. I might do so once I can buy a used one.

Andrew D. Todd (user link) says:

Re: What Is a Used Car? (to John Fenderson, #24)

Well, I think the moment of truth for Tesla will be in two or three years, when the battery packs go stale, and have to be expensively replaced. Contra Elon Musk, there is no indication that batteries are going to start behaving according to Moore’s Law. The conventional definition of a used car assumes that a new battery and a new set of tires are not a very big expense. Airplanes do not become used in the automobile sense of the word– there is just too much stuff which has to be inspected or replaced to keep the airplane airworthy. Old airplanes become “hangar queens.” I argue that it is impossible for a Tesla to become used.

Andrew D. Todd (user link) says:

Re: Re: Re: What Is a Used Car? (to John Fenderson, #24)

The definitions are related, of course. The kind of person who sells a car in the newspaper, or on Craigslist, for “$2000 or best offer,” is not going to be willing to offer credit, or a warranty. Doing that kind of thing is a job for a businessman, who knows how to take calculated risks and all. Your definition of a used car is effectively one sufficiently inexpensive that you can afford to buy it out of your liquid cash, and that you are willing to take a bet on its reliability. An automobile dealer will tell you (crocodile-fashion) that you need to drive the most expensive automobile you can become indebted for, and that if you don’t do so, this is a direct reflection on your manhood. You have chosen to opt out of this view of life. The problem with a Tesla is that, without a certain minimum value in batteries, it is a hangar queen. A set of batteries is a bit like a Lycoming aircraft engine, or the steel tracks on a bulldozer or an armored fighting vehicle. In the latter case, the usual assumptions about “tires” are not valid either.

Buying a house “by private treaty” is not a free ride. You need a civil engineer to check the structure, and a lawyer to check the title, the home-owner association, the zoning, etc.

John Fenderson (profile) says:

Re: Re: Re:2 What Is a Used Car? (to John Fenderson, #24)

All true, but the car is still used regardless of all that.

is not going to be willing to offer credit, or a warranty

True, but I absolutely don’t want the credit (I have my own bankers for that), and warranties don’t enter into my decision making anyway.

Your definition of a used car is effectively one sufficiently inexpensive that you can afford to buy it out of your liquid cash, and that you are willing to take a bet on its reliability.

Not quite. I have financed used car purchases from private parties through my credit union, and the bet on reliability is one that I have to take regardless of whether it comes from a dealer or not. I hedge that bet by having a mechanic examine it (whether it comes from a dealer or not) prior to locking in the purchase.

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