NADA chair: Consumers prefer dealers over Tesla model

Melissa Burden
The Detroit News

Consumers offered a choice would favor a franchised dealer network that offers discounts over Tesla Motors Inc.’s retail model, the chairman of the National Automobile Dealers Association chairman said Wednesday.

Jeff Carlson, speaking at the Automotive Press Association, said policymakers should consider what consumers want most and he believes that’s a cheaper vehicle price.

“They can continue to support the franchised dealers who discount up to $700 ... or, the choice for the policymakers, they can offer the consumer a vertically integrated model that prices vehicles at retail,” Carlson, a Ford and Subaru dealer in Colorado said. “The public policymakers are going to go to the consumers and say, ‘Which one do you want, the discounted product or the product at retail?’ I think they’ll make the right decision.”

Carlson cited a 2015 Phoenix Center study that found consumers often receive hundreds of dollars in discounts from dealer competition when they buy a new car. The study found that typically having the same brand dealers working to sell vehicles to the same customers lowers new car prices.

Tesla, which uses a direct sales model where consumers buy cars directly from the manufacturer, in September filed a federal lawsuit against the state of Michigan, challenging the prohibition against the carmaker selling cars here because Michigan law says new cars must be sold through franchised dealers.

Carlson, who said he doesn’t think the direct sales model will work for a mass manufacturer, said ultimately consumers should weigh in if they want to keep a system where they receive discounts.

“Do you all want us to create a new market in the state of Michigan or do you tell your legislators that, ‘Yes, allow the manufacturers to have the Tesla model,’ ” he said. “I don’t think the consumer is going to support that.”

Tesla did not respond for comment.

NADA represents 16,500 dealers.

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