In a video distributed to dealers this fall, Don Hall, President of the Virginia Automobile Dealers Association, can be heard urging car dealers to unite against a threat to their livelihood.
He explains that for the last 29 years, he has fought as a gladiator to protect the rights of Virginia auto dealers and their franchise system. This system however, is now under attack by the likes of Tesla and many others out there who believe that the franchise system is a "dinosaur and no longer works". He finalized it with an encouragement, "Let us all strap on whatever it takes to win."
The video expresses determination to put a stop on Tesla, an electric car company known for selling its cars directly to consumers rather than through franchise dealers, on its plan to open a second store in Virginia. Tesla already operates a retail showroom in Northern Virginia and is now seeking the state's permission to open a second store in Short Pump Town Center, The Washington Post reported.
Like most states across the country, it is illegal for manufacturers to sell their cars directly to consumers --- to prevent the company from undercutting their franchises, in accordance to a post on Federal Trade Commission's official website. Car dealers have been fighting Tesla, seeing the company's direct-to-consumer sale system as a threat to the franchise system they say protects consumers, as well as their own business interests.
However, Tesla exclaimed there are exceptions to that rule and that applies to them, partly because traditional car dealership won't work on their unique business model.
A decision from Richard D. Holcomb, commissioner of the Department of Motor Vehicles, is due by mid-December. But the matter is unlikely to end there because Tesla and the dealers' association, known as VADA, have shown willingness to take their fight to court --- and possibly, the General Assembly.
Moreover, franchise car dealers represented by the Virginia Automotive Dealers Association said that dealers are willing to partner with Tesla to sell electric vehicles.
Tesla exclaimed that its car sales takes longer than it would be economically viable for a dealer. The company also rejects dealer markups, only using a consistent base pricing throughout the country. In addition, the company avoids paid advertising and placing their stores in city centers --- unlike the suburban locations of many car dealerships.
Watch the entire video below:
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