Many EV companies, such as Tesla, Rivian, and Lucid, are pushing to bypass franchise laws to sell directly to consumers. Today on CBT News, Jim Appleton joins the show to discuss the potential impact direct sales could have on the industry. Appleton is the President of the New Jersey Coalition of Automotive Retailers (NJ CAR). NJ CAR advocates on behalf of New Jersey’s new car and truck business owners.
Appleton begins the conversation by explaining why Wall Street and Silicon Valley disruptors are anxiously looking to enter the car business. He says that these new businesses are trying to enter the market because they see the large profits neighborhood new car and truck dealers are making on an annual basis. These disruptors believe that they can bring a new and better model to the car-buying experience. Contrary to what new EV companies say, the direct sales model is more beneficial for shareholders than it is for the actual consumers. Appleton says the direct sales model obliterates any type of price competition.
Franchise laws were not put in place to protect dealers, but instead to protect consumers. Local dealers accommodate service needs or any other issues concerning the vehicle in ways that manufacturers can’t. Franchise laws protect consumers from being disconnected from big businesses that are unable to meet their needs directly.
Appleton then goes into the argument of a free market vs regulation. He explains his perspective by pointing to the fact that pharmaceuticals, securities, and other specific markets are not open to the business of those that don’t have proper licensing and training. Legislation has a responsibility to regulate the business community for the health, safety, and well-being of consumers.
Appleton closes the conversation by discussing the state of the auto industry in New Jersey. After reopening in May, dealers were able to regain some lost momentum. However, automotive sales volume in the state was down by 20%. Appleton also says that service work remains down as well. Despite these challenges, profitability is high in the state as dealers continue to operate with tight inventories.
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