New car manufacturers like Tesla have begun disrupting the new car sales industry. They’re trying to sell directly to consumers without using independent dealers, and that’s caused some controversy across the county, including here in Utah.
Republican Rep. Kim Coleman wants Utah to be seen as business friendly. She says since the end of the legislative session she’s been hard at work at the negotiating table with Tesla, new car dealers, and car manufacturing representatives.
“It’s not the easiest solution," she says. "It’s fairly tricky at this point trying to make all thee entities happy. We haven’t quite found the solution, but we’re all really committed to getting there.
With her bill, Coleman is trying to find a solution that would allow new car manufactures, like Tesla and Google, to be able to sell their vehicles directly to consumers, without going through a franchised dealer. The franchise model is how companies like General Motors and Toyota sell their vehicles, and it’s been that way for almost 100 years.
Craig Bickmore is the executive director of the New Car Dealers of Utah.
“And so it’s not that Tesla can’t be here and have dealerships," Bickmore says. "They can. There’s simply a set of rules and regulations that says if you’re going to be in the dealer business here, the model of the franchise system has been the best distribution process that we know of.”
But Tesla representatives disagree. James Chen is Tesla’s associate general counsel. He says current franchise laws were intended to limit manufacturers from undercutting their independent dealers, but Tesla doesn’t have any independent dealers.
“We are not harming intra-brand competition," he says. "We are not competing against a Tesla dealer. We are competing in inter-brand competition. Just like Ford competes with GM, competes with Honda, competes with Toyota. We would like to be in that mix too.”
While the groups seem far apart now, everyone seemed fairly confident that some kind of deal would eventually be reached.