Owners and managers of the state’s auto dealerships rallied Wednesday against a bill that would allow electric car manufacturer Tesla to sell cars directly to Connecticut residents, telling legislators the measure jeopardizes consumer safeguards and jobs.
The bill before the legislature’s Transportation Committee would make a specific exception for the electric car company, giving it permission to bypass auto dealers and sell its vehicles directly to Connecticut customers.
Dozens of auto dealers gathered at the state Capitol Wednesday to discourage lawmakers from passing the bill and force Tesla to use dealerships if it wants to sell its cars in the state. The group argues existing franchise laws provide protections to consumers, such servicing and warranties.
James Fleming, president of the Connecticut Automotive Retailers Association, said the state’s auto dealer industry has also created many jobs.
“We employ over 13,000 people in very good, high-paying jobs in the state of Connecticut. Dealers have been selling cars from manufacturers in this state for nearly 100 years, so it is a time-tested system,” he said.
According to Jeff Aiosa, Connecticut director for the National Automobile Dealers Association and owner of Carriage House Mercedes-Benz in New London, Tesla’s use of the direct sale model sounds harmless but is a major threat. “I would argue that Tesla would be the monopoly since the consumer can only pay [manufacturer recommended price] if they want to buy their product,” said Aiosa.
Lawmakers on the legislature’s Transportation Committee are considering allowing Tesla to open a limited number of stores in Connecticut. Last week, Diarmuid O’Connell, a vice president of Tesla, asked the committee to make a special exception for the small, innovative company.
“In these early stages, we’re focused on direct contact with our customers because we’re evangelists, to put it simply, we’re trying to represent this technology ourselves. Who knows it better than us?” he said. “We’re not operating through a middleman because we want people to understand very clearly what’s at stake here.”
Although Tesla is seeking a specific exemption, Aiosa said the bill could permit other manufacturers to use a similar model in the future and possibly open “a loophole for other manufacturers to come in.”
Another bill before the legislature would strengthen the same franchise law that Tesla is seeking an exemption to. Fleming said that would benefit the auto retail market by increasing competition and allowing dealers to “do what they do best — sell.”
“The nice thing about having the dealer network in place is that it saves money for the manufacturers. We think we can save Tesla money by selling their cars,” said Fleming.
Fleming said he was confident the auto dealers will win their argument if lawmakers consider the case based on the merits.
“The franchise system works really well here, and I think if it’s judged on that then we will win on this issue,” he said.