For those such as yours truly, who cringe when the protection of an elite few stands in the way of innovation for all, last week was a good one. A bill circulating in the Capitol allowing companies such as Tesla to sell cars directly to consumers was all but dead. Then out of nowhere, a breath of fresh air named Will Haskell blew into the stale Legislative Office Building and revived it.
Haskell, 25, is a second-term senator from Westport and a progressive Democrat, so I’m sure we don’t agree on everything. But Haskell, who was recently named Senate chair of the joint Transportation Committee smack in the middle of the current legislative session, is right to resurrect SB 127.
For the uninitiated, as the law currently stands, automobile manufacturers are not allowed to sell directly to consumers. Instead, new vehicles must be sold through franchise dealerships. In other words, a middleman is required to complete the transaction. The dealer therefore takes his cut, whether his service is truly needed or not.
We know why that is. The current law protects auto dealerships from meaningful competition, just as Connecticut’s archaic liquor laws protect package store owners from having to compete with one another. Naturally, the dealers are apoplectic at the thought of the state allowing new automobiles to be sold directly to consumers, as just about every other product is.
Since the Great Depression, Connecticut has maintained this type of prohibition — unlike neighboring New York and Massachusetts. Electric car manufacturer Tesla does have a service center in Milford, where leases are available, but in order to purchase one, Connecticut consumers must travel to such exotic locations as Natick and Mount Kisco.
The argument the dealerships offer for retaining the prohibition is easily refuted, baldly paternalistic and is an affront to the intelligence of the very consumers who have bought from them in the past.
“If they buy directly from the manufacturer, where will car owners go in the event of a mass recall? If a manufacturer goes out of business, where will consumers go for service?” Ah, but if consumers know the risks upfront, aren’t they intelligent enough to make their own decisions about a direct-to-manufacturer purchase?
The opposition of the legacy dealerships to Haskell’s legislation has little to do with concern for consumers and everything to do with a fear that relaxing the law will cut into the profit margins of traditional car dealerships, or perhaps even put them out of business. That also seems to be the sentiment in the comments on the CTNewsJunkie bill tracker for SB 127.
Interestingly, the aforementioned doom-and-gloom scenario has not played out in the Bay State, where Tesla and others may sell directly to consumers. The Massachusetts State Automobile Dealers Association reports that it still “represents the interests of over 400 franchised new car and truck dealers in the Commonwealth.” Interestingly, the word “Tesla” is nowhere to be found on the MSADA’s website.
I’d say what the dealerships really fear is the proliferation of online car sales and the shift to lower-maintenance electric cars. Imagine for a moment not having to sit down with a smooth-talking salesman who quotes you one price, only to tell you later that there are other fees, delivery charges and “options” that will raise the price by another 10%. Imagine the money you will save by not having to take your new electric car to a garage for service as often as you currently have to with your gasoline-powered vehicle.
It should go without saying that the threat of economic loss is not a valid reason to maintain the existing law. Imagine for a moment that I walked into a hearing room at the LOB and argued before lawmakers that Craig’s List should be banned from the state because the classified advertising giant was taking business away from my community newspaper and might force publishers across the state to shut down or furlough thousands of employees. I would be laughed right out of the hearing room, but auto dealers and package store owners have no such fear — or they haven’t until now.
As happened in 2016, this year’s bill in the Transportation Committee appeared to die a noble death. But when Haskell took over the Senate chairmanship of the panel from Sen. Steve Cassano, D-Manchester, earlier this month, the young whippersnapper “was not shy about changing course,” reported CTNJ’s Hugh McQuaid. The bill gained bipartisan support and cleared the committee by a 25-10 margin.
Perhaps because he still has at least two-thirds of his life still in front of him, the youthful Haskell is taking the long view. He has repurposed the legislation toward Gov. Ned Lamont’s proposal to tax gasoline on the wholesale level to fund a network of electric-vehicle charging stations and other clean energy programs.
“But what good will that do if we don’t have cars to charge?” Haskell asked rhetorically at a Westport gathering of supporters of the bill, according to The Courant.
Sometimes it takes a younger person to raise an obvious question that’s been hiding in plain sight. As for the dealerships, you must innovate, examine your business model and adapt to change. Otherwise you will become victims of what Austrian economist Joseph Schumpeter called “creative destruction.”
Contributing op-ed columnist Terry Cowgill lives in Lakeville, blogs at CTDevilsAdvocate and is managing editor of The Berkshire Edge in Great Barrington, Mass. Follow him on Twitter @terrycowgill or email him at firstname.lastname@example.org.
The views, opinions, positions, or strategies expressed by the author are theirs alone, and do not necessarily reflect the views, opinions, or positions of CTNewsJunkie.com.