WA bill to allow direct sales appears dead (again)

[Gshenderson]

This is odd, as all six of the bill's sponsors were Democrats.

None of the legislative tracking services are yet reporting HB 1388's death in committee, so please let us know what you find out.

“Tabling” a bill is a pretty common legislative maneuver, especially for contentious bills. Rather than go on record with a vote, they simply let it sit. If it doesn’t pass out of committee by a certain deadline date, then it essentially dies without a vote.

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[DuckTruck]

The negative experiences of vocal Tesla owners sure isn't helping Rivian's efforts to gain entry into Washington. It seems that Tesla's customer satisfaction ratings go from first to worst, or at least tumbles as soon as an owner needs some help. That just feeds the Dealers' Association's narratives.

 

[DucRider]

The problems people tend to complain about regarding both dealerships and the manufacturer direct models are not actually inherent in either model. It's all in the execution.

Having local dealers with inventory that you can test and drive home the same day has it's advantages - particularly if you are in an immediate need situation (breakdown, accident, etc). But since there is little to no money in the actual sale of new vehicles, dealerships tend to rely on Service and F&I as their major profit centers. This can lead to the high pressure tactics that turns people off so much. But Service is usually readily available, and most people have multiple choices on where to buy (on volume brands - Porsche, Mini, etc not so much).
So eliminating the middleman with the direct sales model can save a bit of hassle/money, but comes at the cost of the manufacturer dictating price, and having to build out (or contract) a robust service network. For a startup and/or low volume manufacturer this is financially difficult. Replicating the density and availability of service thru franchised dealers is likely not possible. Direct sales manufacturers (like Tesla) still push Service contracts, etc on customers - just not as aggressively as you sometimes find at franchised dealers.

I work with the local Auto Dealers Association on a variety of events and have also sat on more than one alphabet soup advisory committee about EV adoption with them. They are adamant that the franchised dealer model is better for the customer. I tell them if that is the case they have absolutely nothing to worry about. Add the fact that many people would rather go to the dentist than a car dealer shows they have a real issue. The problem is even worse for women - the good ole boys network/attitude is alive and thriving as part of the car sales culture.

Making laws to keep a manufacturer that sells franchises to later come in and compete with them has validity. Twisting those laws to require a manufacturer to utilize the franchise model does not.

 

[IPTV65]

I think the manufacturers should be able to sell direct. IF you want to protect consumers give the manufacturer a set of standards to meet to do that in whatever form is deemed best for consumers. Physical presence with sales and service facilities that meet what is necessary to support the product maybe...just lay it out.
The discussion unfortunately isn’t WHAT consumer benefit is provided but rather who gets the money to provide it.
Rivian could open physical facilities just like a normal dealership but they can’t by law. The folks who own the franchises see to that. It’s a joke to hide behind consumer protection in my humble opinion.
I am sure Tesla’s issues would not be solved with a dealer in the mix beyond maybe more physical presence. If there aren’t parts there aren’t parts. Dealers don’t make parts. The BMW dealer is always keeping me waiting for parts. Only the manufacturer can solve that one.
I just wish it really was about consumers. It it’s only about politics and money.

 

[DuckTruck]

The problems people tend to complain about regarding both dealerships and the manufacturer direct models are not actually inherent in either model. It's all in the execution.

Having local dealers with inventory that you can test and drive home the same day has it's advantages - particularly if you are in an immediate need situation (breakdown, accident, etc). But since there is little to no money in the actual sale of new vehicles, dealerships tend to rely on Service and F&I as their major profit centers. This can lead to the high pressure tactics that turns people off so much. But Service is usually readily available, and most people have multiple choices on where to buy (on volume brands - Porsche, Mini, etc not so much).
So eliminating the middleman with the direct sales model can save a bit of hassle/money, but comes at the cost of the manufacturer dictating price, and having to build out (or contract) a robust service network. For a startup and/or low volume manufacturer this is financially difficult. Replicating the density and availability of service thru franchised dealers is likely not possible. Direct sales manufacturers (like Tesla) still push Service contracts, etc on customers - just not as aggressively as you sometimes find at franchised dealers.

I work with the local Auto Dealers Association on a variety of events and have also sat on more than one alphabet soup advisory committee about EV adoption with them. They are adamant that the franchised dealer model is better for the customer. I tell them if that is the case they have absolutely nothing to worry about. Add the fact that many people would rather go to the dentist than a car dealer shows they have a real issue. The problem is even worse for women - the good ole boys network/attitude is alive and thriving as part of the car sales culture.

Making laws to keep a manufacturer that sells franchises to later come in and compete with them has validity. Twisting those laws to require a manufacturer to utilize the franchise model does not.

Imagine my surprise when I found out that Kurt Russell's 1980 movie Used Cars was actually a documentary. Roy L. Fuchs was such a perfect name for the Dealership owner.

I think many dealerships still use it for training purposes.

 

[Hmp10]

IF you want to protect consumers give the manufacturer a set of standards to meet to do that in whatever form is deemed best for consumers.

Exactly!

Dealerships are just beginning to taste the problems EV will bring them. As companies such as Ford and GM increase the number of EV models, dealers will inevitably see the service revenue on which they depend shrink. To stay afloat, they're going to have to shift more of their necessary profit margin onto the back of the sales price.

Car manufacturers, too, make a good bit of their profit off the sale of replacement parts. What most worries me is that the greater durability of EV drivetrain components will tempt manufacturers to downgrade the quality of other components in EVs in order to keep spare parts revenue flowing.

I experienced this in the early 1990's. I was working at GE Motors & Industrial Systems when it entered a joint venture with Bosch (dubbed BGAM) to develop and manufacture less expensive but longer life cycle accessory motors for cars. The window lift motors the venture developed for cars saw the MTBF (mean time between failure) rise from 40,000 cycles to more than 70,000 cycles -- and at a reduced price. Ford, which was just launching its "Quality is Job One" campaign, contracted for the motors. Delco, GM's electrical components division, turned the motors down, expressly telling BGAM that they did not want motors that lasted that long, even at the reduced price. The reason: a window lift motor that BGAM would sell for under $15 to the car manufacturer cost a customer $240 at the parts counter in a dealership, where both the manufacturer and the dealer pulled off a healthy margin on the motor.

Despite claims that EVs cost more than equivalent ICE models because of battery prices, I am convinced that some of the extra price derives from companies such as Tesla having to make more money off the sale of the car due to expected lower replacement part revenues down the road. Right now, EV manufacturers are trying to make their cars as durable as possible to counter customer suspicion about the viability of electric cars. Once they become the norm, there will be a growing temptation for all manufacturers to begin to engineer earlier failure of non-safety-related components into their cars.

I think the consumer would be better off having the manufacturer who makes the car also responsible for its service. Better to have only one entity (the manufacturer) needing to realize a profit margin off the total ownership experience rather than two (with a franchise dealer in the loop).

I don't object to the presence of middlemen when they provide a service that cannot otherwise be provided. But, as Tesla has proved (albeit with some rough patches since the Model 3 overloaded their service infrastructure), the manufacturers can provide that service if they decide to -- or, as IPTV65 suggests -- are required to by state legislatures. They have to put the resources behind it, but it is not organizationally or structurally infeasible.

 

[aardvarkricky]

I think I posted this on another thread but regarding HB1388, I wrote to my WA state representative, Debra Entenman asking if she knew anything about its status. She wrote back the following email:

Ricky-

Thank you for your email expressing your support for HB 1388, concerning motor vehicle sales

Unfortunately, HB 1388 did not come up for a vote in committee in time before the required deadline and is therefore unlikely to pass this year. This bill was referred to the Consumer Protection & Business Committee which I am not a member of, so I did not get chance to weigh in on the bill.

Again, thank you for taking the time to contact me. I value the input I receive and hope you will continue to share your views with me.

Sincerely,

Representative Debra Entenman

47th Legislative District

Washington State House of Representatives


Disappointing to say the least.

 

[Hmp10]

This bill was referred to the Consumer Protection & Business Committee which I am not a member of, so I did not get chance to weigh in on the bill.

She sort of did.

Before referral to committee, every bill is circulated to all members of the chamber in which the bill originated to give them a chance to join as a co-sponsor should they be so inclined.

From the "Guide to Lawmaking" issued by the Washington Legislature:

"An abbreviated description of bills being introduced is sent to members’ offices the day before the bill is scheduled for floor consideration. In the Senate, this list is known as Short Titles & Referrals, and in the House it is referred to as Introductions. Members write the bill numbers of the bills they are interested in co-sponsoring on a slip of paper and submit this form to their respective workrooms by 2 PM on the day the measure is scheduled to be introduced on the floor. In the Senate the slip is known as an add-on sponsor slip, and in the House it is referred to as a pink slip."

This does not mean she would not have voted for it had it come to the floor for a vote, but it does mean she missed a chance she did have to weigh in on the bill before it was first introduced on the floor, from whence it would be referred to a committee.

 

[Sdvictor]

Sigh. Sounds like I'll need to pick up the car in Portland. Either that or they will have a refund deal with a 3rd party delivery partner that isn't owned by Rivian.

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