In a free market, manufacturers and retailers must adapt to changing economic forces and shifting consumer preferences. It is time that Michigan responds to the evolving market changes impacting the new car industry. Consumers want more choices and more convenience – they do not want to be forced by the government to buy their cars from a certain type of monopoly retailer. They want the freedom to buy cars they want in the manner they choose, unencumbered by government requirements.
In 2014, Gov. Snyder signed a bill requiring that new cars in Michigan can only be sold through franchised dealerships and even banned manufacturers from operating service centers. When Snyder signed the bill, he did so with a carefully worded message directly referencing the future of the automaker-franchise model. “A healthy, open discussion can and should be had over whether the current business model in Michigan should be changed,” read Snyder’s statement, which also called on the Legislature to make this discussion “a top priority.”
This law specifically outlaws plans by electric vehicle manufacturer Tesla Motors to open Tesla stores and service centers in Michigan. Tesla’s sales and service locations are similar to Apple’s. They are owned and operated by Tesla Motors, Inc. and not independent franchisees. Tesla owns and operates stores in more than 20 states across the country in addition to 35 countries around the world.
Each Tesla location represents dozens of jobs and millions of dollars of investment. The Legislature should be doing everything possible to remove barriers to this type of economic activity, not creating impediments to it. What’s more, Tesla is investing heavily in Michigan, having purchased the former Riviera Tool & Die in Grand Rapids. Now called Tesla Michigan, the facility employs more than 100 Michiganders.
We think Tesla’s award-winning, all-electric vehicles are a great addition to the marketplace, and we think Michigan consumers should be able to choose to shop at a Tesla store or a traditional dealership, depending on their preference and the kind of car they want to buy.
The Federal Trade Commission agrees. In an 11-page letter to Michigan lawmakers last May, the FTC said the new law restricts competition and reduces consumer choices.
Tesla sells cars via Tesla stores in Ohio, Indiana, Illinois, Pennsylvania, and many other states. Michigan consumers wishing to test drive and buy a Tesla must travel to one of these other states, or go online to purchase the vehicle without the benefit of a test drive. When it comes time to service their Tesla, Michigan consumers are also at a disadvantage as Tesla is also prohibited from operating Tesla-owned service centers as they do in other states.
State Rep. Aaron Miller (R-Sturgis) has introduced HB 5312 in Lansing that will end Michigan’s new car monopoly.
We would not dream of telling Apple they cannot open stores in Michigan, or that they can only sell their products through Best Buy and other retailers, but that’s what Michigan law does with regard to the auto market. Michigan’s new car sales law just does not make sense in a free market.
We are glad the state legislature has begun that discussion urged by Gov. Snyder. We urge them to pass HB 5312 and focus on bringing consumers the choice and flexibility they demand when buying new cars.
Keith den Hollander is chairman of the Michigan Christian Coalition.