Car Dealers’ Driveway Blues; Pushing for a Crackdown on Sales Done Directly Online
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Internet companies that sell cars directly to consumers are encountering stiff opposition from auto dealers, who are using their influence in state legislatures and with state regulators to protect their businesses. Car dealers, meeting here at their annual convention, are worried that they are being undercut or bypassed entirely by the new services. They are also afraid that automakers might sell cars on the Internet themselves or through the new Internet services. So the dealers have begun pushing restrictive laws through state legislatures to prevent this and have encouraged state regulators to crack down. But consumer advocates say that extra competition would be good for customers. Indeed, state regulators say the only complaints they have been receiving about the services have been from dealers, not consumers. There is mixed evidence on whether consumers save money buying cars online. Because of state franchise laws and manufacturers’ policies, Internet services must buy cars from dealers, not directly from manufacturers. Paying two markups, one for the dealer and one for the Internet company, is a burden on consumers that does not exist for many other forms of electronic commerce. This erodes price advantages Internet companies may have. The federal government has left the regulation of auto retailing to the states, leaving potential gaps in regulation for deals that cross state lines, said state regulators from across the nation, who convened at a hotel near the dealers’ convention for meetings over the last four days. ”You could buy a car from a Mississippi dealer who has his Web site in Iowa and delivers a car in Idaho — who has jurisdiction?” asked T. Rex Green, Idaho’s supervisor of dealer investigations. ”I can’t justify to my taxpayers running all the way to Mississippi to chase someone.” Dealers have already used their political muscle over the last 12 months to persuade lawmakers in nine states to tighten state franchise laws, making it virtually impossible for manufacturers to sell cars except through franchised dealers. Governor George W. Bush of Texas, the front-runner for the Republican presidential nomination, signed the toughest such law in the nation last year, and the Texas Department of Transportation has become the nation’s leader in becoming stricter on Internet commerce involving cars. Legislatures in many more states are expected to consider legislation pushed by dealer groups this year, with one bill introduced last week in the Nebraska Legislature, which is nonpartisan and has only one house. State motor vehicle regulators, acting partly at the prompting of dealers but also because of concern that businesses could use the Internet to commit fraud, have become alarmed that Internet companies may be violating longstanding laws in most states that require anyone selling a new car or truck to be licensed and have a franchise relationship with a manufacturer. The regulators said that they believed the newest services, those which actually deliver cars to customers’ homes, might violate laws intended to protect dealers and consumers. More : query.nytimes.com |