Resellers still exist not because someone is asking for them, truth, but because of state franchise laws, which largely prevent automakers from selling directly to consumers. Which means that any threat to these laws makes traffickers very, very grumpy. The latest evidence of this is a new lawsuit against Illinois, Rivian and Lucid.
The suit was filed Thursday on behalf of a group of dealerships, the Illinois Automobile Dealers Association and several other claimants, primarily individual dealerships located throughout the state.
The lawsuit aims to prevent Rivian and Lucid from selling directly to consumers in Illinois, as resellers claim this is against the law. Tesla currently operates locations in Illinois under an agreement made in 2019, which resellers agreed because they thought the Illinois franchise law would be applied more strictly going forward. Thursday’s lawsuit is an attempt to prevent any possibility of Lucid and Rivian, who is based in Normal, Illinois, from playing by Tesla rules.
“We welcome new manufacturers in Illinois, especially those who are building innovative vehicles,” said David Sloan, president of the Chicago Automobile Trade Association, another party to the process. “Our franchised members already sell dozens of electric and hybrid vehicles. We request that manufacturers sell them in Illinois in accordance with state law. We are not demanding that they cease operations in the state, only that they make a franchise from a dealer.
And while the civil lawsuit filed by dealers offers many legal reasons why they should win – Illinois’s deal with Tesla sounds strange – dealers also claim they are doing it on behalf of consumers, which is where they lose me instantly.
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Through the press release:
At stake are the benefits to Illinois consumers and the economy generated by more than 700 dealerships operating 2,300 franchises across the state. These benefits include:
- Consumer protection: Resellers maintain service centers with staff trained to carry out all recalls and warranty repairs, where resellers act as consumer advocates with manufacturers.
- Parts and service availability: Dealers maintain a stock of parts and provide timely services to consumers who depend on the daily use of their vehicles.
- Price competition: consumers have many options, with competition between resellers saving buyers money. Direct sales by manufacturers result in a monopoly that offers no price benefit.
- Community benefits: Franchise dealers are long-established local companies that generate millions of dollars in revenue and economic development, employ 42,000 people across the state and support many local causes and events.
All of these arguments are pretty silly, but my favorite is the claiming direct sales results in some kind of monopoly. No wonder Tesla is doing so well.
Anyway, for my money dealers would be better served by admitting who they are: textbook intermediaries. “We exist because for now we have the law on our side and we will fight to keep it that way ”. they could say. It would not be the most attractive argument, but at least it would be honest.
You can read the full complaint below.