Today's Edition About us Local Opinion Obits Sports Things to do Classifieds Newsletters Podcasts Contact us

Missouri auto dealers launch campaign to protect franchise marketing

Taking on Tesla over the issue January 16, 2015 at 5:10 a.m. | Updated January 16, 2015 at 5:10 a.m.

A week from Monday, Missouri lawmakers are invited to a reception at a downtown Jefferson City restaurant, where "a brief update of Tesla in Missouri" will be provided and Tesla cars will be available for test drives.

The invitation was sent to lawmakers Wednesday, Missouri Auto Dealers Association Director Doug Smith told reporters Thursday. MADA provided reporters with copies of the invitation.

So, it appears, a lobbying battle that got somewhat heated near the end of the 2014 General Assembly is starting up at the beginning of this year's session.

As it did last year, MADA continues to argue the state Revenue Department gave Tesla a dealer's license in 2013 to sell its all-electric cars in Missouri, even though the California-based manufacturer had no Missouri franchise dealership.

In the state's "Motor Vehicle Franchise Practices" law, or MVFP, the Legislature has said: "No motor vehicle, foreign or domestic, may be sold, leased, or offered for sale or lease in this state unless the franchisor, which issues a franchise to a franchisee in this state, is licensed. ...

"No franchisor shall modify the area of responsibility to avoid the requirements of (any) section of the MVFP act."

MADA says state law requires all carmakers to have dealerships in Missouri.

In its two-page letter to lawmakers this week, Tesla countered: "The Missouri Franchise Practices Act covers solely the relationship between a manufacturer and its affiliated dealers. Since Tesla has no independent franchisees anywhere in the world, the provisions of this Act simply don't apply."

Smith disagrees.

"The Missouri Motor Vehicle Franchise Practices Act, or the new car franchise law, clearly states that only franchise new car dealers can be granted dealer licenses to sell new motor vehicles to consumers in the state of Missouri," he told reporters Thursday afternoon.

But Tesla's letter to lawmakers, sent by James Chen, Tesla's vice president for regulatory affairs and general counsel, reported: "Existing Missouri law currently allows consumers to decide how they want to buy a car.

"Manufacturers, like Tesla, who do not use independent franchise dealers, may sell directly to consumers."

When state Sen. Mike Kehoe, R-Jefferson City and a former Ford dealership owner, last year asked the Revenue department why Tesla was licensed in 2013 to operate a sales operation, then acting Revenue Director John Mollenkamp wrote: "It is not clear that the statutes apply to a seller like Tesla."

In early May, Kehoe and other lawmakers tried to amend bills in the House and Senate to re-enforce the franchise-requirement language they said the Legislature always intended - but those efforts failed.

Tesla's letter this week argued that proposal was "anti-free market" which would have stifled "innovation in Missouri."

Smith countered the existing law protects consumers and helps Missouri's 381 dealerships be classic examples of Missouri small businesses" that remain family-owned operations, with a statewide average of 55 employees who make an average $50,000 a year.

"New car and truck dealers are investing millions of dollars in local communities and are one of the state's largest charitable contributors," he said.

Smith said MADA isn't upset with Tesla's lobbying effort nor with Tesla as a company.

And dealers aren't trying to prevent people from ordering online.

"You can order a vehicle online (now), if you want to," Smith said. "You can do the financing, the shopping, the sales consultation.

"You can take care of every aspect of that deal, via the website. ... But, you have to take delivery of the vehicle at the dealership," because a vehicle is a much more complex than a washing machine or small appliance purchased online.

Tesla's letter said it plans to open its "second store and associated service center in Kansas City" during the third quarter of this year.


Sponsor Content