Tesla's Direct Sales Model May Endanger CT Dealerships

Tesla's Direct Sales Model May Endanger CT Dealerships

All over the country, automaker Tesla has been fighting battles in several states to be able to sell their cars directly to consumers. In Connecticut, it is illegal for Tesla to sell their vehicles because of a dealer franchise law that prohibits car manufacturers from selling directly to consumers.
 
The law was put in place to provide tax revenue and protect small businesses who provide a valuable service to the community. Recently, a bill was introduced by the Connecticut General Assembly’s Joint Committee on Transportation that could allow for Tesla to begin selling in Connecticut. HB 7097, An Act Concerning the Licensing of New and Used Car Dealers, garnered favorable support from both Republicans and Democrats on the committee and is now waiting to be discussed in the House.
 
“If Tesla was granted the privilege of selling cars directly to consumers here in Connecticut, why would any manufacturer need the franchise model?” said John Antonino, President of Antonino Auto Group. “It’s the dealers who take care of registrations, trade-ins and financing,” he said.
 
Tesla refuses to work with dealerships, mainly because dealers also sell gas-powered vehicles. Tesla believes this poses a conflict of interest and that dealerships will not effectively market their electric cars. But last year, Connecticut’s Auto Dealers were responsible for selling 92% of the electric vehicles sold and registered in our state.
 
While it is understandable that Tesla wants to safeguard the brand and marketing for their cars, their sales model endangers hardworking local dealerships. If legalized in Connecticut, it could open the floodgates for other car manufacturers to take over direct sales of their vehicles and undercut local dealerships.
 
“Dealerships invest millions in showrooms and employ thousands and thousands of people,” said Christopher Antonino, General Manager of Toyota of Colchester. “Allowing Tesla to do business in Connecticut the way they are proposing would be a disservice to the consumer and the Connecticut taxpayer.”
 
For now, Tesla operates a single gallery location in Greenwich. The cars are on display and staff can discuss the features but are prohibited from disclosing prices and allowing test drives. For purchase inquiries, they must refer customers to Tesla stores outside of the state.
 
As Tesla continues to push for direct sales in Connecticut, local car dealerships may have to prepare themselves to compete with vehicle manufacturers for car sales.
 
Read Tony Sheridan’s letter to Senators Paul Formica and Cathy Osten taking a stand against HB 7097.