Pub. 55 2014-2015 Issue 3

16 Questions for TADA 1. What is the difference between the way liquor/beer/ Uber/Appleare retailedand thewaynewvehicles are sold? • 27 million Texans’ quality of life and safety depend upon personal transportation. • There is no comparison between any retail commodity and an automobile which gets our citizens to work, to school, and to the doctor. • Vehicles must be titled, registered and safety inspected, which differentiates them from every other retail product. 2. Aren’t you protecting a dealer monopoly? Texas franchise laws provide for as many dealerships as the manfacturers and the state wish to establish, creating the most competitive vehicle sales environment possible. 3. Why shouldn’t we be free to retail our product thewaywe want to? Texas franchise laws allow Tesla to have their exact business model and guidelines as long as a business operating in Texas owns the dealership. 4. Other states have allowed Tesla to sell direct. Other states have just exported $105,000 in capital every time a Tesla is sold under their exception. Texas legislators are inter- ested in keeping our citizens’ capital at home, not in exporting it to California. 5. What’s the harm? Old, antiquated system? Our system is hardly antiquated; it encourages competition, it creates a free marketplace whereby there are many dealerships with multiple owners in 284 Texas towns, providing competitive prices, qualified service, and ensuring safe travel for 27 million Texans. Moderator Questions for TADA 1. Why should Tesla be prevented from operating dealer- ships in Texas? They are not prevented — they can appoint dealers today. Any manufacturer of vehicles who controls all of the retail outlets is a monopoly with no incentive to negotiate the price to the customer, provide a higher level of service or serve Texas in any way. A corporate monopoly controlling a retail network provides nothing for Texas. 2. Section 2301.476 of the Occupations Code codifies a successful business model. Could your business model remain successful without it? Franchise laws create competition between dealerships and incentive to provide better services. There would be no dealership network throughout the state to handle warranty repairs and recalls. The sales price to the consumer would increase, and the safety of the driving public would be compromised. Texas needs a widespread dealer network with a competitive environment that provides the lowest price to the consumer, the highest level of service and avail- ability of dealerships throughout the state to perform warranty repairs and service calls. 3. Onlydealers testifiedagainstHB3351. Whywasn’t there a larger group of allies coming to your defense? Texas has always led the way.We knew that the legislature would not give an exception to an out of state monopoly when franchised dealers were essential to their constituents in every district in the state. This session you will see some of the 92,000 dealership employ- ees, representatives of the dozens of businesses and suppliers that depend upon franchised dealers, perhaps some of their 100,000 employees, the leaders from communities that our dealers serve and officials from schools, hospitals, and charities that dealers support. It is a broad base of Texans that support the franchise dealer system. We are ready for that base to be heard. 4. How do you respond to criticism that TADA is asking the legislature to protect an outdated model? The premise of the question is false. Just because something has existed for a while and works doesn’t mean it’s outdated. Personal transportation is more important to our citizens than ever, and a widespread dealer network, which exists only because of franchise laws, is needed to provide price competition, service facilities with the latest in high tech equipment, tools and training for vehicle service, warranty repairs, and to handle recalls. Fran- chised car dealerships are some of the most modern, sophisticated retailers in existence. It is the most effective, cost efficient method of providing personal transportation to our citizens. 5. If indeed the entire franchise system is in peril, what are the implications of that? Why should the general public be concerned? If dealer franchise laws were repealed and the manufacturer con- trolled the retail network, we wouldn’t have 1,257 dealerships in 284 towns to serve Texas. We would have 500 dealerships in 100 cities on the IH 35 and IH 45 corridors and the principle hub markets. The manufacturers would not make the investment in rural Texas. Their responsibility is to their stockholders, so dealerships would only be located in the most highly populated markets. It would be too costly to own facilities in rural Texas. Every dealership in the 163 Texas towns under 15,000 population would be in jeopardy. Competition would be eliminated, vehicle prices would increase, availability of service would be reduced, warranty repairs and recall assistance would be limited, threatening public safety. The remain- ing dealers would not invest as readily in facilities, equipment and training if the future of their dealerships was at risk. Texas towns would lose jobs and tax revenue. Dealership sup- pliers would suffer and public safety would be compromised. The benefit of the Texas franchised dealer network is far reaching and truly affects the quality of life of 27 million Texans.   TCCRI — CONTINUED FROM PAGE 15