Open Michigan's car market to direct-from-maker competition

MLive By Guest writer Rob Sisson

Rob Sisson is executive director of ConservAmerica, which was was founded under the name Republicans for Environmental Protection in 1995.

Tesla Motors is building some of the most amazing cars in the world. These all-electric sedans and crossover SUVs have appeal across the political spectrum, with progressives and conservatives alike praising their zero emission electric power and their performance. Conservative TV personality Bill O'Reilly  said "Everybody on the planet should be rooting for Tesla — I mean everybody, even the traditional car companies that will have to compete."

If you're a consumer in Michigan, however, you cannot buy a Tesla here. If you own a Tesla you've bought in another state, you cannot have your car serviced in Michigan.

That'€™s because Michigan law prohibits car manufacturers from directly selling their products. They cannot even service them. Not unless they enter into franchise agreements with independently owned auto dealers to serve as the middleman, taking their cut as they sell you a car, and continuing their profit as they service cars.

Tesla directly owns and operates stores and service centers across the country. It has decided this business model makes the most sense for the company and its customers. Neighboring states like Ohio, Indiana, and Illinois allow Tesla to open stores and service centers. But Michigan has erected a barrier to Tesla. Consumers pay the price.

The Federal Trade Commission sent a letter to Michigan lawmakers last May, saying Michigan law amounts to "protectionism"€ by restricting competition and reducing consumer choices.

You may be wondering how this law stays on the books. The answer is simple —€” Michigan€'s auto dealers are a powerful and wealthy special interest lobby in Lansing. The dealers work both political parties to make sure their new car and service monopoly is protected in state law —€” and that threats to that monopoly are thwarted.

General Motors, Ford, Fiat Chrysler, and other manufacturers decided years ago to enter into these franchise agreements with auto dealers. Some of these companies see preventing change to Michigan's restrictive law as an opportunity to keep small competitors, like Tesla, out of their markets.

Gov. Rick Snyder has issued a challenge to the Legislature to make reviewing this law a "top priority."€ State Rep. Aaron Miller, R-Sturgis, heeded Snyder's call and has introduced House Bill 5312 to allow manufacturers like Tesla to sell directly to consumers, while at the same time protecting the investments and territories of existing auto dealer franchises from encroachment by manufacturers with whom they are affiliated. It'€™s a win-win for Michigan consumers and our economy.

Tesla Motors is already investing heavily in Michigan'€™s economy and providing Michigan jobs. The company purchased a tool and die supplier in Grand Rapids and have announced plans to expand their 100-plus workforce at Tesla Michigan.  Additionally, Tesla spends more than $250 million each year with more than 50 Michigan auto suppliers.

Changing this law makes sense. Doing so doesn't have to alter existing agreements between auto manufacturers and dealers. It doesn'€™t mean that new car dealerships are bad businesses or that the Big Three will somehow be at a competitive disadvantage. But new entrants into the car market, such as Tesla, shouldn€'t be forced by the dealers or bigger manufacturers to do business their way, or not at all.

Most of all, consumers should have choices. They can choose to buy a car from a dealer, or not. That'€™s how the free market and capitalism are supposed to work.