No, this isn’t some insane Ted Nugent diatribe about the gub’mint getting in the way of Real America and Real Americans. The wonks with glasses (do they have glasses? I’m not sure. I have glasses) over at NPR’s Planet Money took a look today at why buying a new car sucks, always, without fail.
It basically boils down to “protections” put in place by state and federal governments to ensure that owning a dealership will be highly profitable and also nearly immune from competition from other dealers selling the same brand. Not only are automakers like General Motors, Ford, Toyota, etc. prohibited from setting up their own company-owned dealerships, but the privately-held dealerships are granted regional monopolies in their respective areas.
In addition, the ability to pass on your dealership to your children, grandchildren, and your grandchildren’s grandchildren is enshrined in law as well. Your grandchildren’s grandchildren suck at selling cars, and are dragging down Ford’s regional profits? Well, I suppose that’s just too bad for Ford.
But surely there’s a reason for this. Nobody is just handed anything, here, in America, capitalism. Tammy Darvish, who sits on the executive board of the National Automobile Dealers Association, told Planet Money why they deserve it:
“We need these state laws to protect our investment, not just the investment in our business, but our people. We employ a little over 2,000 people, that’s 2,000 families throughout greater Washington that are dependent upon us continuing our business operations.”
Yes, just as the oil companies plead, Jobs and Families. Never mind the conservative principle of the free market filling the void if these monopolies were allowed to collapse, with the associated jobs that would follow. This is about Freedom, or something.
And, as Planet Money notes dryly:
“This is not the sort of argument that sways economists.”
These sorts of regulations have serious consequences as well. In November of 2011, Chrysler was forced to sell ts own “model dealership” in California in a settlement with the state and the California DMV.
Photo Credit: Christopher Ziemnowicz/Wikimedia