Potential buyers of the Slate pickup/SUV, which has a starting price somewhere in the mid-$20,000s, are getting annoyed by the mandatory $1,450 shipping and destination charge that adds to the cost. Many who live near the factory in Indiana are wanting to know why they’re paying that much or why they can’t just go to the factory and pick up their vehicle when it’s ready.
The blame isn’t on Slate. That mandatory destination charge is the law in Indiana and in every other state in the union.
Tesla highlighted this several years back when famously trying to sell direct to customers. The best they could do was create showrooms for people to browse, but not buy, inventory. The actual sale had to happen via legally-vague loopholes through the law.
Today, about a decade later, nothing has changed. Tesla is still in legal disputes over its direct sales and dealership franchise models are still the norm in the U.S. Meaning that mandatory shipping fee you pay when buying a car is still there.
Let’s call the “dealership franchise model” what it is: a protectionist scheme.
The scheme was created in the 1920s, but didn’t really cement itself until the post-war era. The bigger automakers like Ford and General Motors were already fully embracing the dealer model and had been for a couple of decades. Heavy lobbying by both those dealerships and the automakers pushed the franchise scheme into law across the country, quickly gaining ground state-by-state.
Today, every single one of the 50 United States have dealership protectionist laws in place. Direct sales from the factory are prohibited. Tesla makes direct sales via some loopholes in the system, but has spent a lot of money fighting to be able to do that.
Ostensibly, like most protectionist schemes, dealership franchise laws are there to “protect the consumer” and have been much-touted as such. The direct result of these laws, of course, is the terrible dealership experience new car buyers must face every day. We can thank this garbage legislation for just about everything we hate about the buying experience at the local new car dealer: pushy sales tactics, weaselly financial negotiations, and the aforementioned mandatory delivery fee attachment that isn’t included in the listed price.
Slate buyers are finding out that their $25,000 truck is actually a $27,000 truck thanks to this dealership protectionist racket. Welcome to the “free market,” chumps.
This article originally appeared on the AaronOnAutos Substack.
