Senate Backs Away From Direct Auto Sales Ban

Feb 26, 2016

Credit Tesla Motors / Facebook

The Senate has pulled the plug on a bill which would have shut down the Tesla Motors showroom in Indianapolis. Instead of franchising dealerships, Tesla sells to customers directly.  But the Senate had proposed banning that practice.

Senate Commerce Chairman Jim Buck (R-Kokomo) says he's been bombarded with angry calls from Tesla owners, so he killed the bill in favor of the House's original call for a study committee.

Buck charges the bill has been mischaracterized as an attempt to prop up General Motors against Tesla. He says legislators aren't out to stifle innovation, but need to be aware of market disruptions that could cost jobs.

But he says the negative perception of the bill is too much to overcome.

Automobile Dealers Association of Indiana vice president Marty Murphy says the number of car dealerships in Indiana has dropped by nearly half, and says that’s not a healthy trend.

“If you want to say that the dealerships provide an extra layer of cost, we won’t disagree,” Murphy says. “But we will say that layer is a critical value-added benefit that provides local sales and service to your vehicle purchase that extends beyond the warranty period.”

Tesla's competitors don't have the direct-to-consumer option because they already have franchised dealerships. Current law requires carmakers to choose one or the other.