By David H. Landon

California-based automaker Tesla began selling its electric cars directly from two Ohio storefronts in 2014. Now, that number is three. This development doesn’t sit well with the 830 new-car franchise dealers across the Buckeye State.

For years, Ohio law has distinguished between the roles of automotive manufacturers and auto dealers. Manufacturers could not directly sell their product. Dealerships must be privately owned. That’s why there is no GM store or Toyota store in Ohio. There have been rules in place for years, which prevent auto manufacturers from owning and operating auto dealerships. With the stroke of a pen at the Ohio BMV, those rules are out the window.

Dealership representatives argue the consumer is the beneficiary of the current arrangement, as the dealership serves as an advocate for the consumer. Dealerships want return customers and go to bat for the consumer when issues arise over the functioning of a new vehicle. The Tesla business model defies those rules by directly selling its product to customers from their storefront outlets. States including Arizona, Texas, Maryland, New Jersey, Virginia, Michigan, and Utah have refused the direct-sales model.

In Ohio, the 830 new-car dealers employ over 55,000 people in Ohio with a payroll that exceeds $2 billion. That’s 55,000 Ohio families benefiting from this industry. In addition, these dealerships have collected well over $1 billion annually in sales tax on behalf of the state. They also pay a considerable amount of real estate, CAT, and other business-related taxes. A healthy auto industry benefits all Ohioans through the tax dollars they pay. The variance by the Ohio Bureau of Motor Vehicles granting a license to Tesla to sell at retail locations without contracting with an independent dealer opens the door for all manufacturers to follow the same path.

The rules under which the dealerships operate were created years ago by the Ohio legislature.  Based on those rules, dealerships have invested millions of dollars in their businesses. Now, the business model is turned on its head, not by a change by the Ohio legislature, but by a faceless bureaucrat at the BMV who, by granting to Tesla the license to sell its vehicles, has changed the rules of how these businesses can operate.

It’s not the first time faceless government bureaucrats have affected the health of the auto industry. During the GM bailout, there was the arbitrary picking of winners and losers by the Obama administration when the government determined which dealerships would remain open and which would be closed. In what alternative universe can the government change rules mid-stream and close down a viable, legally established, functioning business? Obviously, the answer is here in the crony-capitalism world of Barack Obama.

So, our question for the forum debate this week is whether government is interfering with the free market place when it involves itself in issues such as those states which are blocking Tesla from direct sales. Here’s a news flash: the free market doesn’t exist. Please don’t insult our collective intelligence by arguing that restricting manufacturers of cars from directly selling those vehicles will cause a chasm in the free market. Every market has some rules and boundaries that restrict freedom of choice. Our American enterprise system looks free only because we are so conditioned to accept its underlying regulations, prohibitions, and restrictions we fail to see them. Our only hope is we can minimize the interference of government in our economic markets. As much as I strongly object to the government’s over-involvement in regulating business, once a regulation is in place and businesses have adapted their business models to comply with those regulations – sometimes at the cost of hundreds of thousands of dollars – the worst possible scenario is for a non-elected bureaucrat to change the rules businesses live under by bureaucratic fiat. That’s what has happened here in the Tesla direct sales situation. The change has the possibility to affect the health of an important component of the auto industry in Ohio and other states.

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David H. Landon
David H. Landon is the former Chairman of the Montgomery County Republican Party Central Committee. He can be reached at

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