Why automakers don’t want to be their own dealers

The drive by Tesla Motors to sell its cars by bypassing traditional auto dealers has opened a legal and public relations war in several states. In every case, the arguments follow the same script: Tesla says it needs the freedom from tradition to successfully sell electric vehicles, and dealers say the system protects customers from abuse by far-off corporations.

What's been ignored so far is a more basic question of whether having dealers or the factory sell cars makes better business sense, something that can't be tested in the United States, where franchised dealers control the market for new cars. But it can in Germany, where factory-owned dealers exist side-by-side with independent stores — and the results may give Tesla pause.

As Reuters reported, Mercedes-Benz' parent Daimler is considering shedding some of its company-owned dealerships in Germany to better compete with its main rivals, Audi and BMW. Daimler's corporate dealers account for more than half of Mercedes sales in its homeland, while Audi's stores handle only a quarter of its volume and BMW's take an even smaller fraction.