1889 Institute: End the "car dealer licensing cartel"

THE CASE FOR ENDING NEW CAR DEALER LICENSING

New car dealer regulations are anticompetitive, at the expense of Oklahomans

OKLAHOMA CITY, OK (November 13, 2019) – “There may not be a clearer example of naked protectionism in the laws of Oklahoma than the protection afforded to car dealers,” says a new study by 1889 Institute Research Fellow, Mike Davis.

The 1889 Institute study, entitled “Fully Loaded: Oklahoma’s Car Dealer Licensing Cartel,” points out that the law:

1. Makes car brokering (buying on behalf of someone else for a fee) illegal, making it impossible for most Oklahomans to have experienced car buyers act on their behalf, and denying opportunity to those who would like to do so. This means car dealers always have the advantage in deal-making.
2. Forces car manufacturers to sell only through dealers not owned by the manufacturer (except for those that existed prior to 2000, begging the question of who the law is meant to protect). This means Oklahomans, by law, must pay a middleman in order to buy a car.
3. Forces car manufacturers to grant dealerships in perpetuity, not allowing a manufacturer to end a dealership agreement unless it shows “good cause” as approved by a body consisting mostly of car dealers. This means manufacturers find it difficult to reorganize business to compete for buyers, which means buyers lose.
4. Grants new car dealerships exclusive rights to sell in specific geographic territories. This means buyers are dealing in a market with less potential competition.
5. Explicitly states that its purpose is to prevent new car dealers from going bankrupt. Financial challenge is often a result of competition, with costly, uncompetitive companies being forced to change or make way for efficient companies – a benefit to consumers – and a benefit denied to Oklahomans buying new cars. This is an explicit goal in state law.

“Since Oklahoma’s new car dealer franchising laws are of, by, and for car dealers, instead of being written for Oklahomans in general, it is easy to recommend their complete repeal,” said the study’s author, Mike Davis. “The law is written to allow out-of-state manufacturers and the vast majority of Oklahomans to be preyed upon by new car dealers,” he said.

About the 1889 Institute
The 1889 Institute is an independent Oklahoma think tank advancing public policy ideas to promote the flourishing of all Oklahomans through limited, responsible government, robust civil society, and free enterprise. The publication, “Fully Loaded: Oklahoma’s Car Dealer Licensing Cartel” can be found on the nonprofit’s website at https://1889institute.org/licensing.

The Conservative View: When Donkeys Fly

This week's Conservative View, by Adair County Commissioner Russell Turner (R-Stilwell).

The Conservative View
by Russell Turner

When Donkeys Fly

Anyone who owns an automobile learns pretty quickly about the insurance industry and the need to have insurance on his car.  In most, if not all, states require drivers to have liability coverage. If a person finances his car, the lending institution requires that the owner must have full coverage to insure that the loan will be paid off in the event of an accident.  If a driver owns his car, it is his business to decide if he want to purchase full coverage or not.  The prudent driver knows that life is a gamble and he has to decide if he is willing to take the chance of not having full coverage.  Protecting our savings is also a gamble, before 2008 individual accounts in banks were insured up to $100,000.00.  Most individual bank accounts — including checking, savings, trusts, certificates of deposit (CDs), etc. — are covered by the Federal Deposit Insurance Corporation.  If a husband and wife had a joint savings account, for example, they were typically protected up to $200,000.  If a sole account owner had the same $200,000 ... he would have been wise to open two $100,000 accounts at two separate banks to get full coverage.  Thousands of people using Indymac Bank, a California institution that went under in July 2008, did NOT understand these things.

There is currently legislation now working its way through Washington with a little-known provision that will retroactively insure about 8,700 depositors at Indymac Bank and five other institutions that went belly up before lawmakers increased FDIC coverage.  Our government has made a habit of bailing out businesses and firms that didn’t use good financial sense, and now they want to bail out people who didn’t take time to protect their own money.  While this is a small bailout, the cost will be anywhere from $180 million to $200 million.

If the same mentality could be applied to the auto insurance industry, we could buy a car and drive it without insurance and save the premiums that we would pay and use the money for something else.  If we did have the misfortune to become involved in an accident, then we could go to the local insurance agent and buy full coverage and get our car repaired.  We all know that would only happen when donkeys would learn to fly.  If our government continues to ignore the rules they create why even pretend to have rules at all, when they're so easily bent and exceptions are so easily made?

If you wish to contact Russell Turner, or want to subscribe to his email loop, email him at rdrepublican@windstream.net.