The group’s CEO, John Bozzella, said in a statement provided to Automotive News that he’s “never seen this many bad state bills” before. He cited efforts by leaders of state and regional dealer associations to push a flurry of legislation that he claimed would “add a lot of extra costs to the system and, in some cases, ban the innovations that would improve a customer’s buying and ownership experience.”
“That’s not a recipe for a strong franchise system in the long term,” Bozzella said in the statement. “OEMs and dealers rely on one another to deliver and service great cars and trucks across the country. We ought to be in the same boat rowing together to update the system, but that’s evidently not a view shared by all.”
Tensions over the future of the franchise system have been building for years, in part prompted by the rise of Tesla and its direct-to-consumer sales model that has been emulated by other startup electric vehicle manufacturers, such as Rivian.
Dealers’ concerns have been influenced by the pandemic’s acceleration of online sales and the growth in reservations and vehicle orders resulting from a shortage of semiconductors that curtailed new-vehicle production. At the same time, traditional automakers have rolled out more EVs and — in some cases — new sales models to accompany them.
But the advantages franchised dealerships have gleaned during the supply shortage have newer competitors wary of the legislative efforts.
“In recent years, franchised new car dealers have benefited from supply chain disruptions that have slowed car production. Dealers have reported record profits while buyers are commonly paying above sticker prices,” Rivian said in a statement. “State legislators must be mindful of these market conditions and resist pressure to pass laws that further entrench dealer protections that block competition and ultimately harm consumers.”
Dealer association leaders in several states say their aim is to prevent automakers from competing directly with franchised retailers, thus preserving dealers’ role in the sales model — whatever form it takes.
“The model is always changing. It’s been changing for 100 years,” said Brian Maas, president of the California New Car Dealers Association and 2023 chairman of the Automotive Trade Association Executives.
“Dealers don’t sell cars the same way they sold them 25 years ago before the Internet. They’re not going to sell them the same way they sell them now 25 years from now,” Maas said. “What we want to make sure is that dealers remain central as part of the retail experience for consumers because the franchise model is the best retail model.”
That can be accomplished by passing new legislation and enforcing existing laws, several dealer advocates said.
In Florida, for instance, pending legislation would give a motor vehicle dealer association standing to request that the state Department of Highway Safety and Motor Vehicles review an automaker’s practices to determine whether they violate franchise law. Currently, only individual dealers are allowed to make such requests.
“Dealers are very reluctant to challenge any particular practice of the OEM for the obvious reasons — it’s their business partner. It’s the entity that supplies their vehicles and handles so much of their day-to-day life,” said Ted Smith, president of the Florida Automobile Dealers Association, which advocated for the change in coordination with some dealership groups in the state.
With some past concerns, Smith said he found no dealer willing to put his or her name on a challenge, even after calling dozens of retailers.
“That’s a very telling need being exhibited for having the association to be able to bring something,” he said.