Скачать или смотреть The Rise and Fall of Car Dealerships: How Dealer Franchise Laws Shaped the Industry

Kellogg, Idaho, a small town with a population of 2,255, is home to Dave Smith Motors, the nation's largest Jeep Ram dealer. This dealership, along with many others across America, is thriving despite its remote location. The success of these dealerships can be attributed to something called "Dealer Franchise Laws," which have created a lucrative business model for car dealers. In the next few minutes, we will explore the history of these laws, their impact on the industry, and the recent challenges faced by traditional dealerships.

The Origins of Dealer Franchise Laws:

In the early days of the automobile industry, car dealerships were scattered throughout the country, serving only their local communities. However, as car manufacturers consolidated, they gained significant power over dealerships. Carmakers could force dealers to buy unpopular models, shifting the risk onto them. To protect dealers from such practices, all 50 states eventually enacted Dealer Franchise Laws, making it illegal for manufacturers to sell cars directly to consumers.

The Impact of Dealer Franchise Laws:

Dealer Franchise Laws not only protected dealers from unfair practices but also shifted the risk back onto the manufacturers. These laws made it difficult for carmakers to terminate franchise agreements and required them to compensate dealers for future profits, rent, and unsold inventory. As a result, dealerships were virtually guaranteed profitability, leading to the rise of wealthy dealership owners and the decline of small, mom-and-pop operations.

The Rise of Internet and Electric Vehicles:

With the advent of the internet, traditional dealerships faced new challenges. Online car shopping allowed consumers to compare prices and find better deals, often from dealerships located far away. This shift in the market threatened the existence of lazy and uncompetitive dealerships. However, instead of adapting to the changing landscape, dealerships lobbied for more government protection.

The emergence of electric vehicles (EVs) further exposed the biases of traditional dealerships. Tesla, a prominent EV manufacturer, decided not to sell through dealerships, arguing that they were biased against EVs. Consumer Reports' investigation revealed that many dealerships discouraged customers from buying EVs and even pretended not to sell them. This put lawmakers in an awkward position, as they could no longer argue that dealerships needed protection.

The Changing Landscape:

While Dealer Franchise Laws still favor traditional dealerships, the balance of power is shifting. Companies like Ford and Volvo have announced plans to sell vehicles online, bypassing dealerships. Negotiating prices at dealerships is becoming less common, and some manufacturers, like Hyundai, are even partnering with online platforms like Amazon to sell cars. The dealer monopoly is slowly weakening, and the industry is experiencing a transformation.

Conclusion:

Dealer Franchise Laws, initially designed to protect small-town dealerships, have created a system that favors large corporate dealerships. However, with the rise of the internet and the emergence of electric vehicles, the industry is undergoing significant changes. Traditional dealerships are facing challenges from online sales and direct-to-consumer models. As the industry evolves, it remains to be seen how Dealer Franchise Laws will adapt to the changing landscape and whether they will continue to favor dealerships over manufacturers.