Why are direct manufacturer auto Sales illegal?
Because state laws prohibit that. The purpose of the law is to shift money from the middle class to auto franchise dealers, who tend to be far richer. Most states require car manufacturers to sell through dealers. Even if you order directly from the factory, the order must go through the car dealer.
Can you buy a vehicle directly from the manufacturer?
Car shoppers often wonder if it’s possible to order a car directly from the factory. The answer is yes – in fact about 15\% of all buyers special order their vehicles. But the truth is, you can’t actually order a vehicle yourself, you still need to do it through a dealer.
Which states allow direct to consumer auto sales?
States that have introduced legislation this year related to direct vehicle sales by auto manufacturers:
- Connecticut.
- Georgia.
- Status: The bill did not pass during this legislative session, according to the Kansas Automobile Dealers Association.
- Nebraska.
- New York.
- Ohio.
- South Carolina.
- Texas.
What is a disadvantage of direct sales distribution?
Disadvantages of Direct Distribution Direct distribution retailers may miss out on opportunities to capitalize on their products without having several indirect distribution channels to widen their reach. Wholesale agents and retailers understand their market and specialize in promoting products.
Should consumers be able to buy cars directly from manufacturers?
“Consumers may benefit from the ability to buy cars directly from manufacturers – whether they are shopping for luxury cars or economy vehicles. The same competition principles should apply in either case.”
Why do automakers work with dealers?
When an automaker works with dealers, they must trust dealers are going to do a good job. Simplicity of purpose. The business of building cars is not at all like the business of selling cars to the public. They require different skills and mindsets. By “outsourcing” retail sales, automakers are able to narrow their focus.
Why can’t you buy cars directly from brand-owned showrooms?
Here, the FTC is referring to the many state laws that prohibit carmakers from selling directly to consumers through brand-owned showrooms. Almost universally, those state laws were put into place through the political clout and largesse of state dealership associations. It’s a classic case of protectionism, and a pretty blatant one at that.
Can you sell a car outside of a dealership?
Some states have laws prohibiting sales outside of a dealership. It’s questionable whether these anti-competitive laws will stay around, but ones that protect dealerships against the manufacturer that makes the cars they sell make sense.