FTC to Host Public Workshop Examining the U.S. Auto Distribution System Workshop Will Explore Competition, State Regulations, and Emerging Trends in the Industry, Project No. P131202
Imagine if you were a creator. You created this device and you want to sell it. But you are required to find someone else to sell it for you BY LAW. This just doesn't make any sense. Why can't I produce the goods and sell them as well? Apple does this very thing, and consumer are eating it up. Dealer laws are an unnecessary and antiquated burden on the free market economy. It made sense 100 years ago. Many of these franchises were set up to aid early car manufactures since the manufactures could not afford to build their own dealerships. Once the Manufactures grew in power, protections were put in place to prevent the manufactures from strong arming their franchises out of business. That's fine, since the manufactures control the production of the vehicles, the franchise holders would have no hope of staying in business against the manufactures without protections. However the situation becomes different when a new manufacturer appears. This new manufacture should be able to sell to consumers with what ever model he chooses. Since he doesn't control the production for the franchise owners of other manufactures, he has no way to 'strong arm' them out of business other then the tried and true American methods of offering a better product/service at a better price. Independent dealers have offered up many supposed advantages that they offer in a plea to strengthen the dealership protection regulations, such as: They prevent Monopolies. This is untrue, since there are many car manufactures. Even if they all sold directly to consumers, a consumer can still choose to buy from a different brand. In fact, the consolidation of many small town dealerships has lead to many towns only having access to dealerships that are all owned by one family/organization. This is a monopoly as the consumer must buy from this one organization/family regardless of car brand, unless the consumer is willing to travel a long distance. They provide service centers for their consumers. Any direct selling brand will find that they'll also need to provide service centers to their costumers. If the service experience is poor, they will receive very few repeat customers, and suffer from bad word of mouth. This is basic capitalism. They offer competitive prices to consumers. If this is the case, why are they worried about direct sales? Surely if they offer better prices, the manufactures that sell direct won't be able to compete in a fair market. Personally, I know someone who ended up paying nearly $5,000 over MSRP for a vehicle at a dealership simply because she wasn't familiar with what were fair prices. For a 21,000 base price vehicle, that's downright predatory. When it comes down to it, why are companies that sell their product directly, such as Apple, hailed as great companies that consumers love? While the general vibe behind car dealerships is one of deceit and greed? If a business model needs skewed regulations in place to keep it viable. Maybe it's a bad business model?