Yesterday, I reported that the automakers are starting to push back against dealership franchise laws. The National Automobile Dealers Association (NADA) has launched a new campaign called "Get the Facts" in an attempt to convince consumers that the current franchise system really is in the car-buyer's best interests.

From the NADA Press Release-

"Franchised new-car dealers provide the best, most efficient and most cost-effective way to sell and distribute new cars in America, and we're proud of our businesses and business model," said NADA President Peter Welch.

"NADA's efforts will set the record straight about the benefits of the dealer franchise network for consumers, manufacturers and local communities everywhere," Welch added. "New-car dealers provide the best and most efficient way to buy and sell cars for both consumers and manufacturers, despite the misinformation and misconceptions that have surfaced over the last several months."

It is clear that the dealerships feel that they are on the defensive here and the reports do present some legitimate arguments. Whether or not consumers will agree is another story. My primary criticism is that the NADA is presenting this as an "all or nothing" scenario. I don't think most observers are expecting dealers to disappear overnight, have have all car purchases be completed via the internet. The reality is many manufactures due to the complexity and cost associated with factory stores will most likely continue to use franchises.


"We need people in the individual communities to serve those customers. We couldn't do that from a central location. And so our dealers are the embodiment of Ford Motor Company in their local communities—both in how they sell and service our vehicles to the consumers … The system works well because there are entrepreneurs—dealer principals—investing in the facilities and the people locally, to serve customers. And it's served us well for over 110 years and will continue to serve us well in the future" -JOE HINRICHS, FORD MOTOR CO. VICE PRESIDENT AND PRESIDENT OF THE AMERICA

So again I propose the question...why can't factory stores and franchises compete side-by-side? I understand the argument that buying a car is very different than buying a MacBook, but does Apple store really have an "advantage" over say Best Buy when it comes to sales?


Whether you like Tesla or not, Musk deserves credit for initiating the catalyst in bringing the legitimacy and value of the automobile franchise system to the forefront of the discussion. Dealerships are not going to go away anytime soon, but consumers clearly want a different experience when it comes to buying a car. So the dealerships, as a whole, can either defend their current system or adapt.

I encourage all of you to read the reports here. Are you convinced that the franchise system benefits consumers?