In the early days of the automobile manufacturers did sell directly to the consumer. Then automobile sales began to boom. Manufacturers didn’t have the capital to create enough dealerships to sell all their cars in every city across the nation so they franchised out to dealerships.
This helped car manufacturers reach consumers fast and get into areas where it wasn’t feasible to just sell their cars. They could franchise their brands to dealers who sold competitor brands. This allowed continual rapid growth for sales while keeping capital to a minimum.
These franchises feared automotive companies would be able to undercut them if they ever decided to build their own dealerships. So they successfully lobbied politicians to create laws prohibiting direct sales.
This was done with the belief these laws would protect the small franchises from the large corporations and the belief that dealerships created local jobs. There was also the belief that dealerships created a more personal experience and lowered prices by creating more competition.
These dealerships also banded together into networks and fought against OEM’s if they tried to create their own dealerships.
Not all states outlaw direct sales, and the Big 3 in the past have tried to sell direct in those states. Yet their own massive independent dealer network would freak out whenever it happened and would threaten to disrupt sales across the country.
So even in states where it’s not illegal to sell direct the major manufacturers still sell through dealerships due to threats from other dealers if they don’t.
Of course opponents to these regulations see dealerships as nothing more than useless middlemen, especially in an age with so much information available to the consumer.
Why shouldn’t cars be sold like most products? A person can go to an Apple store or Best Buy to get a new Macbook. Heck, they could buy one from the comfort of their own home by buying one online directly from Apple or an Apple dealer. Why can’t a person do that with a car?
If dealerships truly lowered prices then they have nothing to fear. These laws appear to be useless regulations that provide little benefit to the consumer while adding costs to the process of buying and owning an automobile.
Why not let the consumer decide what they value instead of being told how to buy a car?