this post was submitted on 30 Jul 2023
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One thing I never understood was stopping direct sales.
100%, gotta be a car lobby thing. If dealerships provide an important service, then put it in the market's hands and let people decide if that service is worth paying for.
There are lots of reasons:
Naked corruption, be it financial or (more like since this is state level), nepotism.
When many of these laws were instituted, it was generally illegal for producers to own their own means of distribution. Movie studios couldn’t own movie theaters for example. That’s why streaming went from a small collection of collaborative entities with most things you’d want to watch, to four (or more) dozen, all price fixing and moving in unison just like the cell industry does.
Theoretically, tax money is more likely to remain in a state if a car dealership is local to that state. Ford selling vehicles in Georgia, for example, would almost surely send all their profits back to Michigan or whatever tax haven is cool these days (which wasn’t as much of a problem when these laws were made).
I’m not defending dealers, though. They are rent-seeking parasites that grossly underpay the people in the garage who keep things humming along. There is a very real dealership-owner (or children) to state politician pipeline in my state and I don’t think that’s a coincidence.
The best argument I've hard in favor of dealers is that they introduce competition in sales of a single brand of vehicle. Instead of Ford having a monopoly on Ford vehicles and selling for MSRP only, you can shop around Ford dealerships that all sell the same product but have to compete with eachother on price or whatever.
That system starts to break down when, like in recent years, dealerships collectively decide to stop selling vehicles for MSRP or below and all tack on thousands of bullshit dealership markup fees. Also dealerships are exclusively run by scum of the Earth which massively taints the entire car shopping experience.
I don't think the analogy with movie studios holds up. If it did, we'd see dealers who sell new cars from a variety of manufacturers to follow market trends, but in practice dealers only work with a single manufacturer. They'd add some value if they provided a one stop shopping experience where customers could compare all the vehicles they're considering had to head, but instead they're just vassals of their respective car companies.
The dealers near me sell multiple different manufacturers under the same name. They won't be on the same lot, but they will be directly adjacent to each other so that it's effectively the same thing.
Good info!
But movie studios not owning their own cinemas is a very good thing. This used to be the case in the US and it was really really problematic for competition and the free market. That’s why this was introduced in the first place.
Does that mean that preventing direct sales of cars is a good thing as well?
Car dealers are owned by wealthy owners. They have lobbied hard (i.e. $$$) to block other business models via state regulation capture.
Note that most of these laws exist in so called “pro business” red states. Allowing competition and newer, more efficient, business models to replace older business models is a basic tenant of capitalism.
Purely government in the pockets of the dealers.
Dump regulations to kill the free market
Basically to prevent one care company to put up stores everywhere and making a monopoly, also more tax.
Historical legacy. It made sense when they were first rolling out. Someone would take the risk of trying to build up a market for these really expensive new devices and then the factory would swoop in and undercut them and destroy their business after they had done all the initial leg work of creating demand for the vehicles. They wanted protection from this.
Well, cars are now everywhere in the US market and it doesn't take a whole lot of effort anymore to convince someone they need a car, and not just a horse. But the laws protecting "car market development" in the former of dealerships never went away.