I’d like to be able to buy a Fusion from Ford like I buy an iPod from Apple.
Of course, no one can order a new car direct from the manufacturer. Unlike the electronics industry, a myriad of state laws prevent auto manufacturers from selling directly to the public.
These laws, enacted in all 50 states, are designed to protect dealers and ensure they are the only avenue for consumers to purchase new cars. In fact, state laws even prevent auto manufacturers from getting rid of brands without paying an extraordinary amount of money to the dealers selling that brand.
For example, when GM dumped Oldsmobile in 2004, it cost them about a billion dollars to pay off Oldsmobile dealers because GM had effectively broken their agreement. (Apparently an automaker is bound to keep a brand forever just because a dealer network exists.) It’s tantamount to state-sanctioned organized crime and needs to end.
I would sure be happy if state laws protected the consumer rather than the dealership… but dealers are strong political groups and have heavy influence in state governments. As a result, they’re guaranteed to be the exclusive channel of distribution for new cars AND are protected against corporate brand reduction.
The only thing that can change them is for people to stop buying cars (unless there’s a law against that somewhere too).
I posted a blog here recently discussing the closure of thousands of dealers across the country as a result of just that. Vehicle sales are so far down that dealers are falling left and right, so now is a prime opportunity for the business to finally evolve. Next we need individual states to step up and revise their dealership franchise laws, allowing a consumer to order a vehicle directly from the company that makes it.
As unlikely as that is, if it did ever happen, dealers would exist for the consumers who want a vehicle immediately and don’t mind choosing from in-stock inventory. But the option to order a new Fusion online directly from Ford, in the perfect combination of color, options and accessories, would be there. All while avoiding the dreaded dealer markup.
Automakers would win because they wouldn’t be bound to a bloated, inefficient network of dealers. Consumers would win because they’d have the freedom of choice. And believe it or not, dealers would win because over time their business would become respected, legitimate and honest.
We want to know: Would you rather buy a car from a dealer or directly from the maker?