news
Automakers Want Feds To Help Them Reel In Dealerships
Dealer groups and automakers are clashing again with a new big-business-friendly DoJ in the middle.
A group that represents the majority of automakers that do business in the US has just declared war on new vehicle dealers. That's the response from the group that represents those dealers, at least, after the Alliance for Automotive Innovation has reportedly asked the Department of Justice to take a look at state dealership franchise laws and how they affect consumers and competition.
At the same time, Scout Motors had also reached out to the DoJ about dealership practices. The automaker has ties to the Volkswagen Group and is looking to find a path that will let it sell vehicles directly to customers, once those vehicles enter production.
Automaker Alliance Wants More Control Over Dealerships
The letter from the Alliance, Automotive News reported, is addressed to the Anticompetitive Regulations Task Force. It asked the department to look into state laws about warranty service and laws that limit establishing new dealers in certain areas. One conflict between dealers and automakers includes time guides for repair payments, the Alliance told AN in a statement. Another is how close stores can be, a limit that varies from state to state.
Don Hall, CEO of the Virginia Automobile Dealers Association, replied to the letter saying "if there is such a thing as a holy war in the franchise world, it’s a holy war." National Auto Dealers Association (NADA) CEO Mike Stanton said that "the franchise system has been and will continue to be the most consumer friendly, competitive and efficient way to sell and service vehicles." Clearly, some feathers have been ruffled.
Honda's dealers aren't happy about the automaker's new Afeela EV brand selling cars directly to consumers - and they're ready to sue.
This corresponds with Scout Motors asking the feds to eliminate state motor vehicle franchise laws. It calls them "burdensome restrictions on competition." Existing VW dealers have been clashing with Scout ever since the new brand declared it wanted to sell direct to consumers, much like Tesla. Dealer groups in various states claim this is a violation of state law.
Scout Wants To Sell You Cars Without Someone In The Middle
Many states bar automakers from selling direct. It's an issue that has caused headaches for new automakers, especially Tesla, which is not permitted to sell or deliver vehicles in certain states. That includes Texas, the state where Tesla is based and has a factory. Yes, the irony of that is not lost on us.
“Outdated legacy state motor vehicle franchise laws – written decades ago in response to yesterday’s circumstances – have mutated into legal shields for established franchise dealership networks, barring any other business model from existing, let alone competing with these networks,” Scout Vice President for Government and Regulatory Affairs Blair Anderson said in the letter, dated May 23.
“We urge the Department of Justice and this Administration to probe these protectionist, anticompetitive schemes and to open the automotive industry to fair competition and innovation,” Anderson wrote. “These schemes are in direct conflict with the possibility of free and open markets where all can compete.”
A lawsuit was filed against the NHTSA by the Alliance for Automotive Innovation, saying automatic emergency braking is too expensive and ineffective.
In a statement, Alliance for Automotive Innovation CEO John Bozzella said its members "support the dealership franchise model. Period. Full stop." Volkswagen is a member of the alliance. We've reached out to multiple member automakers for comment.
Source: Automotive News, Automotive News