Who Benefits from Local Auto Dealers? YOU!

Local franchised auto dealers create fierce price competition and prevent manufacturer monopolies; protect consumer safety with recall, warranty and repair service; generate good-paying local jobs, tax revenues and economic benefits; and simplify the otherwise complex car purchasing and registration process.

Competition

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  • Dealers compete fiercely with each other, to the consumer’s benefit.
  • Having multiple retailers of the same brand in the same market creates price competition and superior customer service as they compete for business.
  • If a single seller operated all the retail stores in a region, they would reduce consumer choice in the market place.

 

Local franchised auto dealers CREATE fierce price competition and prevent manufacturer monopolies;

  • Dealers are more economically aligned with consumers than manufacturers when it comes to safety recalls or warranty work.
  • Dealers are incentivized to respond quickly to safety concerns, since they are paid by the automaker to perform warranty and recall work.
  • In contrast, automakers have an economic disincentive to issue recalls or incur warranty expenses, which may imply a mistake, significant expense and/or a lawsuit.
  • Automakers also have an economic disincentive to follow through even after a recall or warranty action is announced.
  • “Middleman costs” are a myth.
  • Retailing expenses exist regardless of the distribution model used.
  • In a factory-direct model, the costs of showrooms, car lots, sales staff and holding inventory would simply shift from the dealer to the factory.

Safety

Franchised dealers create an extra layer of accountability for public safety.

  • Should a manufacturer go out of business, the local dealerships facilitate warranty and recall claims.
  • For example: Former Suzuki dealers still service Suzuki cars and trucks even though that manufacturer no longer sells in the United States.
  • Locally franchised dealers make substantial investments in state-of-the-art service facilities to perform warranty and recall work.
  • Having a dealer advocate on their side makes safety, warranty and service solutions easier for consumers.

Transparency

Today’s new-car prices are transparent, allowing customers to benchmark pricing and negotiate.

  • The manufacturer’s suggested retail price (MSRP) is readily available, and consumers can easily obtain invoice and independent pricing information for a vehicle.
  • Armed with this information, consumers can shop different dealers to negotiate price.
  • In a single-seller model, the factory fixes the price of its vehicles without any opportunity for consumers to either benchmark or negotiate prices.
  • MRSP stands for The Manufacturer’s Suggested Retail Price which is the price recommended by the manufacturer including the destination fees. Fortunately vehicles are often sold below MRSP.

Think Local

Dealers generate good local jobs and significant tax revenues, delivering a significant impact on their local economies.

  • Dealerships provide good-paying jobs with benefits, and opportunities for personal advancement and professional development.
  • Utah franchised new-car dealers pay hundreds of millions of dollars in state and local taxes.
  • Dealer revenues stay in local communities, whereas profits generated by manufacturer owned stores flow up a vertical ladder to out-of-state shareholders.
  • When the going gets tough, a multinational giant can close a local retail outlet and move on. Local dealers will be there for consumers in good times and bad.

More Options

Dealers simplify a complex process and personalize the car buying experience. A new-car dealer serves a consumer for the entire ownership experience.

  • Dealers offer a wide variety of financing options, which are frequently more affordable than bank loans.
  • More than 60% of all new-car purchases include a trade-in to cover a portion of the down payment, and dealers provide a hassle-free market for trade-ins.
  • Dealers take on the complex system of title, registration and reams of regulatory paperwork, so consumers can simply sign and drive away.
  • While making a purchase that’s second largest to a house, consumers want to interact in person, not with a website, a faceless 1-800 number, or a manufacturer or distributor located hundreds or thousands of miles away.

Auto dealer franchise laws represent the best opportunity to ensure local ownership and operation of dealerships, which benefits consumers and local communities.