The Truth about Car Dealerships

When buying a new car we all have to go to the car dealerships, these dealership only sell one brand so if we want to buy a new Hyundai we would need to go to a Hyundai dealership and if we want to buy a new Honda we would need to go to a Honda dealership and so on. With books we do not go to a book store that only sale Harry Potter books, there is all kinds of books at a book store. This goes for other products as well, clothing while there are some outlet and brand name stores, but there are also some store that sell a different variety of brand name from Nike to Adidas. Then we ask ourselves why can we not get a new car online or have a car store sales different brands of new cars? Here is the answer car dealerships have laws passed banning such practices, the truth is that car dealerships are separate businesses and they are not owned by the car makers.

Since the early days dealership associations have pressured the governments to pass franchise laws that pretty much give these dealerships a monopoly over new car sales. So it is illegal to sales new cars unless you are a car dealership and each dealership and their own turf on where they can sell. This mean that if a dealership own a turf it is illegal to open another dealership in that turf. It is also virtually impossible for car makers to shut down dealership, this is because there are also laws against it. Due to the lack of competition and oversight car dealership can treat us badly. It is also extremely difficult to change the laws because about 20 percent of state sales tax revenue comes from car dealerships. If car manufacturers were able to sale the new cars to consumers directly without the monopoly of car dealerships on average each car would be about $2000 cheaper. Unfortunately because of these franchise laws that is there to protect the dealerships the only way to buy a new car is by going to the car dealerships.