Detroit News Commentary: The Benefits of a Franchised Dealer Network

Publisher's Note: We strongly agree with the sense of the Detroit News opinion below. In spite of the recent Tesla induced "get rid of dealers" tsunami among the general public, The Auto Channel continues in its long-held position that local franchised auto dealers are an asset to car buyers, their communities and the future success of the auto industry.

As the pioneer editorial automotive website (Online since 1995) The Auto Channel was there while the "promoters" in both silicon valley and wall street gave life to the failed concept that enabled the waste of zillions of dollars in the self-serving quest to change a system that was and had always worked.

In fact when the editorial staff needs a reminder as to why we support our "Dealers are Important" position we invariability remember Ford Direct, the Dearborn company's 50 million dollar "lets sell cars directly" misadventure.

Although there are may things we can fault local dealers for, we strongly believe the consumer needs a responsible local intermediary that is responsive to the needs and desires of local consumers.

Washington DC June 17, 2014; AIADA Online reported that in an editorial in the Detroit News by Maryann Keller opined that at the height of the dot-com bubble, Wall Street analysts, academics and consumer advocates claimed that “factory-direct” new-car sales would reduce costs, lower prices and deliver superior customer experiences.

Despite the lack of evidence to support this contention, the debate has resurfaced as state legislatures consider changing franchise laws to allow some factories to sell directly to consumers.

Past experiments by factories to sell directly have rarely, if ever, proven successful, and the results have only reinforced the need and value of having a network of franchised new-car dealerships.

In the end, the franchised dealer network benefits consumers and manufacturers alike, providing fierce price competition among dealers and an extremely efficient distribution network that is acutely sensitive to local markets.

Click here for the full commentary.