Mark Twain once said, “A lie can travel around the world and back again while the truth is lacing up its boots.” That statement has never been more true, especially as new-car and truck retailers continue to face increasing pressure from Wall Street and Silicon Valley-backed disrupters peddling false narratives. This well-orchestrated campaign poses an existential threat to the franchise system of independently owned and operated businesses, which benefits the consumers and local communities these retailers serve.
These false narratives take the form of four common myths:
- Factory direct sales are more efficient. Some automakers are looking to bypass the dealer network and have asserted — despite persuasive evidence to the contrary — that direct factory sales are more efficient. It’s not the efficiency they are after. They are looking to establish vertically
integrated monopolies, which will eventually eliminate local accountability and harm consumers. Their goal is to eliminate competition and enable big money interests to divert profits away from Main Street businesses.
- Buying at a dealership is a hassle, at best, and a hustle, at worst. Disrupters such as Vroom, Carvana and direct-sale automakers have adopted an aggressive go-to-market strategy grounded in outdated stereotypes about the car-buying experience. They are spending tens of millions of dollars on consumer-facing advertising that reinforces negative stereotypes. Just look at Vroom’s ad that ran during the Super Bowl. It will, and should, make your blood boil.
- Traditional dealers don’t do business digitally or online, like other modern retailers. These same disrupters are also peddling the fiction that new-car dealers are not embracing consumer-friendly technology. All you have to do is look at how quickly franchised dealers expanded or ramped up their digital capabilities in the early months of the COVID pandemic. Traditional dealers are digitally ready, willing, and able to do business with car buyers wherever, however, and whenever the customer wants.
- Traditional dealers are an obstacle to introducing new options such as electric vehicles, automated vehicles, subscription services and more. The Alliance of Automobile Manufacturers recently changed its name to the Alliance for Automotive Innovation. Tesla, Rivian, Lucid, Johnstown Motors, Uber and others have formed the Zero Emission Transportation Association. These organizations seek to paint dealers as a relic of the past and portray the franchised dealer network as an obstacle. But the reality is that franchised new-car dealers are — and always have been — the most efficient and reliable go-to-market strategy for new and innovative automotive products and services.
I encourage you to read both Rick DeSilva, Sr.’s NADA Director column and Judy Schumacher-Tilton’s Chairwoman column in this issue of New Jersey Auto Retailer. Both discuss what the industry is doing, at both the State and federal level, to fight back against the persistent attack on the automotive franchise system. It is up to NADA, NJ CAR and all dealers to embrace an ongoing campaign to emphasize the benefits of the franchise system (for consumers and automakers) and to push back against this relentless effort to tear down the nation’s neighborhood new car and truck dealer franchise system.