New-car and -truck retailers are facing increasing pressure from Wall Street and Silicon Valley-backed disrupters peddling false narratives. This well-orchestrated campaign poses an existential threat to the franchised dealer 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:
1. Factory-direct sales are more efficient. Automakers are looking to bypass the franchised dealer network and have asserted — despite persuasive evidence to the contrary — that direct factory sales are more efficient. It’s not efficiency they are after. They are looking to establish vertically integrated monopolies, which eventually will 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.
2. 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such as Vroom, Carvana and direct-sale automakers have adopted an aggressive go-to-market strategy grounded in outdated stereotypes about the vehicle-buying experience. They are spending tens of millions of dollars on consumer-facing advertising that reinforces negative stereotypes. Wait until you see Vroom’s Super Bowl ad. It will make your blood boil.
3. 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 read the pages of this publication to know that traditional dealers are digitally ready, willing and able to do business with car buyers wherever, however and whenever the customer wants. But as a quote attributed to Mark Twain goes, “A lie can travel around the world and back again while the truth is lacing up its boots.”
4. Traditional dealers are an obstacle to the introduction of new options such as electric vehicles, automated vehicles, subscription services and more. The Alliance of Automobile Manufacturers changed its name to the Alliance for Automotive Innovation last year, and Tesla, Rivian, Lucid, Johnstown Motors, Uber and others have formed the Zero Emission Transportation Association. These organizations seek to paint dealers as a vestige of the past and portray the franchised dealer network as an obstacle. But the reality is that franchised new-vehicle dealers are — and always have been — the most efficient and reliable go-to-market strategy for new and innovative automotive products and services.
Fortunately, there’s the National Automobile Dealers Association. It’s the one dealer advocacy organization capable of organizing and leading the kind of nationwide campaign needed right now to emphasize the benefits of the franchised system (for consumers and for automakers) and to push back against this relentless effort to denigrate the nation’s neighborhood new-vehicle dealers.