… and dealers are latching on

Donna Harris covers automotive retailing for Automotive News
One of the industry's hottest trends is for dealers to promote their service contracts online. Some are even selling the plans through dedicated Web sites and toll-free numbers.

As some dealers' grow their volume through these direct-marketing initiatives, their competitors may cry foul. Some of the most aggressive dealers are selling contracts way outside their sales area.

Is it right to plunder other dealers' sales territories for business?

I spoke with dealer franchise attorney Richard Sox of Tallahassee, Fla. He says the state franchise laws protect the physical dealership from competition by regulating the distance between dealerships. The laws prevent one dealer from locating a dealership too close to another.

But Sox says there's nothing in the statutes to keep dealers from using cyberspace to sell vehicles or service contracts anywhere within the United States.

The online direct marketing trend is destined to flourish.