As more dealers use the Internet to expand their influence, the relevant market areas defined in state franchise laws are becoming less relevant.
Relevant market area laws prevent bricks-and-mortar dealerships from being built too close together and were designed to create protected territories for franchisees.
But these laws don’t prevent dealers from using the Internet or other media from selling vehicles or other products outside their trade areas.
Recently, American Honda introduced a policy prohibiting dealers from selling Honda Care service contracts online. The contracts can be promoted on Web sites -- but they can’t be sold directly to consumers online.
Just before Honda implemented its policy, some Honda dealers were using the Internet to sell service plans outside their trade areas and other dealers griped about it.
As some dealers more aggressively sell products online, it will be interesting to see how the factories and their competitors respond. More automakers might emerge as traffic cops along the information highway.