WASHINGTON - A national consumer organization has launched a campaign against state franchise laws on the grounds that they limit vehicle sales competition and cost car buyers money.
The Consumer Federation of America estimated customers would save at least 6 percent, or about $1,500 per vehicle, if there were competitive pressure from direct factory sales and true online purchasing.
'We are calling on state legislatures to open the doors to Internet competition in the auto market, to give consumers the ability to make free choices on the Internet,' said Jack Gillis, public affairs director for the federation, a coalition of 270 consumer groups.
When a reporter suggested that battles about factory and online selling already have been fought and that franchised dealers have won, Mark Cooper, the federation's research director, said that is true so far, but only because consumers don't understand franchise laws.
If they can be made aware that the laws cost them money by limiting competition for their local dealers, 'We can stop (legislatures) from making them worse and start to reverse the trend,' he said.
The National Automobile Dealers Association contends franchise laws are as relevant in the Internet age as ever. The association said the recent rash of online business failures proves the value of laws that have built-in consumer protections and help ensure survival of stable businesses rooted in local communities.
The federation's effort consists primarily of alerting the consumers to the effects of franchise laws and hoping that they begin to pressure state lawmakers to stop doing what dealers ask.
'We are not set up to do grass-roots lobbying in the states,' said Sally Greenberg, senior product safety counsel for Consumers Union, publisher of Consumer Reports and a federation ally.
'We just want consumers to get the best information and the best deals,' she said. 'This is not about dealer bashing.'
But dealers are tenacious defenders of the franchise system, and they are a potent political force, especially at the state level.
The federation said the number of states with laws restricting competition in vehicle sales has grown from two in 1970 to 41 now. Generally, the laws say only franchised dealers may sell new vehicles to consumers. And the qualifying standards set for dealerships effectively keep new players from entering the market.
The federation said some franchise laws have other anti-competitive provisions, such as requiring that warranty work be done only at dealerships.
The federation said a January survey of 1,029 adult Americans by Opinion Research Corp. International found that 78 percent disagree with 'laws that require all car sales to go through car dealerships.'