Dealers came into this year's NADA Show feeling good about the strength of their business and the year ahead. But lurking in the shadows is a fear: Is the franchised dealer model vulnerable long term to direct sales by automakers?
That fear reared its head hard Friday when news emerged of a bipartisan bill in Colorado that would allow any manufacturer to sell electric vehicles directly to consumers. The bill differs from a previous attempt in a major way — it would apply even to automakers that already have franchised dealers.
The specter of such a bill passing set off alarm bells for many of the thousands of dealers gathered here in Las Vegas. And dealers were already worried. Nearly two-thirds who responded to an Automotive News survey in early February said they had concerns about the future of the franchised model.
And outside of a couple of present-day problems — eroding vehicle margins and affordability challenges — the main factor weighing on retailers' minds as they looked to the future was dismay about direct sales. A third of respondents cited direct sales by Tesla and potentially other brands new to the market, while nearly a third expressed worry that their current automaker partners would eventually want to sell directly.
It's unclear what will happen with the Colorado bill or whether such a measure could gain momentum in other states. But many dealers point to the complexity of retailing and servicing automobiles and argue that automakers are just not set up for it. That should put dealers in a good position for at least the next 20 years, California dealer Erich Gail said.
Still, with the Colorado bill fresh on his mind, he said, "It would be naive not to be concerned."