Americans love shopping online, but laws in all 50 states require new cars to be sold through franchised dealerships. Here’s how Tesla is getting around that.
Buying a car from a dealership can be difficult, especially if you make one of these common new car buying mistakes. Although Americans spend more than $1 trillion annually online, nearly all new car purchases in the country are made in person at a dealership. Franchise laws in every state give dealers the right to sell cars through dealerships and often ban direct sales. Competition is still encouraged between franchisees, which is why you might see multiple independent dealerships for a brand in the same locality.
In the earliest days of the auto industry, customers could buy automobiles directly from manufacturers. This made financing and servicing new vehicles needlessly difficult for consumers, and forced automakers to absorb additional costs. As the automobile industry matured throughout the 20th century, these shortcomings gave rise to a franchise system where each manufacturer sold or leased the right to sell its cars to local business owners.
