Active Legislative Year for Dealer Associations

BSM is assisting dealer associations representing nine (9) states with franchise law issues during their 2021 Legislative sessions. In some of those states the non-franchised direct selling OEMs (i.e. Tesla, Rivian, Lucid, et al.) have filed bills seeking to open the states to an unlimited number of direct selling dealership locations. In response, the strategy has been varied amongst the dealer associations.

In some states, the dealer associations are fighting to keep the existing limits on OEM direct sales arguing that licensed franchised dealers provide convenient sales and service locations across the state, offer the most competitive pricing and encourage local investment, including minority ownership opportunities. 

Other state dealer associations are willing to allow non-franchised direct selling OEMs to operate dealerships within their state but want to insure that this distribution system doesn’t spread to the franchised OEMs. With the continuous stream of new policies by the franchised OEMs capturing more and more direct customer interaction through online vehicle ordering (see news brief on Volvo one-price, direct sales), franchised dealers are very concerned with their OEM taking over the retail sales process or competing against them with a new brand of vehicle. In these states, the dealer associations are seeking to clearly define the sales and service activities which are reserved solely for the franchised motor vehicle dealer and to prohibit franchised OEMs from those activities as well as from being licensed as a dealer in the state.

In other states where direct sales have not been made an issue, the dealer association(s) are focused on adding provisions to their franchise laws governing (i) data sharing with the OEM; (ii) ownership and operator succession; (iii) two-tier pricing; (iv) OEM performance standards; and (v) OEM facility upgrade programs, among other items.