E-Commerce and OEM Strategic Partnerships
By Savannah Criado
At the beginning of November, Hyundai announced a partnership with Amazon to create an online marketplace. The platform will allegedly pull information of available new Hyundai vehicles within the customer’s locality, then directly link the customer to their participating local dealership’s website. As of today, that is all the public knows about the partnership. The biggest question that remains is what role does the dealership play in this “partnership?” In theory, having a platform like Amazon with wide customer-reach is a positive. However, this may have opened the door for other manufacturers to attempt similar “strategic” partnerships across the country that would otherwise violate state franchise laws. Which begs another question, is there a way for dealers to challenge other manufacturer partnerships that cut out dealer participation?
Across the country, many states have enacted laws that prohibit a manufacturer from selling direct-to-consumer. Other states have enacted laws that are narrowly tailored to protecting dealerships from the threat of ecommerce if there are already franchised dealerships located in the state. For example, in Florida, if an OEM already sells vehicles through franchised dealerships within the state—they are not permitted to offer a direct-to-consumer ecommerce platform without the use of traditional brick-and-mortar dealerships. These laws serve as a shield for dealers to use in the event of OEM attempts to entrench the industry with partnerships designed to strategically maneuver around their obligations under state franchise laws.
The shift of the automotive industry into ecommerce is beginning. Despite a desire to enter into the virtual marketplace, OEMs must continue to follow the state franchise laws. As of late, Amazon + Hyundai and Honda + Sony have been the leaders in announcing strategic partnerships which may violate state franchise laws down the line. BSM will continue to monitor any developments or proposed partnerships between OEMs and other ecommerce platforms. In the event that an OEM proposes a direct-to-consumer sale, effectively cutting out the dealer, BSM will oppose such proposal to the fullest extent of the various state franchise laws.