Dealers have grown increasingly worried that automakers such as Volkswagen and Honda will choose to sell their upcoming electric vehicles through a direct-sales system rather than using the tried-and-true franchise model. What would this shift look like and what would it mean for the retail automotive sector?
On this episode of Inside Automotive, host Jim Fitzpatrick is joined by John Devlin, president of the Pennsylvania Automotive Association and the Automotive Trade Association Executives‘ 2024 chairman. Devlin shares his insights into the franchise system’s strengths and how transparency strengthens the dealership-manufacturer relationship.
Key Takeaways
1. Devlin emphasizes the benefits of the franchise system for selling automotive products, pointing out that dealers are ready to work with companies like Honda and Volkswagen, highlighting the efficiency and benefits of the franchise model for consumers.
2. There are concerns about companies like Honda and Volkswagen moving towards direct sales models, potentially cutting out dealers from the process and creating challenges in areas such as service and warranty work.
3. Devlin suggests that there could be legal challenges across different states due to existing franchise laws that may not easily accommodate direct sales models, hinting at potential legal action if necessary.
4. The franchise system is touted as efficient and beneficial, particularly for consumers who benefit from price competition, warranty work, recalls, and overall serviceability of vehicles.
5. Devlin urges dealers to continue pressure on manufacturers like Honda and Volkswagen to clarify their intentions regarding sales models while also highlighting the need for OEMs to be transparent and clear about their strategies moving forward.
"So there's no question our system, we think, is the most efficient and works the best, especially for the consumer. We got to go back to that because the consumer wins just in the price competition alone." — John Devlin
