As legacy automakers explore direct-to-consumer sales models, dealers are questioning the future of the traditional franchise system. Brian Benstock, Partner, GM, and VP of Paragon Honda and Acura, joins Inside Automotive to share his concerns about Honda’s joint venture with Sony and the broader implications of automakers shifting away from their dealer networks.
Benstock outlines that the evolving terrain of direct-to-consumer automotive sales concerns not just Honda dealers but the entire industry. For instance, he points to Volkswagen’s Scout initiative and Honda’s partnership with Sony as signs of a shifting strategy that could undermine the franchised dealer model.
While automakers assure dealers that these ventures will remain niche products, Benstock questions the wisdom of bypassing an established retail network, especially when those networks have been critical to the brands’ success.
In addition, Benstock highlights the case of Scott Keogh, a well-regarded industry leader who successfully revitalized Audi before being moved to oversee Scout. He argues that such leadership decisions signal a serious commitment from automakers to these direct-sales ventures. He also warns that if these efforts prove successful, they could set a precedent for other brands to follow, eroding dealer influence and profitability.
Furthermore, Benstock touches on the regulatory and political landscape. He speculates that while some state governments might support direct-to-consumer EV sales as part of broader environmental initiatives, lawsuits against Volkswagen for its direct-sales approach indicate that the fight over this issue is far from settled.
While some automakers may see Tesla’s direct-sales model as a blueprint for the future, Benstock cautions that Tesla’s success was largely driven by early regulatory credits and subsidies. He argues that manufacturers should focus on improving the franchise system rather than attempting to dismantle it, as direct-to-consumer experiments in Europe have largely failed.
"I think the retail automotive franchise dealer is one of the most efficient distribution methodologies in the country and in the world. We've seen what's happened in Europe—those manufacturers that went direct to consumers fell on their faces. Let's not double down in a bad direction. Let's really lean into and improve the current franchise system." – Brian Benstock
