In June, Florida Governor Ron Desantis signed a bill banning direct-to-consumer sales (excluding Tesla) to protect franchise dealers in the state, which went into effect on July 1. On this edition of Inside Automotive, we’re pleased to welcome back Ted Smith, President of the Florida Automobile Dealers Association (FADA), to tell us more about the bill, the association’s response, General Motors’ challenges with their dealers, and the lawsuit filed against Ford.
One prominent issue faced by states across the country involves dealing with companies like Tesla, Lucid, and Rivian that engage in direct-to-consumer sales. According to Smith, many jurisdictions seem unsure of how to handle this situation. They often assert that the franchise system is the only way to sell cars and establish relationships between traditional automakers and dealers. This approach can hinder the entry of EV manufacturers like Tesla, Lucid, and Rivian into these markets. However, FADA recognized that restricting car sales solely to franchise dealers wouldn’t work for their state after Governor Ron DeSantis enacted the new bill.
Smith points out that Original Equipment Manufacturers (OEMs) attempting to sell directly to consumers is illegal in Florida. Nonetheless, he clarifies that certain reservation programs have been permitted under the new law. These programs have varied in effectiveness, with some being beneficial for consumers while others prove detrimental, leading to delays and frustration for car buyers and dealers alike. As a result, FADA supports the use of reservation systems but emphasizes the importance of allocating vehicles to dealers and ensuring the sales process is smoothly transitioned to dealers, ultimately ensuring the best care for the customers.
Additionally, the FADA has taken legal action against Ford concerning its electric vehicle Model e program. The court case revolves around specific requirements set by Ford for dealerships to participate in the program and become eligible to sell Ford electric vehicles. These requirements include the installation of charging ports.
Smith emphasizes that the lawsuit filed by FADA against Ford is just one aspect of a broader discussion encompassing the aspirations of various associations in the marketplace. Some OEMs have assumed responsibilities such as evaluating and pricing automobiles, as well as managing reservation allocation systems. However, Smith clarifies that their examination extends beyond the impact of Ford’s EV program on dealers and consumers; they are also closely scrutinizing other OEMs attempting to encroach upon dealers’ sales functions.
For instance, following the passage of the bill by DeSantis, GM sent a letter to all its dealers, notifying them that they would need to adapt their business operations. Interestingly, Smith points out, “The letter addressed all the changes we wanted to see.” The changes introduced a system where reservations would no longer dictate allocations but would instead be integrated into the allocation process itself.”