“It’s a holy war,” Don Hall says, referring to the highly controversial letter that the Alliance for Automotive Innovation sent to the U.S. Department of Justice’s Anticompetitive Regulations Task Force to evaluate whether state franchise laws restrict competition and harm consumers. In today’s special episode of Inside Automotive, Don Hall, president and CEO of the Virginia Automobile Dealers Association (VADA), unpacks the letter and explains why dealers must keep their eyes open on this topic.
The Alliance for Automotive Innovation, which claims on its website to be “the unified voice of the automotive industry,” represents major manufacturers such as Volkswagen, Volvo, Toyota and Honda. However, their letter is a direct attack on the dealer body. The Alliance suggests that state franchise laws restrict competition, harms consumers and are “outdated.” The subtext is clear: manufacturers want to sell directly, control service and relocation, and reduce dealer authority altogether.
Manufacturers consistently claim that dealers are their partners. The Alliance has historically collaborated closely with state and national dealer associations on regulatory matters. But Hall views this move as a betrayal. The letter, he says, wasn’t just poorly timed, but it fundamentally undermines the system the manufacturers themselves created and that has been flourishing for over 100 years.
"If they don’t believe in it, then the OEMs ought to step up and say we do not. There ought to be some recourse back to that association for having sent a letter that is so anti-franchise and anti-a system that was created by the manufacturers and has worked and served the community and our public for over 100 years in the history of this great country."
Hall notes that no OEM has publicly rejected the letter, even if some privately claim to disagree with it. He challenges OEMS to speak out publicly if the Alliance’s views don’t reflect their own.
In addition to challenging franchise laws, the letter also disputes current warranty reimbursement rates—the amount OEMs must pay franchise dealers to fix vehicle issues under warranty. Dealers rely heavily on warranty work as a stable source of income. However, the way manufacturers currently handle reimbursement work is unfair and demoralizing to technicians. Technicians want to do customer-paid work, not warranty work. OEMs continue to squeeze labor times nd part pricing, making warranty jobs less appealing for fixed ops teams. This is not a simple business disagreement and it has real implications for customers.
Hall urges all dealers to apply pressure on their OEM representatives and demand clear, public statements. If the Alliance’s letter doesn’t represent the manufacturers’ views, they must say so—explicitly and soon.
So why now? Why play nice for years and suddenly send this letter? Hall speculates that the shift may be due to the DOJ’s active review of potential anti-competitive business models. That may have prompted the Alliance to position direct sales as the future under the guise of consumer benefit.
If the letter was misaligned with OEM beliefs, it should be retracted, and a public apology should be issued, along with accountability if the Alliance acted without explicit approval.
Hall also highlights the political miscalculation in targeting the franchise system now. With many auto dealers and dealership employees strongly supporting the current administration, a direct-sales model could alienate a powerful base of voters and lawmakers. He points out the strong presence of car dealers in Congress and warns OEMs not to underestimate the influence of their own retail partners.
In the meantime, VADA has already issued its own response letter to the DOJ, despite the official comment window having closed. It’s a rebuttal to what Hall calls “the untruths” within the Alliance’s filing. He encourages dealers to read it and ask hard questions of their OEMs and dealer councils.
