Florida Governor Ron DeSantis Signs Bill Blocking Most Direct-to-Consumer Auto Sales

Dealer franchise laws are controversial at best and downright divisive in most cases, but they remain a significant force in the automotive industry despite the political noise surrounding them. Florida governor and GOP presidential candidate Ron DeSantis recently joined the fray when he signed House Bill 637, legislation that blocks direct auto sales for most brands but not all. 

As Inside EVs pointed out, the bill’s language prohibits direct-to-consumer sales by automakers. However, those that don’t already have existing franchise agreements can, so brands like Tesla, Rivian, Lucid, and others. While that won’t be a significant change from the current automotive retail situation, the law could give those automakers a competitive advantage over legacy companies, as it lets them sell vehicles at lower prices without covering dealers’ overhead.

Calls to revise or nix dealer franchise laws have become louder recently, as car buyers have felt the wrath of inflation, supply chain shortages, and extreme demand for some models. Those conditions have given dealers an open door to raise prices on new and used vehicles, which has led some to question why automakers can’t bypass dealers and sell directly to consumers.

Dealer franchise laws prevent that in most cases. They are designed to protect buyers, and the National Auto Dealers Association (NADA) notes that they can also benefit manufacturers. While those claims are open to debate, the net effect on the average car buyer is that the choice is to buy from an established auto brand at a dealership or buy from an upstart EV company at a direct store.

There’s certainly a case to be made that local dealers play an important role in service and product support. Still, the remote service and mostly digital support programs offered by companies like Rivian have earned relatively solid reviews, and the brands’ customers are among the happiest respondents in surveys. 

[Image: Hunter Crenian via Shutterstock]

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