In recent comments to the U.S. Department of Justice’s Anticompetitive Regulations Task Force, the Alliance for Automotive Innovation (The Alliance)—representing most major automakers—argued that state franchise laws are anti-competitive, inflate vehicle and warranty repair costs, and restrict consumer choice. This marks an aggressive escalation in the ongoing battle over the future of auto retailing and poses a direct threat to the franchise system that has served consumers and communities for generations.
In response, the National Automobile Dealers Association (NADA) submitted a robust defense of the franchise model, asserting that the dealer network is not only the most cost-effective method of selling and servicing vehicles at scale, but also a critical safeguard for consumer protection and economic stability. NADA pointed to a 2024 Oliver Wyman study that found the traditional dealership model is actually more cost-effective than direct-to-consumer or agency models when operating at scale—dispelling the myth that dealers are simply expensive “middlemen.”
The Alliance’s comments criticized state laws that limit manufacturers’ ability to unilaterally open new dealerships and that require dealers to be fairly reimbursed for warranty work. They argued these laws hinder competition and inflate service costs. NADA countered with evidence that such protections ensure consumer access to reliable, safe, and affordable service, especially in cases of warranty repairs and recalls—work that manufacturers often see as a cost rather than a public safety obligation.
Importantly for Washington area dealers, this public battle highlights a dangerous precedent: OEMs are now openly lobbying federal regulators to undermine state franchise laws that provide vital balance to an otherwise lopsided relationship. Should these efforts succeed, manufacturers could bypass existing dealer protections, vertically integrate distribution and service operations, and erode local accountability.
The franchise system works because it aligns the interests of the customer, the community, and the dealer. It ensures that even if a manufacturer falters, consumers still have a place to go for parts, service, and warranty fulfillment. Removing those safeguards would not only weaken consumer protection—it would destabilize thousands of small businesses across the country, including right here in the Washington area.
What Can Dealers Do?
- Stay Engaged: Follow NADA and WANADA updates closely and be prepared to speak out. The manufacturers’ comments to DOJ are a call to action.
- Educate Lawmakers: Connect with your state and local elected officials. Make sure they understand the franchise system’s economic and consumer value—and that weakening it helps Wall Street, not Main Street.
This is not a theoretical policy debate. It’s an existential question about who controls the retail car business—local entrepreneurs or multinational manufacturers.
Download Bulletin PDF