Car dealership

[1][2] The early cars were sold by automakers to customers directly or through a variety of channels, including mail order, department stores, and traveling representatives.

[5] Today, direct sales by an automaker to consumers are limited by most states in the U.S. through franchise laws that require new cars to be sold only by licensed and bonded, independently owned dealerships.

They are often located on properties offering enough room to have buildings housing a showroom, mechanical service, and body repair facilities, as well as to provide storage for used and new vehicles.

[17] In response, Tesla has opened city centre galleries where prospective customers can view cars that can only be ordered online.

[1] The franchisor can act opportunistically by imposing constraints and burden on the franchisee after the latter has incurred sunk costs, such as investing in physical assets and building up a reputation with customers.

The franchisor could for example require that cars be sold at low prices, and services be performed for little compensation.

This has led to dealerships becoming in essence hereditary, with families running dealerships in an area since the original issuance of their license with no fear of competition or any need to prove qualification or consumer benefit (beyond proving they meet minimum legal standards), as franchises in most jurisdictions can only be withdrawn for illegal activity and no other reason.

[27] This has led to consumer campaigns for establishment or reform, which have been met by huge lobbying efforts by franchise holders.

[28] According to a 2023 survey by the Sierra Club, two-thirds of US car dealerships did not have electric or hybrid vehicles for sale.

[29] Reasons for this include supply chain difficulties,[29][30] as well as a need for car dealers to make substantial investments in new employee training and infrastructure to be able to sell, service and maintain electric vehicles.

Internet use has encouraged this niche service to expand and reach the general consumer marketplace.