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Fighting Tesla inroads, NADA punches back in defense of franchises

June 20, 2014
As multiple states debate the merits of motor vehicle franchise laws — the New Jersey Assembly on June 16 approved a bill to allow consumers to buy electric cars directly from a manufacturer — the National Automobile Dealers Association on the same day rolled out a campaign to defend franchised dealers.
The NADA still won’t comment on state debates or confront Tesla, but it plans to rapidly spin out talking points and comments to influential journalists and policy experts, many of whom are questioning why franchise laws exist. 
"It’s going to take several forms, and it’s going to go on forever as long as I’m president of (the) NADA," Peter Welch said of the campaign. "We’ve got a great story to tell, and I don’t think it’s been told as articulately as it should have been in the past."
The NADA’s new "Get The Facts" initiative seeks to inform the media, opinion leaders and consumers about the numerous benefits of America’s franchised new-car dealer network through a website and variety of multimedia resources. The centerpiece of the project is a 150-second animated video detailing the benefits of the franchised dealer system, viewable at  
Other resources include a 30-second video, a fact sheet on the consumer benefits of dealers, a longer informative FAQ, a document explaining the reasons for state franchise laws, an infographic and other materials. The NADA has no plans to buy advertising, but said state and metropolitan dealer groups can use the materials it produced.
Among the findings of an NADA study:
• Manufacturers benefit from the high return on capital invested in manufacturing vehicles, as opposed to the low margin of retailing them. 
• Dealers bear the cost and risks of these investments — at virtually no cost to the manufacturers — and provide a vast distribution channel that benefits the consumer. 
• The average dealership today requires an investment of $11.3 million, including physical facilities, land, inventory and working capital.
• Annual operating costs totaled $81.5 billion in 2013, an average of $4.6 million per dealership. 
These costs include personnel, utilities, advertising and regulatory compliance.