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At the height of the dot-com bubble, Wall Street analysts, academics and consumer advocates claimed that “factory-direct” new-car sales would reduce costs, lower prices and deliver superior customer experiences. Despite the lack of evidence to support this contention, the debate has resurfaced as state legislatures consider changing franchise laws to allow some factories to sell directly to consumers. Past experiments by factories to sell directly have rarely, if ever, proven successful, and the results have only reinforced the need and value of having a network of franchised new-car dealerships. In the end, the franchised dealer network benefits consumers and manufacturers alike, providing fierce price competition among dealers and an extremely efficient distribution network that is acutely sensitive to local markets. Click here for the full commentary.
Source: The Detroit News