Local dealerships benefit consumers: Opposing view
Companies offer competition, services that manufacturers may not
In 2012, Suzuki stopped selling cars and trucks in the United States after decades in the American market. Fortunately for Suzuki customers, they could still get those cars serviced by local dealership groups that owned franchises of the disappearing company.
This is one of the many reasons that local dealerships are good for consumers and communities alike. Consumers have access to servicing on their cars and trucks virtually anywhere in America, at any time, and even if the manufacturer goes out of business.
Consumers benefit from price competition from local same-brand dealers, which has been shown to lower prices significantly. And communities benefit from the presence of locally owned businesses and the million-plus good paying jobs they create. Local dealerships are in fact one of the last fields in America where a worker without a college degree has great job opportunities with paths to advancement in sales, service or management.
Perhaps most importantly, price competition by local dealerships demonstrably leads to lower consumer prices. A 2015 study of car sale data found that when local same-brand dealerships compete in proximity to one another, consumers save hundreds to thousands of dollars on the purchase of a new car. That’s because dealerships compete on price and offer discounts to get a customer’s business. And the only way dealerships survive today is by creating customers for life. That means they work hard to provide value to consumers.
Tesla’s CEO posted a note on Twitter stating it will never offer discounts on new vehicles to consumers. Literally, “never.” That’s because Tesla wants to be able to set prices high, at the expense of customers. That might be OK for luxury car manufacturers, but it’s a bad deal for average car buyers.
Local dealerships demonstrably compete in a way that saves consumers money and provides access to service. All of these are a major public good and key reasons why a variety of states require local dealerships to sell and service new cars and trucks.
George Landrith is president of Frontiers of Freedom, a group that supports limited government.