Reader Question: Dealer Law?

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Here’s the latest reader question, along with my reply!

Mika asks: In your recent article about car dealerships, you write: “But in most states, you can only buy them one way – through a dealer . . .Because that’s the law.” What law? State or federal? Do you have a reference or the statute number so I can look it up?

My reply: It’s illegal in most if not all states for manufacturers (e.g., Ford, Toyota) that have franchised dealerships (which they all do) to sell cars directly, which would amount to undercutting the contractual obligations they have with their franchised dealerships. The laws vary from state to state – more info here.  Tesla has been challenging the laws  – because it wants to sell directly to customers.

My personal view is that people buying cars should be free to choose the route that they prefer, and let the market decide which route is best. My bet is that both “models” would exist as some people prefer to shop at a dealership – to “kick the tires,” develop a back-and-forth with the sales staff – while others are ok with buying online.

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Got a question about cars, Libertarian politics – or anything else? Click on the “ask Eric” link and send ’em in!

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  1. You have to leave Texas to buy a new Tesla since state law doesn’t allow sales of new cars without using a retail dealership.

    I always liked the fact if you wanted a Ranger boat you could get a better deal and get one custom made by making an appt. and going straight to Flippin and tour the plant and chose what you wanted for your boat.


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