Governor Ron DeSantis of Florida signed a bill that substantially protects car dealerships that have been in business for a long time. This hurts both automakers and customers. Under the bill’s terms, companies using a dealer model can’t sell directly to consumers. The bill was signed into law on Monday. If a car company chooses to fight markups, it ensures that dealerships are rewarded for after-sale vehicle upgrades and are protected from costs set by the manufacturer. Automakers like Tesla, Rivian, and others that sell directly to customers are safe now that there are no stores. In this part of the law, automakers with active businesses cannot sell cars directly to customers. This is to stop people from buying vehicles from places other than dealerships. Ted Smith, president of the Florida Automobile Dealers Association, said, “By doing this, we made a clear distinction between a manufacturer that has never had dealers and may never have them and those that have relied heavily on their dealerships as their marketing and sales presence in Florida.” FADA says that without more dealerships, people will pay more and get less care. Another part of the signed law protects businesses that want to make money on cars. It stops automakers from setting prices that dealerships have to follow. Some big automakers are trying to do this because dealership markups on hard-to-find vehicles are increasing. Also, automakers would have to give their cars to their franchised dealerships fairly. Also, the law says that retailers must be paid for upgrades and activations that can be done over the air. Instead of fighting the in-car subscription model, in which the automaker gets the full benefit of any after-sale OTA upgrade, the law wants to protect the dealership’s interests by requiring that it be paid for any electronic promotion or activation made by a customer within two years of buying the vehicle. On the other hand, OEMs and industry trade groups are firmly against rewarding retailers for things that have nothing to do with selling. In a letter to Governor DeSantis, Wayne Weikel, the vice president of state government relations for the Alliance for Automotive Innovation, said manufacturers wanted to pay dealers back if they helped a customer with an over-the-air upgrade. “However, we completely disagree with the idea that dealers should be paid for goods they didn’t make, sales they didn’t bring in, services they didn’t give, and support they didn’t give.” It’s hard to argue against the fact that this Florida law is bad for consumers. There are a few parts of the bill that don’t seem to help the buyer directly, like banning dealer markups, which were a big part of the recent record-high inflation rate, and making it harder to buy cars and possibly raising the price of in-car software by making dealers get paid for upgrades done after the sale without their help. Instead, they keep the business safe from changes in the market.
