NJ CAR

Consumer Benefits of the Motor Vehicle Franchise System

An Important Message About The Motor Vehicle Franchise System

New Jersey’s neighborhood new car and truck dealers represent the economic engine on Main Street. They create fierce price competition and prevent manufacturer monopolies; protect consumer safety by offering independent safety recall, warranty and repair service; generate good-paying local jobs, tax revenues and economic benefits; and simplify the complex car purchasing and registration process. Factory-direct sales are nothing but an attempt to monopolize the electric vehicle market, eliminate competition and limit consumer access to independent warranty and safety recall service.

New Jersey’s motor vehicle Franchise Practices Act supports consumers and neighborhood dealerships, providing the best opportunity to ensure continued local ownership and operation of dealerships, which benefits Garden State consumers and local communities.

Keep competition, safety, jobs, tax revenue and service with New Jersey’s franchised auto dealers.

PRICE COMPETITION

  • Franchised dealers compete fiercely (both intra & inter-brand) for vehicle sales and service, driving down costs and improving customer service.
  • Price transparency allows customers to benchmark pricing and negotiate. In a direct sales model, the factory fixes the price, eliminating any opportunity for consumers to negotiate price.
  • “Middleman Costs” are a myth. Retailing expenses exist regardless of the distribution model. In a factory-direct model, the costs of showrooms, car lots, sales staff and holding inventory would simply shift from the dealer to the factory. There are no consumer benefits or cost savings.

CONSUMER SAFETY 

  • Dealers ensure safety recalls and warranty work are addressed fairly and efficiently, because their economic interests are more aligned with consumers than manufacturers. Dealers are incentivized to identify and respond quickly to safety concerns, since they are paid by the automaker to perform warranty and recall work. Automakers view recalls and warranty work as an expense.
  • Franchised dealers create an extra layer of accountability for public safety. New Jersey motor vehicle laws require that franchised dealers have service facilities to perform warranty and recall work.
  • Having a dealer advocate on their side makes safety, warranty, and service solutions easier for consumers.

LOCAL ECONOMIC BENEFITS 

  • Dealers generate good-paying, local jobs with benefits and opportunities for advancement and professional development.
  • New car dealerships in New Jersey are a $37 Billion per year business and have a total payroll of nearly $3 billion, directly employing more than 39,000 people across the Garden State and supporting another 37,000 jobs.
  • Franchised new car dealers generate $1.82 billion in state and local taxes.
  • Dealer profits stay in local communities, whereas profits generated by factory-owned stores flow up the corporate food chain to out-of-state Wall Street investors and Silicon Valley venture capital funds.
  • Local dealers hire local people. When the going gets tough, an out-of-state corporation will close a local retail outlet and move on. Local dealers are there for consumers in good times and bad with jobs that cannot be moved to the Sunbelt or outsourced overseas.

ADDED VALUE

  • Dealers simplify the complex car-buying process and serve their customers for the entire ownership experience.
  • Consumers want a convenient purchasing process. Dealers offer a wide variety of financing options, which are frequently more affordable than bank loans. More than 60% of all new car purchases include a trade-in to cover a portion of the down payment, and dealers provide a hassle-free market for trade-ins. Dealers also assist with the complex system of titling, registration and reams of regulatory paperwork.
  • Consumers value personal service and local relationships, especially when making a purchase that’s second largest to a house. They want to interact with a neighbor, not a manufacturer headquartered thousands of miles away or on some distant continent.

Please take a few minutes to watch the video below and learn more about why the franchise system is much better for consumers than the factory-direct sales model: