The zinger:<p>> Dealers say laws passed over the decades to prevent car makers from selling directly to consumers are justified because without them auto makers could use their economic clout to sell vehicles for less than their independent franchisees.<p>To rephrase: Auto dealers increase the price of cars without producing value, therefore they must be protected by law or they would cease to exist.
NPR Planet Money has a great episode on the history of car dealerships: <a href="http://www.npr.org/blogs/money/2013/02/12/171814201/episode-435-why-buying-a-car-is-so-awful" rel="nofollow">http://www.npr.org/blogs/money/2013/02/12/171814201/episode-...</a><p>Basically, everyone in this thread is right.<p>- Local dealerships were originally founded because in the 1920s, cars were big/expensive and hard to move around the country. Cars needed a lot of repairs, so local dealers to service them made sense.<p>- During the Great Depression, car manufacturers continued to make cars despite no one buying them. So they forced dealerships to purchase cars, or else get banned from selling their brand ever again (effectively terminating the business, obviously bad if you have loans and other capital investments). This was before overseas competition from Japanese/Korean manufacturers existed, so losing your contract to Ford meant you were pretty sunk.<p>- Dealerships fought back by getting legislation passed to protect them legally, slowly granting more power to the dealerships over time. Now the balance of power is far, far on the side of dealers - manufacturers cannot shut down dealerships, cannot control who runs them, must provide cars to dealers even if they are in poorly profitable areas, cannot tell the dealers what to sell, no real way to incentive dealers to not be "car salesmen" assholes, etc etc.
The link takes me to a paywall. The non-paywall version is: <a href="http://stream.wsj.com/story/latest-headlines/SS-2-63399/SS-2-255429/" rel="nofollow">http://stream.wsj.com/story/latest-headlines/SS-2-63399/SS-2...</a>