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A typical franchised, new car and truck dealership in the United StatesCar dealership showroom
In the United States, a car dealership is a business that sells cars. A car dealership can either be a franchised dealership selling new and used cars, or a used car dealership, selling only used cars. In most cases, dealerships provide car maintenance and repair services as well as trade-in, leasing, and financing options for customers.
Used car dealers can carry cars from various different manufacturers, while nearly all new car dealerships are franchises associated with one or more manufacturers. Some new car dealerships may carry multiple brands from the same manufacturer. In some locales, dealerships have been consolidated and a corporation may control a chain of dealerships representing several different manufacturers.
In the United States, direct manufacturer auto sales are prohibited in almost every state by franchise laws requiring that new cars be sold only by dealers.[1] Economists have characterized these regulations as a form of rent-seeking that extracts rents from manufacturers of cars, increases costs for consumers, and limits entry of new car dealerships while raising profits for incumbent car dealers.[2] Research shows that as a result of these laws, retail prices for cars are higher than they otherwise would be.[2]
^Bodisch, Gerald R. (May 2009). "Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers". United States Department of Justice. Retrieved April 7, 2024.
^ abLafontaine, Francine; Morton, Fiona Scott (2010). "Markets: State Franchise Laws, Dealer Terminations, and the Auto Crisis". Journal of Economic Perspectives. 24 (3): 233–250. doi:10.1257/jep.24.3.233. ISSN 0895-3309.
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