27 In the coming years, it is more critical than ever for dealers to vigorously defend laws that prohibit manufacturers from competing against their own franchisees. to sell EVs, or will Ford use this transition to undermine its relationship with dealers? The potential threat to dealers is significant. Tesla, Rivian, and Lucid all sell directly to consumers, and state franchise law prohibiting direct sales are increasingly challenged. However, the greatest threat to dealers is not direct sales from the likes of Tesla or Rivian. It’s direct competition from a dealer’s own manufacturer. California’s franchise laws have never prohibited direct sales. Instead, the Golden State bars manufacturers from competing against their own franchisees. In other words, a manufacturer can operate as both a dealer and a manufacturer, so long as it doesn’t have independent franchisees. Defending this law is the top priority for CNCDA. That’s why we filed a petition against Volvo on the Care by Volvo program, which sought to transform dealers into mere agents of the manufacturer. Thankfully, the New Motor Vehicle Board and the Department of Motor Vehicles agreed that the program violated California law and discontinued it in our state. In the coming years, it is more critical than ever for dealers to vigorously defend laws that prohibit manufacturers from competing against their own franchisees. These laws are just and represent sound public policy. Dealers invest millions of dollars in facilities and employees, which enrich local communities. In making these investments, dealers understand that they will face incredible competition (from dealers within the same line and other lines), and success is far from assured. However, dealers should be able to rely on the reasonable assumption that their manufacturer partner, who is the sole provider of new vehicles to a dealership, will not directly compete against them. 3
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