Fellow Dealers and ATAEs, 

Like all of you, along with everyone at NADA, I am deeply frustrated by the recent news from Volkswagen/Scout and Honda/Sony that they intend to retail their new vehicles directly to consumers.

NADA has spent the better part of two years working diligently to persuade Volkswagen and Honda from making the outrageous and misguided determination that attempting to sell their vehicles directly will be beneficial to them or their customers.

Through countless outreach attempts, including multiple letters and emails, invitations to engage in discussion, and even a trip to Japan, NADA again and again presented to these OEMs the central fact of the issue: The franchise system works best for customers and automakers alike.

This reality was recently reinforced by an independent study of the cost and value of new-car distribution by the consulting firm Oliver Wyman, which concluded that utilizing franchised dealers is more cost-effective than a direct sales channel, and provides tremendous additional value to automakers and consumers alike. 

We also made it clear – and will continue to do so – that any decision by any automaker to try to compete with or cut out its dealer partners is unacceptable, plainly illegal and will be challenged in statehouses and courthouses across the country – with NADA’s full support.

Franchised dealers are better than anyone at meeting their customers where their customers want to be met in the sales and service process, whether that’s the showroom, 100% online, or somewhere in the middle – which is exactly where most customers say they want to be. Dealers are fully committed to evolving and improving the franchise model and embracing new technologies and tools to help further improve the customer experience – which is already one of the best in the world based on customer satisfaction indexes.

The smart manufacturers, including the vast majority of legacy OEMs, have recognized the invaluable role their dealer networks play in their success. What’s more, as the newer EV-only companies continue to grow, they are invariably finding that they have no choice but to replicate the franchised dealer model to sell and service EVs at scale – and all are operationally moving in the direction of having dealerships in every way but the name.

NADA has been working with ATAE and the state and metro dealer associations to determine the best legal and legislative paths forward to protect the franchise system, enforce the law, and stand behind Volkswagen, Audi, Porsche, Honda and Acura dealers. And we will continue to do so.

At the same time, NADA will continue to press leaders of these brands to meet with us to discuss how they can use the proven success of the dealer franchise system to their benefit and avoid unnecessary and protracted state-by-state legal challenges.

But regardless of what direction this takes, you have my assurance that the protection and the preservation of the franchise system will always be NADA’s most pressing priority, no matter what.

Many thanks, 

Gary Gilchrist 

2024 NADA Chairman