Fla.Gov. Ron DeSantis signed a measure prohibiting most direct-to-consumer vehicle sales, but certain provisions will allow to continue to operate its franchiseless model.
Florida Gov. Ron DeSantis on Monday signed a measure prohibiting most direct-to-consumer vehicle sales, but certain provisions will allow Tesla to continue to operate its franchiseless model.
It was thought by some the bill would be a threat to Tesla’s alternative method of online and retail location sales. However, the bill only prohibits automakers from selling directly if they have a franchise agreement in place.
Ted Smith, president of the Florida Automobile Dealers Association, said the provision will not encroach on digital innovation at stores but instead ensure legacy automakers cannot bypass dealerships.
“In doing that, we made a clear delineation between a manufacturer that has never had dealers and maybe never will, and those who have been heavily dependent upon their dealerships to be their marketing and sales presence in Florida,” Smith said.
The Alliance for Automotive Innovation, a trade group in Washington, D.C., believes making this distinction “will cement an unequal regulatory system.”
The bill requires “some automakers to comply with restrictive, costly, and complex franchise laws (including this bill’s provisions discussed above) while exempting others,” Wayne Weikel, Alliance vice president of state government affairs, wrote in a letter to DeSantis.
The measure also requires dealerships be compensated at least 8 percent of the payment for any post-purchase electronic vehicle upgrades or activations sold within two years of a new-vehicle sale.
“Dealers will always be the contact point for customers who buy vehicle accessories either at the time of sale or after the sale and over the air,” Smith said.
The Alliance also spoke out against this measure: “Manufacturers want to compensate dealers if they helped a customer perform an over-the-air update,” Weikel wrote in the letter. “We reject, however, the premise entirely that dealers should be compensated for products they did not develop, sales they did not make, services they did not perform, and assistance they did not provide.”
The bill was one of a number of measures to strengthen dealership protections that made its way through state legislatures this year. The Florida bill also prohibits automakers from setting vehicle prices and requires them to equitably distribute vehicles among dealerships.
The bill was championed by the Florida Automobile Dealers Association as both enshrining the dealer’s “place in the auto retail market” and prioritizing franchise price competition that is financially beneficial to the consumer.
The measure also allows a motor vehicle association to request an inquiry by the state Highway Safety and Motor Vehicles Department into violations of franchise protections.
Smith believes this protects individual stores from having to potentially enter a conflict with their manufacturer. On the other hand, Weikel wrote that the provision is an “unnecessary bureaucratic overreach” that will “clog up” the investigative process.
The new law will go into effect July 1. Automotive News