Florida currently has an intensely competitive retail automobile market, which is the result of a two-tiered franchise system that fosters price competition between dealers, designed to ultimately drive prices down for consumers.
Florida’s franchise system works like this: Franchised dealers contractually purchase vehicles from specific manufacturers. The manufacturer makes the car and sells it to the dealer. The dealer markets the car, prices it based on trade-ins, financing, and vehicle protection products, and then sells and delivers it to the consumer.
In the past few years, we have begun to see these same manufacturers, who have depended on their dealer networks, attempt to subvert both Florida law and their franchise agreements to increase their profits. These tactics are threatening the price competition that franchised dealers bring to the consumer, as well as thousands of local high-paying jobs and billions of dollars in tax revenue annually.
Some of these legacy manufacturers (manufacturers that have independent dealer networks) are controlling and even withholding vehicle allocations from their contracted dealer networks to mirror programs introduced by newer electric vehicle (EV) automakers like Tesla or Lucid. To be clear, Florida’s franchised dealers do not oppose the entry of new EV automakers. We are excited about selling the EVs that our legacy manufacturers are making and look forward to competing with the new direct sellers.
However, we do oppose legacy manufacturers competing directly with the very dealers they have contracts with and the very dealers who have expended millions on sales and marketing. Proposed legislation would prevent legacy manufacturers from competing online or directly with their contracted dealers. Destroying the franchise system only harms Florida’s consumers and economy.
In 2021 alone, Florida’s automobile dealers generated the largest amount of tax revenue in the state – $6.2 billion. We also spend millions in real estate investments annually and provide hundreds of thousands of local, high-paying jobs to Floridians. This does not even begin to detail the community support and philanthropic investments we pour into our cities.
We also see the need for the Florida Automobile Dealers Association to bring requests for regulatory action by the Florida Department of Highway Safety and Motor Vehicles against a legacy manufacturer when they are in violation of the law or their contractual obligations.
This would be an important clarification in law, because while individual dealers can currently request an action, they often don’t for fear of retribution by the manufacturer who supplies their inventory. This session, we encourage lawmakers to consider needed legislation to preserve the competitive automobile market in Florida.
Chris Kraft is owner of Kraft Nissan in Tallahassee.