In a move that strengthens protections for traditional auto dealerships, Florida Governor Ron DeSantis signed a new law on June 15, 2023, that restricts most direct-to-consumer vehicle sales. However, the law includes provisions that will allow electric vehicle manufacturer Tesla to continue its direct sales model.
The new legislation was initially perceived as a potential threat to Tesla’s unique sales approach, which relies on online and retail location sales rather than traditional dealership franchises. However, the law only restricts automakers from direct sales if they have an existing franchise agreement
Ted Smith, president of the Florida Automobile Dealers Association, clarified that the law aims to prevent legacy automakers from bypassing dealerships, not to hinder digital innovation. The law differentiates between manufacturers that have never used dealerships and those that rely on them for marketing and sales in Florida.
However, the Alliance for Automotive Innovation, a Washington, D.C.-based trade group, criticized the law for creating an “unequal regulatory system.” The group argues that the law unfairly exempts certain automakers from restrictive and complex franchise laws, reports Automotive News.
The new law also mandates that dealerships receive at least 8% compensation for any post-purchase electronic vehicle upgrades or activations sold within two years of a new-vehicle sale. The Alliance for Automotive Innovation opposes this provision, arguing that dealers should not be compensated for products and services they did not provide.
The law is part of a series of measures aimed at strengthening dealership protections. It also prohibits automakers from setting vehicle prices and requires them to distribute vehicles equitably among dealerships. The Florida Automobile Dealers Association lauds the law for preserving the dealer’s role in auto retail and promoting franchise price competition beneficial to consumers.
The law also enables motor vehicle associations to request state investigations into violations of franchise protections, a provision criticized by the Alliance for Automotive Innovation as an “unnecessary bureaucratic overreach.”
The law will take effect on July 1, 2023.
