As posted to CBT News on 6/14/22

(Click Image to View Clip – Run Time: 18 min, 46 sec)

Automakers have been making some unprecedented moves with regards to electric vehicles . . . so much so that many franchise dealers are becoming concerned about the future of their businesses.

In this clip, automotive attorney Len Bellavia sits down virtually with Jim Fitzpatrick on CBT News’ “Inside Automotive” to discuss recent factory announcements as well as his perspective on the future of the franchised dealer network model.

With OEMs implying that it is their wish to implement a direct-to-consumer sales model in some form or another, Bellavia states that franchise dealers are wondering if action needs to be taken. From his perspective, the broad dealer consensus seems to be that these issues generally resolve themselves as the initiatives from Ford, Volvo, and others are based on current statutory law, which is prohibited in all 50 states.

If franchise dealers are ultimately not going to be involved in price setting and customer interactions, there exists statutory prohibitions that would not allow direct selling programs by manufacturers.

The responsibility is now that of dealer advisory boards, dealer councils, state associations, and dealers themselves to negotiate their future positions, says Bellavia.  However it should be noted that lawsuits between dealers and OEMs tend to result in strained relationships.

“The entire future of the franchise system is at play here,” says Bellavia. “Dealers need to come to terms with the fact that state associations by and large have done an excellent job at giving dealers statutory protections. Now, it’s up to the franchise dealers themselves to invoke those protections.”

That said, what is it that makes manufacturers like Tesla and Rivian different?  It is because they are not legacy automakers, their business plans were created without franchised dealers. While the Tesla model is instructive, explains Bellavia, it does not give the legacy automakers free rein to emulate it.

Rather than engaging in a legal battle with the manufacturers, car dealers may file injunctions against the direct selling initiatives being proposed and shut them down relatively quickly. Bellavia believes that car dealers and OEMs should come together to try and coexist within a workable structure.  If however, OEMs cross the line, car dealers have a good legal standing to fight them.

It is Bellavia’s opinion that CEOs such as Jim Farley are testing the waters with their comments . . . and if the result is no tangible resistance from franchise dealers, they will keep moving forward.

(This is Blog Post #1230)

Leonard Bellavia is Founding Partner of the law firm of Bellavia Blatt, PC,  Len has spent his life in the automotive industry, having represented thousands of dealerships across the country. He has also commenced mass legal action on behalf of hundreds of franchise dealers in the United States District Courts against Daimler Chrysler, Ford, GM, Snap-On Tools, and the Tribune Company.