Kristian Stout and Subi Ramakrishnan on How Franchise Laws Raise New-Car Prices
CPG Click Petróleo e Gás recently highlighted ICLE research by Kristian Stout and Subi Ramakrishnan showing how state franchise-dealership laws continue to limit direct-to-consumer sales and increase the final price of new cars. Read the full article here.
Buying a new car can be quite costly, and a study by the International Center for Law & Economics (ICLE) explains why. State laws that require vehicles to be sold only through franchised dealerships increase the final price by up to $4,992 — about R$ 26,000 for a $50,000 car.
The ICLE study details that maintaining large physical structures and a staff adds up to $1,900 to the price of each vehicle.
However, according to the ICLE, this protection model ends up being passed on to consumers. Protecting an established distribution channel is not the same as protecting the end customer, the organization states.