A study by the International Center for Law & Economics finds state laws that require automakers to sell through franchised dealers add roughly $3,934–$4,992 to each new-car transaction.
The ICLE estimates inventory-carrying costs of $1,045–$1,105, interest costs at 6–9% and about $1,600 to move inventory, plus facility, staff and commission overhead of $1,200–$1,900 per vehicle.
The study also cites market fragmentation and potential Dormant Commerce Clause burdens on interstate commerce, and says the franchise model is "structurally incompatible" with software-defined vehicle updates and digital platforms.
Franchise laws originated to protect independent dealers, the study notes, but the ICLE argues the current model imposes persistent costs and may hinder innovation as retailing and over-the-air services grow.
This article is based on reporting from Jalopnik.
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