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Why You Can't Buy a Car Direct From the Factory

How great would it be if you could just visit a manufacturer's web site, configure your vehicle exactly as you want, and purchase it with complete price transparency without having to go through a dealership?

Most car buyers would prefer it this way, but it's actually illegal to do so.

With so much shopping being done online, many people wonder why you can't just buy a car directly from the factory - it would make the car shopping process so much easier.

It all goes back to the days of Henry Ford when mass vehicle production first began. Back then, it made sense to sell cars through a network of independent dealers.

By doing so, Ford created a buffer to cushion fluctuations in sales. Ford's customers were actually the dealers, who would need to purchase and store up to 60 days worth of vehicle inventory. Since there were no options on vehicles back then, there was no need for special orders and the franchise system made sense.

Over the years, the dealers became more powerful and formed strong lobbying groups to ensure States made it illegal for consumers to purchase vehicles without dealer involvement. So although you may see services such as CarsDirect that claim you can buy vehicles online, dealers always remain involved.

And it doesn't look like this will change anytime soon - at least for legacy brands. If anything, the franchise laws have gotten even stricter, thanks to the political clout that dealers have in most States.

The silver lining has been new entrants into the market such as Tesla, Rivian, and Lucid. These are electric vehicle manufacturers that don't have franchised dealers, and so aren't forced to follow franchise dealership laws (in most states). Some states have prevented these brands from selling their vehicles directly, but most allow it.

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About The Author

Gregg Fidan Gregg Fidan is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.
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