Manufacturer Direct: How will that impact our industry? by Mark Sheffield

Over the last couple of years, I’ve had many discussions with dealers who are concerned that the OEMs are going to start selling products directly to consumers. As many powersports and RV dealers fall under motor vehicle franchise laws that prohibit direct sales, new legislation will need to be passed in some states to enable this. I do know that Tesla, Rivian, and others are spending tens of millions on lobbyists to push these changes.

While I have no doubt that this will be something we’ll have to confront, I also point out that this is not something that OEMs can do without taking on additional costs. They’ll need sales staff, service facilities, people to do paperwork and registrations, and all of the other tasks that dealers currently take care of. Over the last 20 years, manufacturers have de-risked their operations. Where they used to store excess stock, dealers now do that. It’s dealers who fix vehicles that weren’t assembled correctly. We take care of the goodwill repairs and pick up customers when they are broken down on the side of the road. It’s dealers who work hard to get customers financed, and we take the hit when fraud is involved. For an OEM to move to a direct sale model, they’d need to move all of these risks onto their balance sheets. They would need to build, staff, and stock service centers, and shareholders aren’t going to be happy about that.

The final thing I’d like to point out is that dealers are the ones who come face to face with the customer. Back in my days as a GM, there were times where we couldn’t make a customer happy, and they’d often want to speak to the manufacturer. When those customers got to me and asked for a phone number, I would always give it out, but I’d add a disclaimer to go with that number. […] With only a few exceptions, the majority of OEMs do a horrendous job of handling upset customers. Instead of having a ticked off customer in their face, they are on the other end of the phone. They rarely offer solutions and in many situations they’ll blame the dealer. In most cases, they just make things worse.

If our vendors go factory direct, who are they going to blame when things go wrong?