Repeal of Current Car Dealership Laws Seen as Critical to Technical Innovation

A powerful coalition of conservative and Tea Party groups has written to leaders of the Texas Legislature, urging them to move this session to end the state's laws that require new cars to be sold only through third party dealerships, News Radio 1200 WOAI reports.

The group says Texas is one of only four states in the country with 'captive sales' laws, and the laws are not conservative, and restrain trade and innovation.

"During the last century, legislation was passed in Texas giving franchised auto dealers a legal monopoly on new car sales in the state, and at the time, lawmakers had their reasons for this consolidation," the groups say in the letter.  "Today,  however, our fellow Texans, who deserve every convenience the free market can provide them, are stuck in an expensive, antiquated model of buying new automobiles."

A bill to repeal captive sale has been introduced by State Rep Jason Isaac (R-Dripping Springs).  He told News Radio 1200 WOAI with major changes in automobile technology right around the corner, it will destroy Texas' competitiveness to require  the tech companies which are leading that revolution to first go through the expensive and cumbersome process of setting up a dealer network to sell autonomous vehicles.

"With autonomous vehicles coming out there are new manufacturers coming into the market every couple of years if not more often," Isaac said.  "They want to be able to sell their products."

He points out that  the carmaker Tesla does not use third party dealers, but sells cars the way Best Buy sells TVs, in stores in malls and strip centers.  He says Texas is at a disadvantage because customers can only go to Tesla 'showrooms' to look at cars, but the state's captive sale laws prevent Tesla representatives from offering test drives or even quoting prices.I

saac points out that the biggest developers of driverless cars, which will be on the road before we know it, are Google and Uber.  They are not likely to establish a dealer network simply to operate in Texas, they will just bypass the state and bring innovation elsewhere.He says the first autonomous vehicles are likely to be delivery vehicles and vehicles supporting industry and manufacturing.  So captive sale laws could determine whether Texas thrives in advanced manufacturing or becomes a backwater.

"One of the largest transportation markets is right here in the state of Texas," he says.  "(By repealing this law) would could attract more manufacturers and more good jobs for the constituents we serve."

The third party dealership rule was passed in the 1930s, largely to make sure that people in rural areas and small towns had access to automobiles.  There was a fear that if carmakers could sell directly to customers they would only sell cars in big cities.  The captive sale rule encouraged local businessmen to establish dealerships in their home towns.

The dealerships argue today that current laws make it more certain that drivers of certain brands will have knowledgable repair professionals in their area who know their cars, and that parts will be avaialble.

Isaac says auto dealers should not fear the end of captive sale laws.  He points out that 46 states don't have them, yet they have thriving dealer networks today.  He also points out that people are unlikely to stop buying Fords, Toyotas, and Volkswagons any time soon, and for the foreseeable future the traditional automakers will control the market, and will continue to sell cars through their existing dealerships.

He says you are not likely to be able to buy a Chevy at Walmart any time soon."

I believe that dealers are going to be around for years to come," he said.  "That is where people go to buy or service their vehicles."

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