This ConsumerGram explores the consequences of various state laws written to advantage automobile dealer franchises. Because many of these laws work to increase vehicle costs and set geographic restrictions that limit price competition, they serve to transfer income from the buying public to dealerships. Specifically, this ConsumerGram finds that American consumers collectively pay $47.5 billion more per year on the purchase of new automobiles due to regulations that limit dealership competition. Because there is a host of other dealer-friendly laws being enacted and proposed, the total harm to consumers is likely to be much higher than measured here. This raises a question — why do state legislatures act to advantage already profitable businesses at the expense of consumers?
The ConsumerGram is available here.