BATON ROUGE – The Louisiana Automobile Dealers Association (LADA) announced on Dec. 2 the release of a comprehensive study commissioned by the National Automobile Dealers Association (NADA), confirming that traditional franchised auto dealerships remain the most cost-effective option for consumers, providing significant savings and added value compared to direct-to-consumer (DTC) and hybrid agency sales models.
The study—“Automotive Cost of Distribution: An Economic Cost Analysis of New Vehicle Distribution Channels in the United States”—was conducted by global management consulting firm Oliver Wyman. It reveals that the traditional dealership model not only matches DTC in cost-efficiency but also offers additional benefits that go beyond price, countering claims made by auto manufacturers promoting direct-to-consumer or hybrid agency sales models.
“This national study confirms what we’ve always known: Louisiana’s auto dealerships, like those across the U.S., deliver value that DTC models simply can’t match,” said Coulter McMahen, President and CEO of LADA. “Customers aren’t just saving money—they’re benefiting their communities through tax revenue, job creation, and the philanthropic contributions that dealerships provide.”
The dealership franchise model has been a cornerstone of the American economy since the early 20th century. Today, there are 18,000 dealerships across the U.S., with over 350 new car and heavy truck dealerships in Louisiana alone.
In recent years, however, some auto manufacturers have pushed for direct-to-consumer approaches, claiming these models would lower costs and improve distribution efficiency. The Wyman study, after extensive analysis of U.S. auto sales and distribution, found these claims to be inaccurate. Consumers ultimately benefit more from purchasing through franchised dealerships, where costs are comparable and the value provided is significantly greater.
The report highlights several key advantages of the dealership model:
Competitive Pricing: Franchise dealers use local market knowledge to offer optimized pricing, ensuring consumers pay less than they would through DTC models.
Comprehensive Services: Dealerships provide a full range of services, including financing, trade-ins, and vehicle maintenance, offering consumers unmatched convenience and value.
Community Impact: Dealerships reinvest in local economies by creating jobs, generating tax revenue, and supporting philanthropic initiatives, strengthening communities nationwide.
“The dealership model is critical to keeping vehicle distribution affordable and consumer-friendly in the U.S.,” McMahen added. “It wasn’t just designed for efficiency—it was built to serve the communities where we live and work, and this study proves it remains the most effective model for consumers today.”
As the auto industry evolves, LADA and dealerships across Louisiana remain committed to advocating for consumers and providing the superior service that franchise dealerships deliver. The study reinforces the importance of supporting this proven model over less comprehensive alternatives like direct-to-consumer channels.
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