The Alliance for Automotive Innovation has asked the U.S. Department of Justice to examine whether state franchise laws restrict competition and harm consumers, provoking a battle with the National Automobile Dealers Association in an auto industry clash of the titans.
The alliance’s May 27 letter, addressed to the government’s new Anticompetitive Regulations Task Force, specifically asks the Justice Department to examine state laws governing vehicle warranty service and state laws that limit establishing franchised new-vehicle dealerships in certain areas.
NADA views the alliance’s actions as “a direct attack to the franchise system,” the group told its board and its Automotive Trade Association Executives in a July 14 email obtained by Automotive News. The Automotive Trade Association Executives represent more than 100 state and metropolitan franchised new-car dealer associations in the U.S. and Canada.
The alliance represents major U.S. automakers, and NADA represents more than 16,000 franchised car dealers.
“If there is such thing as a holy war in the franchise world, it’s a holy war,” said Don Hall, CEO of the Virginia Automobile Dealers Association. The alliance’s letter is “an affront to this industry.”
The U.S. Department of Justice did not respond to a request for comment. It established the Anticompetitive Regulations Task Force in March as part of an effort to eliminate anticompetitive state and federal laws and regulation that “undermine free market competition and harm consumers, workers and businesses.”