Removing Dealership Monopolies Could Save You $1,950 on a New Car

Get ready for it! Holiday deals are about to be in full swing as automakers and car dealerships begin to advertise “unbeatable” end-of-the-year deals and “amazing” savings opportunities.

Want to hear a better deal? Removing the car dealerships’ monopoly on vehicle sales could save Americans $1,950 on a new car.

If you want to buy a new bicycle, you can go to a local bike store or a big-box retailer, or even order one online. If you want to buy a new car, you have to go through a dealership that has been approved by the state. The dealers behave like monopolies, using their government privilege to raise prices and hurt both consumers and manufacturers.

Not only do new dealerships require state approval, but direct sales from manufacturers to consumers are prohibited. The result is wasteful.

Instead of having consumers directly order the options they want from the auto manufacturer, the manufacturer has to guess what will be popular, and it’s up to the dealerships to sell. When General Motors experimented with a direct-order model in Brazil, consumers saved 6 percent and got exactly the options they wanted.

Each state controls its own market, so your state could be the first to allow a free market in new vehicles—and you could be the first to save thousands. That’s a better deal than you’ll see on TV.