Gov. DeSantis signs car dealership protection bill banning most direct-to-consumer auto sales

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Tesla got a carve-out.

It’s a good day for auto dealers in the Sunshine State, and not so great for motorists who’d prefer a more direct route for buying a new coupe, sedan or SUV.

Gov. Ron DeSantis signed a measure (HB 637) Tuesday banning most direct-to-consumer vehicle sales, solidifying the future viability of car-selling operations across the Sunshine State.

The measure, championed and authored by lobbyists representing the Florida Automobile Dealers Association (FADA), prohibits most automakers from selling vehicles directly to buyers.

That restriction, which goes into effect July 1, was considered a direct threat to the business model of Tesla, an electric vehicle (EV) manufacturer that — unlike other car companies — sells its vehicles online and through retail locations rather than third-party dealers.

But as Florida Politics noted previously, lobbyists, including Taylor Biehl and Jeff Sharkey of Tallahassee-based Capitol Alliance Group, hammered out a deal adding language to the bill that should keep Tesla galleries open.

The change confirms newer manufacturers like Tesla, Rivian and Lucid are authorized to hold a franchise dealer license for direct sales of EVs if they are not otherwise prohibited under federal law. That carve-out apparently does not extend to traditional manufacturers such as GM, Ford, Honda and Toyota, all of which now make battery-powered cars.

HB 637 — which cleared both chambers of the Legislature with just two “no” votes, from Democratic Reps. Anna Eskamani and Angie Nixon — also bars manufacturers from reserving or incentivizing the sale or lease of vehicles, including electric or hybrid cars.

Refusing to provide a dealer with a supply of new vehicles by model, mix or color equitable to that of other dealers is forbidden too.

So is requiring dealers to set vehicle prices at rates manufacturers recommend, locking in the long-standing but tedious tradition of buyers having to negotiate with salespeople whose individual profits benefit from ballooned price points.

Dave Ramba, a longtime lobbyist for FADA, said the measure will ensure there is competition among dealers, which leads to better prices and services for consumers.

“The attempt by auto manufacturers to cut out the dealer would only result in higher prices and less customer service to the public,” he said. “The new car dealer is the customer’s advocate when it comes to warranty work and service on a manufacturer’s product, and this bill will protect that.”

Some economists have said the opposite, advising that states should loosen strictures on direct sales of new vehicles if they want to help consumers get lower prices. That’s hardly a new position. In their 2017 study, “Retail Auto Sales: Tesla v. State Vehicle Franchise Laws,” Fiona Scott Morton of the Yale School of Management and Ann McDermott of Blue Sky Consulting Group noted that concern about experience dealer licensing dates back decades and is widespread in economics literature.

“By allowing their vehicle dealer licensing laws to be hijacked to protect incumbent franchised dealers and their manufacturers, states are picking winners and losers in the U.S. auto industry,” they wrote.

In 2014, while commenting on several New Jersey bills concerning direct-to-consumer auto sales, staff from the Federal Trade Commission said, “Our principle point is this: absent some legitimate public purpose, consumers would be better served if the choice of distribution method is left to motor vehicle manufacturers and the consumers to whom they sell their products.”

As detailed by investigative reporter Jason Garcia in his blog, Seeking Rents, more than 70 professors across the country signed an open letter in April 2021 urging calling the current sales arrangements in place “written for the mid-20th Century” and urging states to let manufacturers sell cars directly to the public.

Garcia also delved into the many donations auto dealers gave to Florida politicians, including more than $2 million to DeSantis in the last two years, $230,000 to political committees controlled by Senate President Kathleen Passidomo and $50,000 to Sen. Ben Albritton.

Jason Shoaf of Live Oak sponsored the measure in the House with support from fellow Republican Reps. Melony Bell, Patt Maney, Ralph Massullo and Brad Yeager.

One week after Shoaf filed the bill, car dealership chain Braman Motors gave $10,000 to his political committee, Protect Our Florida Values, and another $2,500 a week after that. He’s received more than $30,000 from auto dealers since December 2021.

Bryan Ávila carried the bill’s Senate analog (SB 712) with co-sponsorship from Ileana Garcia, a fellow Republican from Miami-Dade County. Avila’s political committee, Fighting for Florida’s Families, has accepted $18,000 from auto dealers since 2020. Garcia has received $9,000 from dealers through her campaign account, mostly from Braman Motors, and another $14,500 through her political committee, No More Socialism, over the same time span.

As the measure advanced during Session earlier this year, numerous lobbyists met with its sponsors to fine-tune its language. Among them: Teye Carmichael and Matt Bryan of Smith Bryan & Myers, who represented JM Family Enterprises; Brad Burleson of Ballard Partners, who represented FADA; Ron Book, who represented AutoNation; Travis Blanton of Johnson & Blanton, who represented the Alliance for Automotive Innovation; Adam Basford and Brewster Bevis of Associated Industries of Florida; and Fred Baggett of Greenberg Traurig, who represented Ford Motor Company.

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Editor’s note: This report was updated with comments from Ramba, further context from independent and government economists, and campaign donation information.

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43 comments

PeterH
June 13, 2023 at 10:10 pm

This will be appealed! Anti business Ron DeSantis cannot “carve out” one particular company whose CEO donates to his failing White House run.
- Dre
  June 14, 2023 at 9:09 am
  
  You guys do realize Tesla does not have “dealerships” like other manufacturers which is why they fall into a different category and why they will still be able to sell directly to the public. That is how their business model has been from the beginning. And as for the huge leap that folks made to equate this with gun control, good grief, please take off that foul hat…I think it’s too tight.
  - Las angel
    June 16, 2023 at 2:41 pm
    
    Do you think the government should make business decisions for the people? And exempt one car Maker from the rules?
Dont Say FLA
June 14, 2023 at 7:29 am

When Glock wants to sell direct to consumer, what will Rhonda do now that they established precedent against that by making cars harder to buy? This seems anti-gun which is clearly pro-woke. Stupid Woke Rhonda.
- Jimbo
  June 14, 2023 at 7:47 am
  
  Ron DeSantis is NOT a Republican. He is using the party as a platform to promote a state model more closely aligned to the Peoples Republic of China. Nothing woke in that place either. If ANYONE will regulate guns it’s this guy. He is ALL AGENCY.
  - Dont Say FLA
    June 14, 2023 at 8:15 am
    
    Great points! I think Ron DeSantis would ban guns, given the chance. That fits with their narrative. It’s a great reason for Republicans not to vote for Ron DeSantis.
    - JayH
      June 14, 2023 at 12:46 pm
      
      Agree with all. For a brief moment I was a democrat until I saw the light at age 23 & have been a Florida republican ever since Reagan. I’ll NEVER support DeSantis now, even if it requires voting Democrat.
      - Nikkie
        June 15, 2023 at 4:45 am
        
        Well said!
ElMarco
June 14, 2023 at 8:05 am

Republicans are always saying they are for less government. Really??
Except Elon
June 14, 2023 at 8:13 am

See I was right about Casey trying to become Mrs Musk. It’s why this law exempts Elon Musk’s Tesla, rather than exempting Rhonda as was the usual case for laws. Mrs. Casey Anthony Musk has a nice ring to it. 20 carats at least. Casey cannot wait till the day she can say, “Bye Rhonda.”
- Tom
  June 14, 2023 at 9:31 am
  
  The Beach Boys nailed it years ago.
  
  She was gonna be my wife
  And I was gonna be her man
  (Oh Rhonda)
  But she let another guy come between us
  And it shattered our plans
  (Oh Rhonda)
  Help me Rhonda
  Help, help me Rhonda
  Help me Rhonda
  Help, help me Rhonda
  Help me Rhonda
  Help, help me Rhonda
John Schuster
June 14, 2023 at 8:29 am

You are all missing the point. This protects car dealers and those that work for them. Manufactures want to build cars not sell them to consumers. But if that door is opened you would only be able to buy a car online. Not seeing one on person and certainly not test driving. I don’t like how this bill fixes the price though. Car dealers won’t display sale prices anymore so it is up to consumer to negotiate. That sucks.
- Charly
  June 14, 2023 at 9:21 am
  
  I guess I read that differently. I thought it would make it easier for dealers to set “no haggle” pricing. Then without the MSRP listed, they would be able to set that price wherever they want. Again, the big companies with deep pockets win and the consumer loses. This bill was written by a group of well paid lobbyists:
  
  “As the measure advanced during Session earlier this year, numerous lobbyists met with its sponsors to fine-tune its language.”
- Tom
  June 14, 2023 at 9:38 am
  
  Two comments on that. I started buying tires directly from Goodyear, having them shipped to the local dealer and paying to have them fitted – saved enough money to cover six months worth of insurance.
  I just bought a new mid size pickup. Went to the dealer to test drive it and they didn’t have any in stock despite telling me that they had three. Ordered it anyhow and three weeks later picked it up without having seen or driven it. No real problem there but the dealership was hardly a value-add. It could have been dropped in my driveway just as easily.
  If every other business in the world has to compete with online shopping, why should car dealers be exempt?
- Stefan Skibinski
  June 14, 2023 at 12:19 pm
  
  the point is i thought the gop wanted to get rid of big govt regulating bussiness and so much for consumers free choice
- James Binns
  June 15, 2023 at 12:21 am
  
  The point for me is that DeSantis has again intervened in business to favor one set of lobbyists over another. DeSantis is no conservative.
- Craig Boisseau
  June 15, 2023 at 10:33 am
  
  You can see Tesla’s in person and test drive them. Tesla has and is building more and more service centers, they’re not “only online.” Ford and Cadillac are planning on selling upcoming EV models online as well. This bill protects the dealerships as middle men to necessarily must increase the price of cars to remain profitable. They are no longer needed in the industry and should be phased out by the free market, not propped up by bills like this. I think this is an undercover “anti-EV” bill.
David Sepulveda
June 14, 2023 at 8:34 am

Doesn’t that constitute restraint of trade?
Sundevil75
June 14, 2023 at 9:08 am

This is a bad deal for consumers. Legislators should have asked themselves, What value does this bill add to anyone except a small group of wealthy dealers? None. It only adds cost to the consumer. Government needs to get out out of the way.
Michael George
June 14, 2023 at 9:42 am

The candidate will sell anything and anyone for personal gain. Hasn’t anyone told him that Republicans are supposedly Pro-business?
Roger
June 14, 2023 at 10:21 am

I suspect this law will be appealed rather quickly and probably receive an injunction. It directly imposes a law regulating an interstate commerce, which is a Federal power, not State. I believe the law to be anti-consumer while being pro-business, as it protects the significant interests of local franchise dealerships – the same dealerships which add all those fees and charges to a vehicle when sold that can cause the cost to explode well north of the MSRP. Ron is going to find pressure coming from both the manufacturers and consumers on this one, I think. The dealerships in the middle are the only real beneficiaries here.
Bella Fernandez
June 14, 2023 at 10:26 am

And another right to do as one wants with the money worked taken away.
Jal Para
June 14, 2023 at 10:33 am

DeSantis doesn’t care about consumers – he only cares about the companies that put money in his pocket. If you can’t contribute a cool 100K he doesn’t think you matter.
Michael
June 14, 2023 at 11:15 am

What a crock of anti consumer and anti free market crap. Our Fuhrer never ceases to amaze me
Michael
June 14, 2023 at 12:21 pm

This bill is okey, as long as car dealers will be banned from mark up prices of cars that are in high demand. The car dealers are calling this act as “Market adjustment” and is nothing more than making high profit while robbing the customers.
Linda
June 14, 2023 at 12:30 pm

Aren’t people just going to have cars delivered to their vacation houses or family in other states? this would lead to Florida losing a lot of sales tax on vehicle sales.
Jim Pool
June 14, 2023 at 12:49 pm

He talks the talk, but DeSantimonious does not walk the walk. This is straight out of Communist China. What’s next only Gun Manufacturers s who bribe his coffers can sell gun’s
Robert Ball
June 14, 2023 at 1:18 pm

This is another anti business, anti freedom, selfish law passed by the DeSantis loyal legislators which is yet another example of corruption and control by lobbyists.
And allowing one exception is a joke. Floridians need to remove every politician that voted for another Stassi Law.
- Dont Say FLA
  June 14, 2023 at 6:00 pm
  
  The exception isn’t the joke. The exception is whole point. DeSantis is cutting into the potential profit margin of all competitors to Elon Musk. Why? Because Casey Anthony DeSantis told him too. She is going after Elon. She wants to be Mrs Musk. Rhonda has no clue and lets her tell him what to do, even though she’s undermining him at every turn. She’s the leaker.
Arturo santos
June 14, 2023 at 2:27 pm

Long live communism. Down whit free interprisse and capitalism, thank so much DeSatan
George Santos
June 14, 2023 at 2:30 pm

So glad our governor continues to look out for tha little guy!
Michael K
June 14, 2023 at 6:55 pm

Almost every industry has been disrupted by online sales – autos should be no exception.

But the level of corruption and collusion with Tesla stinks.
Joseph J Doelker
June 14, 2023 at 8:31 pm

The direct from the manufacturer to consumer has been used to sell Chevy Corvettes for years. You can order your Corvette at any dealer with whatever bells and whistles offered and on the day of your car’s build be there to watch it go through the assembly process and get the first drive.

Ordering it factory direct cuts out the middleman which always adds to the price a consumer pays and creates the lack of sales a manufacturer could generate. How many times has a auto manufacturer lost out on a sale because you didn’t like the dealer’s sales staff or because it just wasn’t quite right? Never, because the dealer already purchased the car, you say. As that car sits on the lot unsold the manufacturer is definitely losing sales. Wouldn’t you rather talk to someone who is actually building your car about what you want in it and who can actually tweak the design slightly to satisfy you than some stuffed shirt trying to push his already assembled, isn’t quite right, and less than new weathered car on the lot? This is direct to consumer auto sales.

Unlike the Chevy Corvette program, a D2C auto program would involve building multiple factories in the major markets to facilitate less shipping because shipping increases the price. Important in competition. Being closer to their customer equals better consumer relations and faster feedback leading to better quality and satisfaction equals higher sales and production, Means more high paying jobs in the US.

DeSantis is right having a middleman is best. Long live FADA. Higher prices, less satisfaction, and lower quality autos for all!!!
Gerald Weber
June 14, 2023 at 10:05 pm

The abuse of the American consumer continues unabated.
nail morse
June 14, 2023 at 10:26 pm

When you want a business in Foriduh be prepared to pay before you play, at least until we get this AH in jail….
banana
June 15, 2023 at 8:55 am

When is OCP going to make Delta city in Florida?
Jack Handy
June 15, 2023 at 10:19 am

More horseshit from lobbyists? Just what we need. Auto dealers are shit and they know it, which is why they have to lobby to protect their own existence or people would avoid them.
Peter Aretin
June 15, 2023 at 11:33 am

The funniest part was the”No More Socialism” organization.
David deNagy
June 15, 2023 at 1:26 pm

Another example of restrictions to free enterprise. A car company without a dealership and sells on-line probably makes a boatload of revenue just by virtue of the fact that they don’t have dealer overhead costs to incur. Since when is competitive business not allowed?
Free
June 15, 2023 at 5:44 pm

I will just go to another state to purchase my new Truck
Mark Kittell
June 15, 2023 at 6:19 pm

Who runs Tesla? DeSantis’ good buddy, Elon Musk?
Stealership
June 16, 2023 at 1:19 pm

Great more protections for the stealerships and less for the consumers, so continue to see all the price increases above msrp bait and switch technique and all hidden addons and accesarys when you go to buy a car. Direct sales from the manufacturer would of saved the consumer.
Robert Ball
June 16, 2023 at 4:57 pm

They did the exact same thing by the GDR when there was East Berlin. This guy has created his own Stassi on our taxpayers. The State Legislature has become our Stassi …..So scary . Maybe we voted poorly. No recall.