McLEAN, Va. -

Veteran managers and store principals might remember what happened in the late 1990s when automakers tried strategies to move away from the traditional franchised dealer model with experiments such as the Ford Retail Network and GM Retail Holdings.

A new report by auto industry consultant Maryann Keller not only recapped the shortcomings of those approaches, but also reinforced how America’s franchised dealer network is geared to provide numerous benefits to both consumers and manufacturers

According to the report titled, “Consumer Benefits of the Dealer Franchise System,” factory-direct sales of new vehicles either sold online or through factory-owned and operated retail outlets have not resulted in lower prices for buyers or increased market share for OEMs.

“The franchised dealer network benefits consumers and manufacturers alike by providing fierce price competition among dealers and an extremely efficient distribution network that is acutely sensitive to local markets,” said Keller, in the 34-page report prepared for the National Automobile Dealers Association and released on Tuesday.

“The new-car dealer franchise network is the most efficient way to distribute and sell new cars as well as provide convenient access to service over the life of every vehicle,” she continued.

Keller, managing partner at Maryann Keller & Associates, said “past experiments by factories, such as Ford Motor Co. and General Motors, to sell directly have proven unsuccessful, and the results have only reinforced the need and value of having a network of franchised new-car dealerships.”

NADA highlighted the report also excoriated critics who call franchised dealers “costly middlemen,” demonstrating that as long as vehicles are retailed, there will inevitably be costs of retailing, and that local competitive dealers are the best way to lower those costs.

“Proponents of a factory-direct system have also failed to identify the system-wide savings for car buyers if manufacturers were to provide the same services that dealers do to satisfy the needs of each customer,” she said.

Keller added that local franchised dealerships make a very complex process as simple as possible — from stocking ready-for-sale inventory, offering test drives, appraising trades, arranging financing, interacting with the DMV to replace lost titles on trade-ins, registering cars and obtaining license plates, calculating and paying sales taxes, and managing and retaining all documents from each transaction.

When it comes to service and repair work, Keller says advocates of a factory-owned retail system wrongly assume that manufacturers would be as objective as an independent dealer in addressing all customer complaints.

“The personal relationship with a local business has tremendous value that cannot be replaced by an 800 number or a call center,” she said. “The dealer acts as an advocate with the factory for the car owner, especially for warranty and recall claims.”

Keller’s report is part of a major new “Get The Facts” initiative from NADA to promote the benefits of America’s franchised dealership network. The initiative includes a website and variety of multimedia resources available at www.nada.org/GetTheFacts.

The centerpiece of the project is a two and a half minute animated video detailing the benefits of the dealer franchise system, viewable here. Other resources include a 30-second video, a fact sheet on the consumer benefits of dealers, a longer informative FAQ, a document explaining the reasons for state franchise laws, an infographic and other materials.

Click here for the full Keller report.