FTC Staff Urges Michigan Legislature to Repeal Ban on Direct-to-Consumer Sale of Motor Vehicles by Auto Manufacturers

Federal Trade Commission staff has submitted comments to Michigan State Senator Darwin L. Booher in response to his request for a comment on the possible competitive effects of a legislative proposal creating an exception to current law that prohibits automobile manufacturers from selling new vehicles directly to consumers.

The comment, submitted by staff of the FTC’s Office of Policy Planning, Bureau of Competition, and Bureau of Economics, concerns Senate Bill 268, which would permit manufacturers of a category of vehicles, “autocycles,” to choose whether to sell directly to consumers, through dealers, or through some combination of the two.

The staff comment states that Senate Bill 268 is likely to promote competition and benefit consumers by opening this category of motor vehicles to competition in methods of distribution. However, in the staff’s view, the bill “does not go far enough,” and would “largely perpetuate the current law’s protectionism for independent franchised dealers, to the detriment of Michigan car buyers.” The comment urges Michigan lawmakers to consider repealing the ban on direct-to-consumer sale of motor vehicles by auto manufacturers, and instead “permit manufacturers and consumers to reengage the normal competitive process that prevails in most other industries.”

The Commission vote approving the comment was 5-0. (FTC File No. V150004; the staff contact is Patrick J. Roach, Office of Policy Planning, 202-326-2793.)