Direct auto sales: A liberty-minded solution

Photo by Marjorie Kamys Cotera

Texas is a land of promise and opportunity. Our business-friendly economic policies have made our GDP growth number one in the nation and our job growth number five, according to U.S. News and World Report. High tech and entrepreneurial investment is growing faster here than anywhere else in the U.S., distinguishing Texas as a global leader in innovation, industry and technology. Ours is truly a 21st century economy — in every way but one.

Texas is one of just four states that prohibits consumers from buying new cars directly from vehicle manufacturers.

In our state, if you want to buy a brand new car, you only have one option — a franchised auto dealer. But consumer tastes have evolved since auto-dealer laws were put in place. Just as many of us would rather order groceries and household goods online than go to a brick-and-mortar store, some of us want to choose how to purchase our vehicles — and we should have the freedom to do so.

The direct vehicle sales model gives consumers the liberty to choose between buying from a traditional dealer or directly from a manufacturer.

Dell, an outstanding Texas company, was a trailblazer in reinventing the computer sales and distribution model along similar lines by offering consumers the chance to specify the exact device and options they wanted and order straight from the factory. Because of the substantial reduction in inventory costs, Dell was more profitable, its custom-made products were more affordable and consumers were happier as a result.

Imagine if there had been a statutory prohibition barring Dell from selling products directly to Texans. That’s exactly the case with new car sales in our state. Laws originally created  to protect now constrain consumers.

I have authored legislation that would allow Texans to buy straight from vehicle manufacturers, getting government out of their way and opening our doors to the jobs and economic development that will follow when direct sales become a reality in our state.  

Our current model is likely stifling innovation. House Bill 4236 will make way for more innovation and could attract manufacturers to set up shop in Texas knowing they’ll be able to sell directly to their customers without having to establish large dealer and distributor networks.

Texas’ transportation system is undergoing a transformation in how it works and how it serves consumers’ needs. This legislation is not about whether auto dealers are good or bad. In fact, most are active in their communities and major employers. Instead, it’s about the free market. Direct vehicle sales in Texas will bring more competition for consumers’ car buying dollars and open the door to technological and economic advancement.

Jason Isaac

State representative