Automotive regulatory trends impacting the dealership industry

Franchise automobile dealerships are navigating one of the most complex operating environments in recent memory. From regulatory scrutiny and evolving technology to direct-to-consumer sales models and shifting emissions policies, dealerships face mounting pressures that directly affect profitability, compliance obligations and long-term business strategy. These developments reflect broader automotive regulatory trends shaping the future of the industry. While these challenges are significant, they also highlight the continued importance of the franchise dealership system and the role dealers play in serving consumers and supporting the automotive ecosystem.

On this month’s episode of Up to Speed, Mike Mader, Principal with Baker Tilly’s dealership advisory services team, is joined by Dan Ingber, Senior Vice President of Regulatory Affairs at the National Automobile Dealers Association (NADA), to examine the complex automotive regulatory trends and market forces shaping today’s dealership environment. Their discussion explores key issues affecting franchise dealers, including direct-to-consumer sales efforts by manufacturers, evolving emissions and electric vehicle (EV) policies, federal regulatory enforcement and the growing role of artificial intelligence (AI) in dealership operations. Together, they outline what these developments mean for dealers and how businesses can stay compliant, competitive and prepared for continued industry change.

The franchise system under pressure

One of the most significant issues confronting dealers today is the growing push toward direct-to-consumer vehicle sales. Some manufacturers and new market entrants have explored bypassing the traditional dealership network, arguing that selling vehicles directly to buyers could simplify the purchasing process or reduce costs. However, the franchise system, long embedded in state law across the United States, exists for a reason. It balances the relationship between manufacturers and dealers while protecting consumers and local businesses.