ElI5 why do we have car dealerships?

Question

ElI5 why do we have car dealerships?

In: 160

Answer 1

Because most states have laws requiring new cars to be sold through dealers.

The theoretical justification is that you need dealers to be around to service the cars. You don’t want the manufacturers selling cars direct and not having a physical presence where they can do warranty work, recalls, etc.

The real reason is the dealers lobbied legislatures hard to keep their piece of the pie.