Texas Dealer Franchise Laws have protected Texas drivers for decades. Franchise laws require automobiles to be sold through authorized franchised auto dealers, rather than direct-to-consumers by the manufacturer. In 2015, during Texas’ 84th Legislative session, those laws came into question under House Bill 1653, as Tesla sponsored a bill that would weaken the franchise law system so the company could sell their vehicles directly to Texas consumers.
The Texas Automobile Dealers Association (TADA) hired AngelouEconomics (AE) to determine the economic impact that franchised auto dealers have in the state of Texas. TADA wanted to enter the legislative hearings with as much data as possible, and that included the economic contribution of franchised auto dealers, which operate under the current franchise law system.
To make the case, AE measured the 5-year economic impact of franchised auto dealers for the state of Texas, as well as each of the 36 U.S. congressional districts. The total value of dealerships comes not just from their combined 5-year impact of $415 billion but from their involvement in the communities they serve, their charitable contributions, and their volunteerism.
The analysis is based on detailed data provided by TADA, the National Automobile Dealers Association (NADA), and an extensive survey completed by hundreds of Texas franchised auto dealers. The survey had a participation rate of 22%, an impressive completion rate that signaled to legislators the importance of the issue to franchised auto dealers.
During the legislative hearings, AE provided expert testimony regarding the economic impact of franchised auto dealers. Combined with impassioned testimony from dealers, the economic impact analysis proved to be a powerful tool; in the end, House Bill 1653 never made it out of committee.
5-year economic impact analysis for Texas franchised auto dealers.