The direct to consumer auto sales model is time-efficient, consumer-focused, and more convenient thanks to the ‘direct’ connection of the consumer to the manufacturer. In fact, even dealers agree that car 25% of sales time could be saved that’s spent over price negotiations if D2C model takes over. Furthermore, 58% dealers also believe that this would lead to a greater focus on consumer needs because now the channel of feedback is directly the manufacturer.
This method eases many pain points customers often face at franchised dealers like haggling over prices, added markups or incomplete vehicle features. Let’s discuss D2C car sales, advantages and disadvantages and lows around it in detail below:
What is Direct-to-Consumer Car Sales?
Direct sales or D2C involves automakers selling new vehicles directly to the customers without involving traditional channels such as car dealerships. A prominent example of this is Tesla where you can not only browse through their new and used inventory but also build your own car with preferred specs such as color, wheels, interior color, accessories, and even financing options.
Direct to consumer car sales make the process easy. Instead of depending on franchised dealers, manufacturers can list their inventory online or at company-owned physical stores and start selling the vehicles directly to customers.
Cutting Out the Middleman
D2C car sales cut out the middle men including the traditional dealers from the buyer’s journey of car purchase. Here’s how this model changes the buyer’s journey:
Traditional Dealership Model:
Visiting the dealer, getting assistance from the sales person on car specs, haggling over the price, buying the car, getting paperwork done, driving the vehicle home.
New Direct to Consumer Auto Sales Model
The buyer is sitting at the couch, browsing the manufacturer website, selects a vehicle, selects specifications, places order, provides necessary identity verification documents and delivery address, and the vehicle arrives home.
The D2C model also enables manufacturers to control the customer experience, taking charge of tasks such as vehicle ordering, trade-ins, financing, delivery, and post-purchase support themselves. This eliminates dependency on dealers and their staff who may not treat the customers with the same concern as the manufacturer of the product.
| Pros | Cons |
|---|---|
| Potential for lower prices | Loss of local dealership infrastructure |
| Streamlined purchasing process. | Jobs lost at existing franchised dealers |
| More personalization options. | Customers lose local sales & service support |
Pioneers of the Model
Tesla was among the first to pioneer direct sales, selling its electric vehicles company-owned stores and online without franchise dealers beginning in 2013. Other automakers testing out direct sales include Rivian, Lucid, and Polestar.
By law, these companies are restricted to a direct sales approach in only some states that have passed legislation permitting this distribution method.
If your state doesn’t support online buying from auto manufacturers or if you prefer buying used vehicles from online dealers like Carvana or Edmunds etc., you can still get your vehicle delivered to your home. Call (888) 687-3243 to book your car shipment. Easy Auto Ship will move your booked vehicle from the dealer’s physical store to your provided address without you having to do anything.
The Difference Between D2C & Digital Dealerships
Direct-to-auto sales streamlines and digitizes vehicle buying purchase process without any traditional dealership middlemen involved.
However, digital dealerships offer both of these features too. Buyers have an online platform where they can browse new and used inventories and take their pick.
What differentiates D2C from digital dealerships is the price and trust factor.
Unless you’re dealing with a major dealership online, you can still get scammed. Manufacturers on the other hand have official websites from where they sell vehicles so you don’t have trust issues.
Furthermore, since you’re buying directly from the manufacturer, the cost of the vehicle can be lower as it cuts the middleman and you may also have more financing options than what a dealer might offer.
Both approaches aim to enhance the consumer experience in automotive direct and auto sales.
| Feature | D2C Auto Manufacturers (e.g., Tesla) | Digital Dealerships (e.g., Carvana) |
|---|---|---|
| Sales Process | Entirely online or through a mobile app | Primarily online, with physical presence |
| Vehicle Delivery | Direct to customers’ homes or workplaces | Pickup from a local lot or dealership |
| Dealer Middlemen | Bypass traditional dealerships | May still involve local dealerships |
| Buying Process | Streamlined process, entirely managed internally | Modernizing process with online tools |
| Transaction Location | Entirely online or through mobile app | Completed at a physical dealership |
| Test Drives | Typically not offered | At-home test drives or local dealership options |
| Role of Dealerships | No involvement - handled internally | Advisory role, guiding through options |
| Showroom Presence | Minimal or no physical showrooms | Supplementing physical showrooms |
| Examples | Tesla, Rivian, Lucid, Polestar | Carvana, Vroom |
Why OEMs Are Considering to D2C-Like Buying Experiences
For decades, OEMs have relied and significantly benefitted from the traditional dealership model but the model comes with some challenges too.
For dealerships to survive, they need profit on every sale, meaning the interests of the OEM and dealers don’t always align perfectly when it comes to customer service standards and sales pricing. OEMs have less control over the buyer’s entire experience this way.
Increased Interest in Owning the Customer Relationship
Interests are shifting towards digital as 70% of vehicle buyers already use the internet for information, it’s a matter of time they start making purchases online as well.
In fact, we’re already seeing this with 25% of buyers now looking to purchase via manufacturer or 3rd party websites while 30% are planning to purchase their next vehicle online.
Though with the increase of adoption of the internet to buy and sell vehicles, dealerships are also seeing a rise in customer base, that increase might be temporary because there are currently more dealers online than manufacturers.
OEMs are already looking to directly connect with their end users during the shipping process instead of handing off this crucial step in the buyer journey to independent dealers. Selling vehicles directly to the customers would let manufacturers market directly, collect first-party consumer data for future engagements and keep a tight control over quality of sales and post-sales support.
Key Benefits of Direct-To-Consumer Auto Sales for OEMs
| Benefit | Description |
|---|---|
| First-Party Customer Data | Gain a trove of first-party vehicle purchase and ownership data that dealers don’t share. |
| Build an Online Sales Channel | Design an end-to-end digital experience for researching/buying autos the OEM controls directly. |
| Incremental Revenue Opportunity | Sell directly to consumers and retain profits normally earned by dealer networks. |
| Owning the Customer Relationship | Develop ongoing first-party relationships versus losing customers shortly after sale. |
Addressing Dealer Concerns with Hybrid Models
While fully replacing dealerships presents regulatory challenges in many markets, OEMs are exploring hybrid direct-to-consumer and dealer models. For example, allowing online vehicle sales with delivery through local dealers or dealer assistance on high-consideration transactions.
When developed openly with dealer input, such solutions could address dealer margin concerns while gaining OEMs a stronger digital sales foothold and more customer ownership. A focus on co-op promotion, joint customer acquisition initiatives, and clearly defined dealer vs. OEM sales regions could help in achieving a middle ground.
Gradually shifting to a digital-first relationship model between automakers and customers seems inevitable in the coming years. With care and cooperation between all parties, dealerships may find a way to remain valuable partners amid this evolution.
State Laws Regarding Direct to Consumer Auto Sales
Most states have dealer franchise laws that regulate the sale of vehicles by requiring most vehicle sales to take place through franchised dealers. These laws aim to protect car dealers from unfair competition that could put them out of business.
However, many see them as limiting consumer choice in how and from whom they can buy vehicles. They prevent automakers from selling directly to consumers.
States Allowing Direct Sales
A few states like Utah, Colorado, Ohio and others allow some direct auto sales without a dealer acting as a middleman. This lets automakers like Tesla sell directly to consumers online or through company-owned stores. It fosters competition and puts consumers in control of their purchase process.
Many states like Alabama, Montana and New Mexico have passed laws strictly banning direct auto sales from manufacturers to customers in order to protect the existing auto dealership franchise system. This effectively shuts out new innovative players in the market.
If your state doesn’t support online buying from auto manufacturers or if you prefer buying used vehicles from online dealers like Carvana or Edmunds etc., you can still get your vehicle delivered to your home. Call (888) 687-3243 to get a free quote. Easy Auto Ship will move your booked vehicle from the dealer’s physical store to your provided address without you having to do anything.
Here’s a shortened and 2025’s updated status version of the D2C state laws table uploaded by WisPolitics on direct to consumer auto sales for every state:
| State | Statute/Code | Status | EV Exceptions |
|---|---|---|---|
| Alabama | Ala. Code § 8-20-4(3)(h) | NO | None |
| Alaska | Alaska Code § 45.25.300 | LIMITED | None |
| Arizona | Ariz. Rev. Stat Ann. § 28-4460 | YES | Tesla licensed |
| Arkansas | Ark. Stat. Ann. § 23-112-403 | NO | None |
| California | Cal. Veh. Code § 11713.3 | YES | Same rules |
| Colorado | Colo. Rev. Stat. § 44-20-126 | LIMITED | Yes - EV only |
| Connecticut | Conn. Gen. Stat. § 42-133cc | NO | Limited workarounds |
| Delaware | Del. Code Ann. tit. 6 § 4901 et seq. | LIMITED | Favors Tesla model |
| Florida | Fla. Stat. § 320.645 | LIMITED | EV-only manufacturers |
| Georgia | Ga. Code. § 10-1-664.1 | LIMITED | Yes - ZEV only |
| Hawaii | Hawaii Rev. Stat. §437-1 et seq. | UNCLEAR | None identified |
| Idaho | Idaho Code § 49-1601 et seq. | UNCLEAR | Unclear |
| Illinois | Ill. Rev. Stat. ch. 815 § 710/4 | YES | Same rules |
| Indiana | Ind. Code § 9-32-11-20 | UNCLEAR | None specific |
| Iowa | Iowa Code § 322.3(14) | NO | None |
| Kansas | Kan. Stat. Ann. § 8-2438 | NO | None |
| Kentucky | Ky. Rev. Stat. § 190.070 | LIMITED | Limited EV allowance |
| Louisiana | La. Rev. Stat. Ann. § 32:1261(A)(1)(k) | NO | None |
| Maine | Me. Rev. Stat. Ann. 10 § 1174 | UNCLEAR | None identified |
| Maryland | Md. Transp. Code Ann. § 15-305 | LIMITED | Yes - non-fossil fuel |
| Massachusetts | Mass. Gen. Laws Ann. Ch.93B § 4 | YES | Same rules |
| Michigan | Mich. Code Ann. § 445.1574 | NO | None |
| Minnesota | Minn. Stat. Ann. § 80E.13 | YES | Same rules |
| Mississippi | Miss. Code Ann. § 63-17-115 | NO | Tesla exception only |
| Missouri | Mo. Rev. Stat. § 407.826 | UNCLEAR | None specific |
| Montana | Mont. Code Ann. § 61-4-208 | NO | None |
| Nebraska | Neb. Rev. Stat. § 60-1438.01 | NO | None |
| Nevada | Nev. Rev. Stat. § 482.36349 | LIMITED | Tesla-specific |
| New Hampshire | N.H. Rev. Stat. Ann. § 357-C et seq. | YES | Same rules |
| New Jersey | N.J. Rev. stat. Ann. § 56:10-27.1 | LIMITED | ZEV manufacturers |
| New Mexico | N.M. Stat. Ann. § 57-16-5 | NO | None |
| New York | N.Y. VAT. Stat. Ann. § 415 | LIMITED | Tesla only |
| North Carolina | N.C. Senate Bill 384 | LIMITED | Yes - plug-in EVs |
| North Dakota | N.D. Cent. Code § 39-22-24 | NO | None |
| Ohio | Ohio Rev. Code Ann. § 4517.12 | LIMITED | None specific |
| Oklahoma | Okla. Stat. tit. 47 §565(11) | NO | None |
| Oregon | Ore. Rev. Stat. § 650 et seq. | UNCLEAR | Environmental focus |
| Pennsylvania | Pa. Cons. Stat. Ann. 63 § 818.310 | LIMITED | Tesla-specific |
| Rhode Island | R.I. Gen. Laws § 31-5.1-4 | YES | Same rules |
| South Carolina | S.C. Code Ann. § 56-15-45 | NO | None |
| South Dakota | S.D. Codified Laws Ann. § 32-6B-80 | NO | None |
| Tennessee | Tenn. Code Ann. § 55-17-114 | UNCLEAR | Unclear |
| Texas | Tex. Occ. Code Ann. § 2301.476 | NO | Proposed EV exception |
| Utah | Utah Code Ann. §43-3-101 et seq. | LIMITED | Yes - alternative fuel |
| Vermont | Vt. Stat. Ann. tit. 9 § 4097 | LIMITED | Yes - ZEV only |
| Virginia | Va. Code. § 46.2-1572 | LIMITED | Case-by-case |
| Washington | Wash. Rev. Code § 46.96.185 | LIMITED | Tesla only |
| West Virginia | W. Va. Code. §17A-6A-10 | NO | None |
| Wisconsin | Wis. Stat. Ann. § 218.0121(2m) | NO | None |
| Wyoming | Wyo. Stat. § 31-16-101 | YES | Same rules |
Court Battles Over Direct-to-Consumer Laws
Tesla has fought numerous legal battles over direct-to-consumer auto sales laws across different states. In 2023, Gov. Ron DeSantis signed legislation further tightening the ban on automakers from directly selling automobiles to consumers in Florida but Tesla is an exception.
While some states such as Illinois got major court victories enabling direct sales, and Delaware’s Supreme Court ruling in Tesla’s favor, many new political threats have appeared. For instance, the May 2025’s bill A5604 would remove direct sales permissions. Similarly, New York lawmakers have proposed the idea of removing Tesla’s grandfathered permits by July 2026.
Moreover, Tesla recently settled its lawsuit against Louisiana in July 2025 to accept D2C prohibitions instead of continuing litigating the issue. All of this shows how volatile the legal status across the US is for D2C manufacturers. However, the debate around consumer access versus dealer protection continues nationally.
Direct to Consumer Car Brands in The U.S.
Here’s an overview of car brands selling directly to consumers online.
BMW
BMW offers customers the ability to browse, build, test drive, trade-in, finance, and schedule delivery of their vehicle entirely online. Online support is also available from a local BMW dealership throughout the process.
Chrysler
With Chrysler’s online shopping, consumers can look through vehicles, choose options, arrange a home test drive, organize financing and trade-ins, and sign contracts electronically. Some interactions with dealership representatives are still involved in the purchase process.
Jaguar Land Rover
When buying a new Land Rover online, customers can select or customize their vehicle, pay a refundable deposit, select a purchase plan, get an instant price on a part exchange, and visit a retailer showroom to finalize the sale. Solo test drives and click-and-collect service are options as well.
Ford
Ford allows online browsing of their vehicles, customization, viewing of pricing details and incentives, getting guaranteed trade-in offers, adding protection plans, and completing a credit check and financing exploration - with the transaction wrapped up at the nearest dealership.
Tesla
Tesla’s entire inventory can be viewed on their website or app by location, model, trim, and condition. Customers can configure their car, place an order, confirm via the app along with arranging trade-ins and financing, and schedule delivery - paying the remaining balance fully via the Tesla app before taking possession of their vehicle.
Rivian
Rivian is marketed towards outdoor enthusiasts, with features like a “gear tunnel” and optional cooking station. The company plans electric trucks, SUVs, and delivery vehicles, and has received investments from Amazon and Ford.
Lucid
Positioned as a luxury brand, Lucid aims to compete with Mercedes. The Lucid Air is highlighted for its performance, range, and record-setting electric vehicle specs. Backed by Saudi Arabia’s wealth fund, the Dream Edition starts at $140,500 and is sold out, with more affordable models like Lucid Air starting at $78,900.
Other Brands
Established brands like Cadillac, Polestar, Genesis, and Hyundai are introducing customer lounges and pop-up shops to connect with consumers without violating sales laws. Representatives can discuss vehicles without technically selling them.
Advantages of Direct to Consumer Auto Sales
Direct sales models can provide benefits for both automakers and customers.
Cost Savings for Manufacturers
Automakers can cut marketing expenses via dealerships by directly selling vehicles to customers online. This will enable OEMs to pass on the savings to customers, invest in R&D, ramp up the tech, and improve newer models. For instance, when Ford started using direct sales for its electric vehicles, they aimed to cut costs related to the dealership network and take the automotive industry towards EVs.
Increased Customization for Consumers
Customers gain more control over the vehicle purchase process by being able to customize vehicle specs and options on manufacturer websites instead of relying on dealer-bought inventory.
This expands access to personalized configurations beyond what small lots may stock. Buyers gain selection and empowerment in choosing their desired trim levels, colors and features.
Focus on Customer Service
Dealers may concentrate on value-added services like maintenance, repairs and customer support with automakers handling online sales. This allows local shops to prioritize keeping clients satisfied rather than serve as a middleman. Communities still obtain employment and economic activity from physical locations providing specialized care after the sale.
No Dealer Markups
By transacting direct, manufacturers set firm prices that buyers see upfront rather than dealers negotiating adjustments. This ensures full transparency and prevents extra charges being passed to the customer. People get an unambiguous price online without uncertainty over added charges later.
Disadvantages of Direct to Consumer Auto Sales
While direct sales offer advantages, some challenges also exist.
Limiting Test Drives
Unlike traditional showrooms, the online model makes actually experiencing a vehicle before purchase more difficult. Customers may have trouble finding demonstrations of rare makes/models close to home. This less hands-on process could result in unsatisfied buyers post-sale without true senses of fit and feel.
Potential Price Increases
To offset costs of developing internet infrastructure and eliminating dealer revenue, automakers may slightly inflate the manufacturer’s suggested retail price. While transparency exists, total costs may rise depending on industry pricing strategies in a direct system.
Impact on Local Jobs and Economies
Direct sales mean reduced need for physical dealership staffing. Though valuable services remain, communities lose part of employment and tax income footprint. Areas rely less on auto sector activity stimulating additional local business if online substitutes traditional retail roles.
Safety and Regulatory Concerns
Dealers act as a liaison between buyers and brands, fielding issues to manufacturers. Their absence could impact prompt safety recalls and reporting repeated defects. Also, some states like Texas still forbid direct-to-consumer sales altogether due to passed legislation.
Are Consumers Ready For Direct to Consumer Auto Sales?
Despite advances in technology, many consumers still prefer traditional dealership experience.
Most Consumers Still Prefer Buying Cars In-Person
As per a survey by Deloitte, a large majority of 71% American consumers still like visiting an auto dealership to purchase their vehicle.
They want to check out different models, sit inside them, and negotiate terms directly with a salesperson as per their study.
Online-Only Purchase Process Makes Many Feel Uncomfortable
As per a Harris Poll, around two-thirds or 64% of consumers said they would feel uneasy buying a vehicle entirely online without any in-person interactions.
Shoppers want the reassurance of being able to see the actual auto and get answers to their queries in real-time from dealership staff.
Consumers Are Open to Blending Online and Offline Steps
While direct-to-consumer auto sales don’t appeal to most yet, the survey found that shoppers are receptive to utilizing digital platforms for certain pre-purchase activities.
This includes researching autos online, getting the final price calculated digitally, scheduling test-drive appointments virtually and assessing trade-in values of current vehicles remotely. Online portals are also commonly used for credit checks and financing applications today.
Industry Experts Expect Gradual Shift Towards More Direct Digital Sales
Although present studies indicate the car-buying public still favors the traditional in-dealership experience, industry analysts foresee consumer attitudes evolving gradually over the next decade.
As more automakers offer buying options that blend various online and offline steps seamlessly, direct-to-consumer auto sales may gain broader acceptance according to experts in the field.
Secure payment technologies also need to catch up and build more trust for complete digital purchasing to take off.
While advances have been made, shoppers have grown accustomed to seeing and test driving cars in-person before committing to a purchase. A purely online direct-to-consumer auto sales process remains untenable for the majority presently.
However, preferences may shift progressively as Generation Z consumers less tied to dealerships come of driving age in the future. Blending digital conveniences with offline assurances is most likely to drive this industry transition.
If your state doesn’t support online buying from auto manufacturers or if you prefer buying used vehicles from online dealers like Carvana or Edmunds etc., you can still get your vehicle delivered to your home. Call (888) 687-3243 to book your shipment. Easy Auto Ship will move your booked vehicle from the dealer’s physical store to your provided address without you having to do anything.
