Honda and Sony’s Afeela brand are facing a significant challenge due to dealers who are resistant to the idea of direct sales, both now and in the future. Other legacy automakers like Tesla, Rivian, and Lucid have successfully implemented a direct-to-consumer model, which allows them to sell vehicles directly to customers without relying on a traditional dealership network. However, this approach has sparked controversy within the automotive industry, with the Automotive Trade Association Executives (ATAE) even threatening legal action against Honda and Volkswagen’s new sub-brands for attempting to bypass the dealership network.
In the United States, manufacturers are typically required to sell vehicles through existing dealership networks due to dealership franchise laws. Existing automakers like Tesla have found ways to circumvent these requirements, such as using Tribal land to sell cars directly to consumers. The recent backlash from dealerships stems from Volkswagen’s decision to revive the Scout brand independently of its existing dealer network and Sony Honda Mobility’s plan to sell vehicles under the Afeela nameplate without utilizing traditional dealerships. Despite the potential legal challenges, both brands seem determined to pursue their independent sales strategies, prompting a fierce response from dealers.
Dealerships argue that they have a right to sell vehicles from affiliated spin-off brands, as these brands are connected to established automakers. This disagreement has led to a prolonged back-and-forth between dealers and the brands, with John Delvin, chairman of ATAE, warning that the industry will fiercely resist any attempt by OEMs to sell vehicles directly to consumers. Afeela plans to start producing its software-centric sedan in 2025 and begin sales in the U.S. the following year, while Scout aims to produce its body-on-frame electric pickup truck and SUV starting in 2026. With tight production schedules looming, both brands must make a final decision soon to avoid a lengthy legal battle with dealers.
The issue has escalated to the point where the trade group is prepared to take a stand against the brands, with Delvin expressing frustration over the lack of cooperation from OEMs. Despite facing resistance from dealers and the looming threat of legal action, Honda’s Afeela brand and Sony Honda Mobility seem intent on pursuing their direct sales strategies. However, the industry as a whole appears united in its stance against direct sales, with dealers hoping to maintain their role as retailers for new vehicles. The coming months will likely be critical for both brands as they navigate the complex legal and regulatory landscape surrounding dealership franchise laws.
It remains to be seen how Honda and Sony’s Afeela brand will navigate the challenges posed by resistant dealers and potential legal action from the automotive industry. Both brands have ambitious plans for producing and selling new vehicles in the near future, but their success may hinge on their ability to address the concerns of traditional dealerships and comply with existing dealership franchise laws. As the controversy continues to unfold, the automotive industry will be closely watching how these brands navigate the complex landscape of direct-to-consumer sales and dealership franchise laws in the United States.
