The U.S. Chamber of Commerce reports that small businesses account for 99.9% of all U.S. businesses and employ 46% of the private sector workforce. According to the SBA’s “small business” definition, the majority of local franchised auto dealerships are part of the 33.2 million small businesses that form the foundation of our nation’s economy. 

At the heart of many communities are “main street” businesses. They are often locally owned brick-and-mortar stores that offer essential goods and services. These “main street” businesses serve as a hub for social interaction while fostering a sense of place and hometown pride. 

Franchised auto dealerships are the last true “main street” businesses. 

With deep community ties, many of these businesses are family-owned and have been passed down from generation to generation. When it comes to local franchised auto dealerships, an estimated 85% of the 16,000+ are family-owned and some even have a fourth generation getting ready to take over the reins. These dealerships are known for their accessibility, a place where customers can often interact personally with the owner, thus fostering strong community relationships. 

Additionally, dealers are inherently ingrained and deeply invested in their communities, giving back as much, if not more, than they bring in. Across the board, dealers directly invest in their neighborhoods through car donations, Little League sponsorships, volunteer hours and so much more. And this is just the start of what dealerships bring to the local table. Employees of dealerships are often involved in chambers of commerce and other local business associations, playing a direct role in keeping the local business community vibrant and healthy. This level of community commitment is not easily replicated. 

It’s not hard to see how franchised dealerships have become an integral piece of the local economy and we haven’t even mentioned economic activity. According to Auto Outlook Inc., in 2023, West Virginia dealerships employed 14,800 people, that’s 19% of total retail employment and a whopping $545 million in payroll.

What’s more, those employed in the automotive industry don’t have just another low-paying job. Whether it be in retail or as a service technician, the automotive industry offers one of the few work opportunities where those who don’t see a four-year college degree as an option, can find a path to the middle class and higher. All that is needed is a healthy dose of work ethic, a willingness to learn and on-the-job experience. 

The benefits of these jobs to the community are immediate because employees and customers are the community. The profits feed right back into the local area. Really, the only people the franchise model isn’t good for are Wall Street billionaires.

Yet another staggering number is the $8.2 billion in total sales that West Virginia’s franchised auto dealers made in 2023. That equates to $484 million in state and local taxes collected and almost $129 million in federal taxes. 

Those are impressive numbers, and though there are certainly outliers, most franchised dealerships, fit into the “main street” business mold. They are not what one would classify as a mom-and-pop shop nor are they considered a billionaire class. Simply put, they are affluent “main street” community businesses. While not immune to consolidation by larger corporations, for the most part, dealerships remain a fundamentally local small business that lives and dies by their community, selling person to person to their neighbors. 

The recent efforts of new tech manufacturers to disrupt the franchised dealership system — which has thrived for over 100 years — have not succeeded. What leaders from new tech companies fail to realize is how expensive it is to get a storefront, customize and brand it, fill it with inventory, hire staff and train them on the intricacies of the car make and model so the customer relationship can be built, nurtured and live well beyond the initial purchase of the vehicle. This carefully developed relationship happens over time and includes regular oil changes, service and repair, warranty work, and if all goes to plan, selling the customer their next new car when the time is right. 

Over the last decade, we’ve heard a lot of talking points about the usefulness of physical dealership stores. The talking heads spoke from one extreme to another, especially with Tesla and their internet model of selling cars. In statehouses across the nation, bills were filed, hearings were held, and legislation was passed in an effort to protect the franchised system. 

As the dust settles, the evidence is clear, the integration of a physical store with an online shopping option is the optimal retail model. Not because we said so, it’s because car buyers prefer a combination of physical and digital channels, and their money does the talking. The “bricks and clicks” model of selling cars is here to stay. 

While younger generations may prefer a digitally enhanced car buying experience, they still value physical touchpoints, choosing to gather information and make decisions based on a combination of online and physical channels. At the same time, older generations prefer an in-store car-buying experience but are increasingly engaging in online shopping options. 

The benefits of the franchised dealer model are the wide distribution network, personalized customer service, the ability to manage inventory and financing while providing a physical space for test drives and the final purchase experience. It also supports the car sales process and provides a deeply human interaction, one that can be facilitated, but not replaced, by technology, making the franchised auto dealership the epitome of “main street.”