Streamlining Online Purchase of New Vehicles by States
In the past, dealerships played a crucial role in helping manufacturers expand their reach, especially those without a nationwide distribution network. However, in the digital age, the landscape has shifted, and outdated regulations are holding back online purchases of new vehicles.
States are urged to update and eliminate such regulations to make it easier for consumers to shop for cars online. In most states, consumers are required to complete paperwork in person, a process that accounts for nearly one-third of the total time spent at a dealership during a vehicle purchase. Even elsewhere, consumers must complete some paperwork with a handwritten signature.
The pandemic has prompted dealerships to embrace technology, but outdated practices and regulations continue to inhibit end-to-end online shopping. Car dealerships have signalled their support for the transition by lobbying to reduce "wet ink" signature requirements.
Some states are modernising regulations to allow automakers to engage in direct sales of electric vehicles (EVs). For instance, nine states already allow electronic signatures on all documents for remote car purchases. States like California, New Jersey, and Florida have recently changed practices to accept e-signatures on titles, registration, and transaction documents.
Every state has a framework for electronic signing in place, and streamlining the car-buying process could reduce costs for consumers. The car-buying process could be made more efficient by eliminating regulations that hinder online purchases.
State motor vehicle departments require "wet ink" signatures on vehicle titles and registrations, a practice that is outdated. There are no longer any federal requirements impeding the transition to paperless transactions.
Modernizing state franchise laws involves legislative updates to allow direct sales by manufacturers, especially EV makers. For example, South Carolina’s current law not only bans direct sales but also vehicle servicing by manufacturers, restrictions that modern laws could eliminate to align with global norms.
Some states differentiate between traditional dealers and new EV manufacturers, as seen in Ohio, where Tesla is allowed direct sales but Rivian is not, leading to legal challenges and calls to overhaul such fragmented rules.
Regulatory reforms that update or repeal outdated restrictions originally designed to protect franchised dealerships could strike a balance between dealer interests and consumer choice. Model laws regulating franchise brokers, like proposals from NASAA, provide frameworks that states might adapt to modernize auto sales without dismantling all protections.
Notable recent examples of states actively addressing these issues include Ohio, which is debating its franchise laws with legal actions involving EV manufacturers seeking direct sales rights, signalling a shift towards more flexible approaches in the EV market. South Carolina considered but did not pass a bill in 2025 that would allow direct-to-consumer sales; proponents argue it could lower prices and simplify buying, reflecting growing national interest in reform.
Technological advances combined with dealer cooperation, as seen with Amazon Autos, are enhancing the online buying experience within current legal frameworks. Amazon Autos' integration of dealer systems to enable online vehicle browsing and local pickup represents an innovation improving the online car-buying experience with dealer collaboration, illustrating hybrid models for modernization.
In conclusion, modernizing state franchise laws involves legislative updates to allow direct sales by manufacturers (especially EV makers), legal challenges that push states toward reform, and adopting supportive regulations that balance stakeholders' interests. Ohio and South Carolina are notable recent examples actively addressing these issues. Additionally, technological advances combined with dealer cooperation are enhancing the online buying experience within current legal frameworks.
- Regulatory reforms that modernize auto sales could streamline the car-buying process by adopting electronic signatures and reducing "wet ink" signature requirements, thereby reducing costs for consumers and incorporating current AI and technology advancements.
- State legislative updates, such as those proposed in the Model laws regulating franchise brokers, could allow direct sales by manufacturers, enabling fully online purchases of traditional vehicles as well as electric vehicles, thus improving consumer choice and aligning with global norms.
