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New Mississippi law requires all OEMs to use local dealerships to sell and service vehicles

Some new manufacturers sought to potentially sell vehicles online and without a robust service network

Jackson, Miss.—Mississippi Gov. Tate Reeves signed into law HB 401 last week, an update to the motor vehicle law clarifying how vehicles can be sold in the state. The law would require all manufacturers to use local dealerships to sell and service vehicles, including both electric vehicles and internal combustion engine (ICE) vehicles.

Like most states, Mississippi requires independent dealerships to sell and service new vehicles, but some new manufacturers sought to potentially sell vehicles online and without a robust service network. The Mississippi approach breaks a vertical sales monopoly by manufacturers that by some estimates costs consumers nearly $500 per vehicle and ensures that consumers have access to local service for their vehicles even if new manufacturers go out of business.

“Today, I signed HB401 to restore MS’s auto dealer franchise law back to how it had been interpreted for the last 50 years,” said Gov. Reeves in a tweet. “Almost 200 small businesses in communities across our state are seeking assurances that big manufacturers can’t just destroy their businesses. That’s fair!”

“This law, HB 401, establishes one set of rules for all auto manufacturers in the state of Mississippi,” said Mississippi Automobile Dealers Association (MADA) President Marty Milstead. “It’s rewarding to know that Mississippi lawmakers recognized the importance of the strong dealership network in our state.”

Mississippi’s 174 local dealerships compete on sales and service, ensuring that consumers can shop multiple retailers for their vehicles. The dealership network also provides access to service and repair facilities in diverse geographic locations across the state. Some manufacturers that do not use local dealerships have had serious bottlenecks servicing vehicles – problems that are nonexistent with manufacturers that use local dealerships.

“Local dealerships are a pillar of economic growth in communities across America and Mississippi,” said NADA president Mike Stanton. “Mississippi gets it – local dealerships are efficient, effective, accountable, and create greater choice, access, and affordability for consumers everywhere.”

The average Mississippi dealership has a staff of 47 employees, with an average compensation of nearly $68,000. Local Mississippi dealerships provide more than 18,000 careers in the state, with opportunities to advance into management roles without a four-year college degree.

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