I've worked for several OEMs and have talked to dealers about this a bit. Here's a quick run-down. No domestic OEM sprang into existence with billions of doll

I've worked for several OEMs and have talked to dealers about this a bit. Here's a quick run-down. No domestic OEM sprang into existence with billions of dollars in the bank to spin up a nationwide network of showrooms and repair centers. As they were growing production slowly, they had to rely on small businesses around the country to sell their products for them, which also significantly improved capital when they were growing (dealers bought from the OEM, then sold to customers, potentially thousands of miles away from factories). Over time, these businesses became franchised by the OEMs to allow them to exert some control over the customer experience, standardize parts and repair work, etc. So that's why dealers became a thing in the first place. The tricky bit of the history is why the state laws in favor of dealers came into existence. It's very fuzzy, but in effect the Detroit "big three" became very large and powerful, with enough money to start stepping in with company-owned dealerships. The local franchised dealers, who by that time had also become quite embedded in communities and politics, thought that this was unfair since the OEMs could undercut local dealers on price, thus they lobbied their states to put in place anti-competition laws. And they were successful. That's about it. As far as I've ever been able to tell, customer experience and monopoly prevention never really factored into it other than as dubious arguments by the dealers themselves. Now here we are ~70 years later and the market has changed significantly, but the protection laws are still there. Fwiw, dealer margins vary by vehicle and brand, but 5-10% for mass market vehicles is common. That's money the OEMs would rather not pay out to third parties. Dealers also have massive markups on service and love warranty work because they can rake OEMs over the coals with it. The best argument I've seen in favor of dealers is that an OEM-run dealership would be incentivized to some degree to dismiss warranty work as unnecessary, while a franchised dealer tries to find every warranty hour they possibly can. That's about it, though - there's so much brand and 3rd party competition in the market these days that other arguments usually don't make much sense.