by Terry MacCauley - Posted 33 minutes ago
As we gear up to celebrate the 4th of July, a day synonymous with American Independence, Freedom, and backyard barbecues, let’s take a road trip through the history of the U.S. auto dealership industry. From independent used car lots to buy here, pay here (BHPH) dealerships and franchised OEM (Original Equipment Manufacturer) dealerships, these businesses have been the backbone of America’s love affair with the automobile. Their story is one of entrepreneurial spirit, innovation, and resilience, qualities that echo the ideals we celebrate on Independence Day. Buckle up for a fun, in-depth ride filled with little-known facts, historical figures, and surprising statistics, all tied to the red, white, and blue spirit of July 4th!
The automobile symbolized freedom when it first rolled onto American roads in the late 19th century. By the 1890s, the U.S. was buzzing with inventors and entrepreneurs, much like the colonists who dared to dream of independence in 1776. The first auto dealership in the United States was established in 1898 by William E. Metzger in Detroit, selling Oldsmobiles. This was just 22 years after the Centennial Celebration of the Declaration of Independence, and Metzger’s dealership marked a new kind of independence: the freedom to move.
Early cars were sold through various channels: mail order (imagine ordering a Ford like a Sears catalog item), department stores, and traveling salesmen. But Metzger’s dealership model, rooted in local service and direct customer interaction, won out. By 1903, another trailblazer, Rachel “Mommy” Krouse, opened the Krouse Motor Car Company in Philadelphia, becoming the first woman car dealer in the U.S. Her story is a testament to the independent spirit of the era, breaking gender barriers in a male-dominated industry.
Fun Fact: Did you know early dealerships often doubled as repair shops and social hubs? On July 4th celebrations in the early 1900s, dealerships like Metzger’s would showcase shiny new cars in town parades, decked out with flags and bunting, symbolizing progress and patriotism.
Independent auto dealerships, often used car lots, embody the rugged individualism celebrated on Independence Day. Unlike franchised dealerships tied to manufacturers, independents operate without corporate oversight, sourcing vehicles from auctions, trade-ins, or private sales. Their history is one of scrappy entrepreneurs who, like the Founding Fathers, carved their own path.
In the 1920s, independent dealerships proliferated as car ownership exploded. By 1927, the U.S. had 53,125 dealerships, many of them independents, serving a nation eager to hit the open road. These dealers were often family-run, with names like “Honest Joe’s Used Cars” painted on signs. They thrived in small towns and urban centers, offering affordable vehicles to the working class.
The Great Depression tested their resilience. While many independents folded, survivors like Cleveland’s North Ohio Motor Company (distributors for Chandler Motor Cars) leaned on community goodwill and top-notch service to weather the storm. Post-World War II, independents roared back, capitalizing on the suburban boom and the demand for station wagons and panel trucks. By the 1950s, Cleveland alone saw its number of local dealers quadruple from the 1920s, fueled by economic prosperity and new highways.
Little-Known Fact: During the 1930s, some independent dealers hosted July 4th “trade-in sales,” encouraging customers to swap their old Model Ts for newer models. These events, advertised in papers like The Cleveland Plain Dealer, often included free hot dogs and flags for kids, blending commerce with patriotism.
Statistics: Today, there are an estimated 16,000–17,000 physical independent dealerships in the U.S., with some estimates as high as 60,000 when including individuals filing as used car dealers. They account for over 50% of retail used-vehicle sales and nearly 70% of wholesale auction purchases, making them a driving force in the auto market.
One More Fun Fact: The National Independent Automobile Dealers Association (NIADA) was formed in 1946. It was initially founded as the National Used Car Dealers Association (NUCDA), but its name was changed to NIADA in 1955.
Buy here pay here (BHPH) dealerships are the unsung heroes of the auto industry, offering financing directly to customers who might not qualify for traditional loans. Their history reflects America’s commitment to opportunity for all, a core value of the 4th of July. BHPH dealerships emerged in the mid-20th century as a response to the growing demand for accessible car ownership, particularly among low-income and credit-challenged buyers.
In the 1950s and 1960s, BHPH dealers began formalizing their model, often operating as independent lots. Unlike franchised dealers, they were not bound by strict manufacturer contracts, allowing them to take risks on subprime borrowers. By the 1980s, BHPH became a distinct segment, with dealers financing loans in-house and requiring weekly or biweekly payments, often in person. This model allowed buyers to own a car, echoing the Declaration of Independence’s promise of “life, liberty, and the pursuit of happiness.”
Historical Figure: Joe McCloskey, president of the National Independent Automobile Dealers Association (NIADA), is a modern champion of BHPH dealers. Operating McCloskey Motors/Big Joe Auto in Colorado Springs, he advocates for fair practices and community support, helping independents navigate challenges like rising vehicle costs and competition from online retailers like Carvana.
Fun Fact: Some BHPH dealers in the 1960s offered “Independence Day Specials,” slashing down payments for buyers who signed contracts on July 4th. These promotions, often advertised with star-spangled banners, made car ownership feel like a patriotic act.
Statistics: BHPH dealerships serve a critical niche, with an estimated 35,000 independent dealers (including BHPH) across the U.S. In 2021, used car sales reached 43 million units, with BHPH dealers playing a significant role in the affordable segments under $20,000.
Franchised OEM dealerships, tied to manufacturers like Ford, GM, and Chrysler, represent the structured, loyalist side of the auto industry. Their history is intertwined with the rise of Detroit’s Big Three, who by the 1920s dominated the market, producing 80% of U.S. vehicles. These dealerships operate under strict contracts, selling new and used cars, parts, and services while adhering to brand standards.
The National Automobile Dealers Association (NADA), founded in 1917, was a pivotal force in shaping OEM dealerships. On the eve of World War I, 30 dealers lobbied Congress to reclassify cars as economic necessities, not luxuries, reducing the federal tax from 5% to 3%. This victory, celebrated just before July 4th, 1917, ensured that auto factories weren’t converted to wartime production, preserving jobs and mobility.
OEM dealerships faced challenges from manufacturers, who often imposed harsh rules. In the 1970s and 1980s, Detroit’s Big Three, under pressure from foreign competition, closed many low-volume dealerships to cut costs, a move that echoed the economic sacrifices of the Revolutionary War. Yet, franchised dealers fought back, leveraging state franchise laws to protect their independence. By 2010, all U.S. states had laws prohibiting manufacturers from selling directly to consumers, a testament to their political clout.
Little-Known Fact: On July 4th, 1947, Ford’s “300 Club” idea, born in Cleveland, went national. This program rewarded top-performing dealers with bonuses and recognition, often celebrated with gala events featuring fireworks and patriotic speeches, reinforcing the bond between manufacturers and dealers.
Statistics: As of January 2025, there are 18,311 franchised dealerships in the U.S., up from 16,708 in 2016. They employ nearly 2 million people and generate $1 trillion annually for the economy, including $280 billion in tax revenue.
The 4th of July has always been a high-octane holiday for the auto industry. Dealerships, independent and franchised alike, capitalize on the patriotic fervor with sales events, parades, and community gatherings. In the 1950s, Hudson dealers in Cleveland showcased their innovative Super 6 models in July 4th parades, drawing crowds with their sleek designs and American-made pride. Today, dealerships host “Star-Spangled Sales,” offering discounts and financing deals to celebrate the nation’s birthday.
The auto industry’s connection to Independence Day goes beyond commerce. Cars represent freedom of movement, a value Americans have cherished since the Revolution. On July 4th, 1776, the population was 2.5 million; by 2021, it was 332 million, with 91% of households owning at least one car, many purchased from dealerships.
Fun Fact: In 1972, future president Calvin Coolidge was born on July 4th, the same year Henry Ford’s reputation for innovation was cemented. While Coolidge never worked in the auto industry, his small-government philosophy resonated with independent dealers who valued minimal interference.
The auto dealership landscape is changing, much like the colonies evolved into a nation. Consolidation is shrinking the number of owners, from 40,000 in the 1930s to about 8,000 today, with predictions of 6,000 by 2050. Large groups like Lithia Motors now control 26.6% of franchised dealerships, while independents face competition from online retailers. Yet, the entrepreneurial spirit endures, with BHPH dealers adapting to digital marketing and independents focusing on niche markets like luxury or classic cars.
Electric vehicles (EVs) are the new frontier, challenging traditional models. While OEM dealers like Audi experiment with high-tech showrooms, independents are carving out space in the used EV market. Tesla’s direct-sales model, though limited by franchise laws, echoes the disruptive spirit of 1776, pushing the industry to innovate.
As we light fireworks and wave flags this 4th of July, let’s salute the independent, BHPH, and OEM dealerships that have powered America’s automotive journey. From William Metzger’s first Oldsmobile lot to Rachel Krouse’s pioneering dealership, from NADA’s wartime lobbying to Joe McCloskey’s modern advocacy, these businesses embody the independence, resilience, and opportunity we celebrate. So, whether we are cruising in a classic Mustang or a shiny new EV, take a moment to appreciate the dealerships that made it possible. Happy Independence Day, and keep the wheels of freedom turning.
-by Terry MacCauley, Founder & CEO
Parrots talk. Eagles fly.
