In Iowa, where and how you buy your car is limited by law.
Unlike most other states, Iowa law prohibits buying from automakers that sell cars directly to you and not through dealerships. These rules, written decades before this business model existed, still dictate how and where Iowans can buy a car today.
Want to take a test drive or discuss financing or leasing with a carmaker that sells directly? In Iowa, you must go to nearby states such as Illinois and Minnesota. In fact, Iowa is one of the most restrictive states in the Midwest. This results in higher costs, less convenience, less choice and fewer jobs, as everyone can only buy from a middleman; the dealer.
Lawmakers in Des Moines are considering updating this antiquated rule to allow Iowans to finally buy directly from car companies like most Americans already can — while protecting jobs and business of existing dealerships.
What direct sales would mean for Iowans
In Iowa, cars must be bought through a middleman — the traditional dealer. Consumers should always have that option. But consumers should also be able to buy directly from car companies. This approach, when a car company sells without a middleman, is called direct sales and is illegal in Iowa.
Across most of America, both options exist side by side. Not in Iowa.
The benefits
Across most of the country, how you buy a car is a choice left to the consumer. In Iowa, you can only buy from dealerships. Without the option to buy directly from a car company, Iowans miss out on benefits most Americans already have.
Lower car prices
Buying directly from the carmaker means skipping the middleman. This eliminates hidden dealer markups. According to international banking firm Goldman Sachs, direct sales could lower car prices by ~$4300 per vehicle, based on today's average car price.¹
No haggling
Direct sales mean transparent no-haggle-prices. The price people see on the website or window sticker is the price everyone pays, as the car is sold directly by the manufacturer, instead of being negotiated through third parties.
Time back
The average car buying or leasing process takes nearly 15 hours.² But when you buy directly from the automaker, it can take mere minutes. Pricing, financing and paperwork are handled in one continuous process. No need to move between sales desks, finances offices and managers.
Pro-consumer
Numerous consumer advocacy and protection groups, including Americans for Prosperity, argue that allowing direct sales benefits consumers significantly.³
Modern buying
When an entire purchase is handled at one place without a middleman, buying a car can finally feel like most other purchases today. It makes buying or leasing simple, fast and transparent.
Good for Iowa
Right now, when buyers go out of state for more options, Iowa loses sales, tax revenue and jobs.
What Iowans are missing out on today
Most Americans have two main ways to buy a car: either directly from the company that makes the car, or through a traditional car dealership. Iowans only have one choice.
Direct Sales
Lower costs
As you buy straight from the maker, there is no extra layer for middleman markups. This could lower car prices by ~$4300 per vehicle, based on today's average car price.¹
Free markets, not outdated laws
Individuals should determine how to make this important decision, not antiquated laws — as they do in just about every aspect of their life.
Buy how you want
Online or in person, on your time and how you want.
Much faster
The average car purchase at a dealer takes 15 hours.² Buying a car through direct sales can be done within mere minutes.
Less pressure
Direct sales allows customers to browse and compare without a salesperson hovering or a meeting with a manager.
No added fees
Dealers often add additional fees such as "document preparation fees" and "car preparation fees".
New jobs and private investment
New sales and service sites mean private money and long-term jobs for Iowa communities.
More car models
Currently, only brands with local dealers can be bought in Iowa. Allowing direct sales would expand choice to brands that sell without dealerships.
Greater consumer protections
Iowa will have greater ability to regulate all car companies with a direct sales model and thus provide greater protections to consumers.
Dealership Model
Added markups and fees
Extra charges appear at signing, often for add-ons you didn’t ask for or need.
Outdated state mandate
Car buying is one of the last purchases where the state decides who you’re allowed to buy from.
One choice only
In Iowa, you must follow the traditional dealership process. Every other car buying alternative is illegal.
Long process
Buying a car through a dealer takes an average of 15 hours — and the length has only increased over the years.²
High-pressure tactics
Sales staff earn commissions, so urgency is a common strategy to finish off a sale.
Haggling and negotiating
Prices change based on back-and-forth. Two buyers can pay different amounts for the same car, in the same dealership.
Money leaves Iowa
Buyers seeking more choice buy already in other states. And their purchase dollars go with them.
Limited choice and personalization
You’re often limited to what’s on the dealer's lot — color, trim and options you really want may be missing.
Out-of-state rules
Iowans buying cars directly from makers do so under another state’s laws, which means Iowa has limited authority over transactions that happen beyond its borders.
Dealers stay protected, Iowans get more choice
Iowa law requires new cars to be sold only through dealerships, not directly from carmaker to consumer. Decades ago, the intention was to stop large automakers from opening company-owned stores, controlling prices and outcompeting local dealers on the same streets. Today, it harms consumers.
The update being considered to Iowa’s car sales law not only preserves all current protections, but strengthens these protections and allows dealers to keep operating exactly as they do today.
Modernizing state law would finally allow Iowans to buy cars directly from the maker, including from American manufacturers whose business models did not exist when these laws were written. This added option—one most Americans already have—would mean the end of Iowans traveling out-of-state and sending jobs, tax revenue and regulatory oversight elsewhere.
Good for Iowa dealers
- ✓Keep selling cars
- ✓Keep servicing and repairing cars
- ✓Added protections against unfair competition
Good for state of Iowa
- ✓Adds greater oversight of carmakers
- ✓Increased sales tax revenue
- ✓Greater industry expansion and more jobs
Imagine Iowa told you how to buy sneakers
Imagine only buying from middlemen
Buying directly from the manufacturer is a given in all parts of life. You can buy just about anything from a manufacturer or from a middleman. Produce, televisions, cell phones, sneakers, houses, you name it. Why should cars be any different?
Iowans deserve the same car choices as most Americans
Send a quick note supporting an update to Iowa’s outdated car-buying rules so Iowans can save money, save time and have greater choice.
Questions we hear
What would this change actually do?+
It would give Iowans another way to buy a new car, while keeping dealerships operating as they do today.
Would buying from a dealership still be an option?+
Yes. Dealerships would remain a full and unchanged option for buying a car.
What does "direct sales" mean in simple terms?+
It means buying a car directly from the car company, without a middleman.
Is buying directly from the carmaker legal in other states?+
Yes. Many states, including Midwestern neighbors such as Missouri, Wisconsin and Illinois, already allow it.
Would dealerships disappear if this changed?+
No. In states with direct sales, dealerships and direct sales operate side by side.
1 Lapidus, G. (2000). eAutomotive: Gentleman start your search engines. Goldman Sachs.
2 Cox Automotive. (2023). Cox Automotive’s car buyer journey study shows growing frustration with car buying process.
3 Americans for Prosperity. (2025). Brief of Amicus Curiae.