June 9, 2023

National truck dealership exiting Texas, blames state regulations


After 32 years in Texas, Arrow Truck Sales announced it is closing its three branches across the Lone Star State.

The closures are related to a state law prohibiting motor vehicle manufacturers from also owning auto dealerships and selling vehicles directly to consumers. Arrow Truck Sales is a subsidiary of automaker Volvo.

“The closure of these Arrow branches in Texas comes as a significant disappointment to Arrow, our employees, and our business partners and is an unfortunate loss to the overall trucking industry in Texas,” Arrow Truck Sales said in a statement.

“This closure is driven by Texas state regulations, which prohibit motor vehicle manufacturers from operating as a motor vehicle selling dealership. Arrow, a subsidiary of the Volvo Group, is classified in the state as a manufacturer, and thus is affected by this regulation.”

Arrow Truck Sales did not return a request for comment from FreightWaves.

Arrow locations in Dallas, Houston and San Antonio will close permanently on July 31.

The company said no other Arrow locations will be affected and it will continue to support Texas customers in after-sales situations through its corporate customer service department, along with honoring warranties and third-party vehicle service contracts.

Arrow Truck Sales, which was founded in 1950, is based in Kansas City, Missouri. The company sells used heavy- and medium-duty trucks and trailers across 16 locations in the U.S. and Canada. Volvo Trucks North America Inc. acquired Arrow Truck Sales in 2001.

Arrow began operating in Texas in 1991, when it opened a branch in Dallas.

The Texas law banning auto manufacturers from selling directly to consumers went into effect in 2003. Arrow secured an exemption in 2007 that allowed the company to continue dealership operations through Aug. 31, 2023. 

Texas’ auto dealership regulations have been criticized by automakers such as Tesla and Lucid Motors, as well as engine maker Cummins Inc. and business tycoon Warren Buffett.

Cummins has been cited by Texas agencies for violating the state’s dealership rules because it not only makes engines for trucks, buses and other heavy vehicles, but it also performs warranty service on them, which is against the regulations.

Cummins has advocated for legislation that would have eased restrictions against the company in the state, but the measure failed to pass the Texas legislature in 2019. 

Texas lawmakers did pass a bill in 2019 providing a loophole for Buffett’s holding company — Berkshire Hathaway — to continue owning its more than two dozen Texas auto dealerships while also owning Forest River, an Indiana manufacturer of recreational vehicles that it sells across the state.

In November, Lucid filed a federal lawsuit in Texas alleging that the state’s regulation on dealerships is “economic protectionism” for auto dealers.

“As applied to Lucid, this prohibition is irrational in the extreme: it hurts competition, reduces consumer choice, and drives up costs and inconvenience, with no countervailing benefit whatsoever,” according to the lawsuit. “This prohibition is pure economic protectionism for the benefit of Texas’s existing auto dealers. It puts their profits ahead of the interests of Texas consumers.”

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