I wouldn't put the blame entirely on the dealerships. The automakers are complicit in this whole thing too. Without the dealers there is no service model.
It's mostly on the car manufacturers. Most of them seem to want the dealership model nowadays.
There's no such laws in place requiring independent dealerships in Canada. Aside from the usual direct sales car companies, Genesis dealerships in Canada are all owned by Genesis Canada and I can order a car direct from Genesis. Yet most of the big names in cars operate with independent dealerships, as well as practically every motorcycle manufacturer as far as I know. In fact, Mercedes-Benz Canada just sold off all their Toronto dealerships to a AWIN/Zanchin [1] and AFAIK it wasn't because they were forced to.
I don't have any real insight into why this is the case. Most I can say is that if direct sales was so lucrative for car makers, one has to wonder why they didn't take advantage of it here. That being said, FortNine released a video on why motorcycle dealerships work this way; I suspect a lot of it applies to cars as well: https://www.youtube.com/watch?v=meHYBhcpdvQ
If manufacturers sold direct they would have to book all inventory until it sold. Right now, dealerships work with the banks to finance inventory until it sells. Part of the reason they are so aggressive...they are paying interest on each vehicle daily.
The manufacturer gets cold hard cash for the vehicles, now. They are off the books except for the warrantee.
