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The early cars were sold by automakers to customers directly or through a variety of channels, including mail order, department stores, and traveling representatives. For example, Sears made its first attempt at selling a gasoline-engined chain-drive high-wheeler in 1908 through its mail-order catalog and starting in 1951 the Allstate through select its stores and the catalog.

The first car dealership was opened in 1889 by Fred Koller in Reading, Pennsylvania and sold cars manufactured in Cleveland, Ohio. This would have been the first dealership solely dedicated to automobiles, as opposed to horse-drawn carriages.

Today, direct sales by an automaker to consumers are limited by most states in the U.S. through franchise laws that require new cars to be sold only by licensed and bonded, independently owned dealerships. The first woman car dealer in the United States was Rachel "Mommy" Krouse who in 1903 opened her business, Krouse Motor Car Company, in Philadelphia, Pennsylvania.

The number of car dealerships in the US peaked in 1927 at 53,125 and steadily decreased over the next decades. By 1960, there were 33, 658 dealerships; by 1980, 23,379; and by 2001, 22,007.

Car dealerships are usually franchised to sell and service vehicles by specific companies. They are often located on properties offering enough room to have buildings housing a showroom, mechanical service, and body repair facilities, as well as to provide storage for used and new vehicles. Many dealerships are located out of town or on the edge of town centers. An example of a traditional single proprietorship car dealership was Collier Motors in North Carolina.[8] Many modern dealerships are now part of corporate-owned chains with hundreds of locations.[9] Dealership profits in the US mainly come from servicing, some from used cars, and little from new cars.

Most automotive manufacturers have shifted the focus of their franchised retailers to branding and technology. New or refurbished facilities are required to have a standard look for their dealerships and have product experts to liaise with customers.Audi has experimented with a hi-tech showroom that allows customers to configure and experience cars on 1:1 scale digital screens.In markets where it is permitted, Mercedes-Benz opened city centre brand stores.