Early on 'dealers' would set up shop and build up the market for a particular car brand. In many cases the manufacturers would see which markets were 'best' and then setup their own sales floor directly competing with the car dealers.

They could easily undercut the dealers and drive them out of business. The law was designed to protect the dealers from the manufacturers.

We are seeing it more and more now in many markets and niches as manufactures are cutting out dealers that built the markets and selling 'direct to consumer'. The difference is that most manufacturers saw what happened to the car companies and are trying to carefully avoid having the same thing happen to them.