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Thursday, February 3, 2022

Dealer Sues Carmaker Over Network Expansion Plans


In what could be a visible sign of tensions between carmakers and its dealers due to the lack of new cars, a U.S.-based dealer is suing Nissan because of its network expansion plans.

In a story in Automotive News, New York-based Central Avenue Nissan is questioning Nissan’s move to greenlight an additional dealership near them when there’s clearly an inventory squeeze brought on by the global chip shortage.

The suit, filed in U.S. District Court for the Southern District of New York in late January, challenges the Japanese automaker for approving a competing dealership nearby even as it is unable to adequately supply inventory to existing stores.

The lawsuit alleges breach of contract and violation of state law aimed at protecting dealerships.

In an interview with the publication, F. James Rourke, co-owner and general manager of Central Avenue Nissan said:
“When you can’t even supply the dealerships that you currently have with an ample amount of inventory, you’re going to bring in a new franchise and give him additional inventory?”
Central Avenue Nissan is suing Nissan on a supposed violation of New York’s Franchised Motor Vehicle Dealer Act which restricts a carmaker from authorizing a new store within six miles (9.6 kilometers) of a same-brand dealership. The new Nissan dealership is located 5.87 miles (9.44 kilometers) from Rourke’s store.

The suit though is likely caused by a sore point between carmakers and its dealers for the past year: lack of new cars.

In its lawsuit, Central Avenue Nissan said inventory is so low, it is often selling vehicles off the lot the day they arrive. The newly sanctioned competition, the suit argued, would add to Nissan’s inventory shortage and worsen the impact on Central Avenue Nissan.

“The last thing Nissan needs right now is another dealership without sufficient inventory to meet customer demand,” the suit alleged.

Manufacturers typically divert vehicle allocation to new stores to help the dealer recover startup costs.

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