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Hyundai dealer sues automaker, withholds vehicle allocation

franchise auto dealer Having the rights to sell a particular brand or model can sometimes give you a big boost, but automakers charge a lot for that privilege. Annual franchise fees and mandatory spending on marketing and other business needs add up quickly, but costs don’t stop there. hyundai teeth sued by one dealer For withholding inventory after store owners refused to invest hundreds of thousands of dollars in a much-needed store upgrade program.

Central Avenue Hyundai in Hartsdale, N.Y., sued its franchisor for withholding inventory after dealers refused to undertake renovations required by the automaker’s Accelerate facility image program. Accelerate needs to invest heavily to build a bigger facility and modernize its stores to attract EV buyers and customers to its showroom, as many people like. buy a car Online instead of hanging out with a group of strangers for hours to get a new ride. The economic hit could be millions of dollars for some stores.

car manufacturers Allocation controlor the number of vehicles sent to dealer, and Central Avenue said Hyundai cut the number of discretionary cars to punish it.The store owner claimed that Hyundai had cut prices. new car Shipments in the first quarter of 2022 were approximately 42% lower than the same period in 2021. All dealers and automakers struggled with new inventory, but the drop on Central Avenue was the biggest of his 13 stores in the neighborhood.

Over the past two years, the push and pull between automakers and dealers has become more intense.Supply chain issues and the lingering impact of the pandemic have resulted in ongoing vehicle shortages, reducing the ability of dealers to sell in large numbers (although leading to higher prices for cars owned by dealers) and allowing automakers to obtain there is a problem with new car where they are most needed.

When Hyundai announced its Accelerate plans for 2020, many franchisees resisted, but most called for action through state auto dealer associations out of fear of ruining relationships with automakers. became. We’re talking about Hyundai here, but it’s not the only automaker using allocations as leverage. ford When general motors They threaten to withhold dealership quotas as punishment for engaging in markups and other questionable practices.Both auto giants also have mandated significant investments Some brands’ stores may experience more friction as dealers face the prospect of spending millions of dollars.

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