Supplier Sues VW As a result of New Supplier 20 Miles Away Is Too ‘Shut’

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Picture: Ole Spata (AP)

This shouldn’t come as a shock, however dealerships are pretty territorial. It’s one of many causes dealership franchise possession generally is a messy expertise. It’s additionally a purpose why you hardly ever see the identical model vendor on the town, however maybe a city over. Too shut, and also you’ll be in for a combat, just like the vendor suing Volkswagen over a brand new vendor getting licensed, simply 20 miles away, Automotive News experiences.

Crain Volkswagen of Fayetteville, Arkansas filed suit in December in opposition to Volkswagen Group of America, alleging that the current licensing of Everett Volkswagen in Rogers, Arkansas, violates its franchise settlement with the corporate because the vendor “encroaches on its territory” and Arkansas state vendor legal guidelines. However 20 miles ought to be greater than sufficient area between two dealerships in a spot like Arkansas, proper? Nicely, based on Crain Volkswagen, it’s not.

Crain is looking out VWs lack of market penetration right here within the U.S., saying VW lacks sufficient gross sales quantity to help each dealerships, making two sellers inside 20 miles of one another redundant, and problematic to each sellers surviving. From Automotive Information:

The go well with additionally alleges that VW of America has been unable to attain “the trade commonplace of 600,000 models per yr to help its current vendor community” and because of this would doubtless not be adequately capable of help and provide each dealerships, a failure the grievance claims can be in violation of state franchise legislation.

The go well with additionally outlines Crain’s vendor investments because it moved to its present location in 2017. Crain is looking for $5 million in damages.

VW is looking for to have the entire thing dismissed. In line with representatives of the German automaker, Everett VW was rightfully established in mid-2021 and obtained correct licensing and approval by way of the Arkansas Motor Car Fee—one thing Crain claims Volkswagen didn’t do.