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 Chrysler faces probe by Calif. DMV over LA factory store

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Location : Lancashire
Registration date : 2008-02-02

PostSubject: Chrysler faces probe by Calif. DMV over LA factory store   Fri May 27, 2011 7:05 pm

The California New Car Dealers Association contends Chrysler is violating
state law because Motor Village L.A., pictured, is located within 10
miles of three independently owned Chrysler dealerships.

LOS ANGELES Chrysler Group LLC is under investigation by the
California Department of Motor Vehicles for operating a factory-owned
dealership in downtown Los Angeles in violation of state franchise laws.
The dealership -- Motor Village L.A., a 189,000-square foot store
carrying the Chrysler, Dodge, Jeep, Ram and Fiat brands -- opened in
Chrysler bills it as a test bed for new retail and marketing ideas.
The California New Car Dealers Association contends Chrysler is
violating state law because Motor Village L.A. is located within 10
miles of three independently owned Chrysler dealerships.
California law bars automakers from owning dealerships within 10
miles of their franchised dealers, and the association says Chrysler
hasn't met any of the law's exemptions.
The association filed a petition in March with the state's New Motor
Vehicle Board, seeking an investigation by the DMV. The board oversees
franchise law and disputes between dealers and manufacturers.
Unanimous vote
After a hearing Thursday on the petition, the board voted unanimously to have the DMV investigate the association's allegations.
In its petition, the association said Motor Village L.A. is not
eligible for legal exemptions, which allow automakers to own stores near
other dealers for one year or in partnership with dealers who have made
substantial investments in the operations and agree to buy out the
A Chrysler attorney Gwen Young said during the hearing that multiple
attempts, including some recently, to close a deal for an independent
dealer to buy the store from the automaker were unsuccessful.
Young said it's still Chrysler's intention to find an independent dealer to take over the store, and that process is ongoing.
According to the petition, Chrysler Realty owns the $30 million-plus
building that houses Motor Village L.A. and is charging no rent for the
first six months.
The monthly rent is scheduled to rise gradually from $50,414 now to
$90,000 in 2015, the petition says. The market rate for rent is more
than $200,000 per month, the association says.
If the DMV finds that Chrysler violated state law, the automaker
could have its business license in California suspended or revoked.
John Tangeman, Chrysler's national dealer placement manager, declined
to comment after the board's ruling. Gerry Quinn, head of Chrysler's
retail, wholesale and financial services operations, also declined to
Chrysler spokesman Ralph Kisiel said the automaker will cooperate with the DMV.
"We responded to the allegations today, and we look forward to
responding to them in front of the DMV," Kisiel said. "Beyond that, it's
a pending matter so we can't discuss the matter publicly."
Clear violation
Peter Welch, president of the state dealers association, said he was
pleased that the board directed the DMV to conduct the investigation.
"From our perspective, there's been a clear violation, and what I heard today underscored it," Welch told Automotive News after the ruling.
"We obviously don't want the department to close them down because
that would adversely affect our 103 Chrysler dealers," he said. "But we
can't have rogue manufacturers not following the law and intentionally
trying to circumvent it through sham devices to meet whatever the
flavor-of-the-month new marketing strategy is."
Chrysler's intent
Chrysler acquired Motor Village in 2008 after buying out the
previous owner, who had fallen ill. At the time, the store was known as
La Brea Avenue Motors. The name was changed in November 2010 and moved
to its current location in late January 2011.
During the hearing, Tangeman, Chrysler's national dealer placement
manager, said the collapse of car sales in greater Los Angeles during
the recession and subsequent financial strain put on Los Angeles area
dealers have made willing buyers hard to come by.
Tangeman says Chrysler intended Motors Village to be a high-profile
store in a high-profile location. With its three-story cylindrical glass
and steel vehicle display tower next to a busy stretch of Interstate
110 near downtown, it was designed to enhance the automaker's exposure
and regain market share in an import-dominated market.
"In downtown L.A., 85 percent of the cars sold are imports," Tangeman
said. "Our intentions here are not to harm or create any kind of
disadvantage for any other dealer. I want to come into this market in an
appropriate way and structure a store, have it become successful and
have everybody grow."
Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20110526/RETAIL07/110529907/1400#ixzz1NZMaW0gi
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PostSubject: Re: Chrysler faces probe by Calif. DMV over LA factory store   Sat May 28, 2011 7:06 pm

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