Stellantis Sues North Carolina Dealer to Avoid $180 Million Buyback

The Automotive News is reporting that Stellantis has initiated legal proceedings against Randy Marion Chrysler, Dodge, Jeep®, Ram (CDJR), a dealership in Wilkesboro, North Carolina. This lawsuit aims to prevent the company from having to repurchase over 3,800 unsold fleet vehicles, a move that would cost Stellantis around $180 million.

The Background of the Dispute – 

The conflict began when Randall Marion, the principal of the dealership, notified Stellantis on June 13 of his intention to terminate the dealership’s sales and service agreement. Marion demanded that Stellantis repurchase the inventory of new vehicles by September 13, in accordance with North Carolina state law. This law requires automakers to buy back any new, unsold vehicles acquired within the last 24 months from a dealership that is ending its franchise agreement.

In his communication, Marion did not specify the reason for terminating the franchise but emphasized that the dealership expected Stellantis to comply with the statutory repurchase obligations.

Stellantis’ Allegations –

Stellantis’ lawsuit, filed on June 28, does not dispute the termination of the franchise agreement but challenges the requirement to buy back the fleet vehicles. The automaker claims that over the past three years, the dealership ordered a significant number of fleet vehicles, many of which were reportedly sold to specific customers. However, it has been revealed that many of these sales were not genuine, leading to an unusually large inventory of 3,841 fleet units.

According to the lawsuit, the dealership reported selling 4,532 fleet vehicles in 2023 and an additional 770 between January and May of this year. Stellantis contends that these figures are misleading and that the dealership violated company rules by stockpiling fleet vehicles for resale at higher prices during a period of high demand.

The Legal Argument – 

Stellantis is seeking a court ruling to clarify that North Carolina law does not require it to repurchase the fleet vehicles under these circumstances. The law mandates repurchase of new, unsold vehicles acquired within the last 24 months if they have not been significantly altered or driven more than 1,000 miles. However, Stellantis argues that its policies do not typically involve repurchasing fleet units because dealers usually do not maintain large inventories of such vehicles without committed buyers.

The automaker also alleges that the dealership used its own fleet account number and those of large corporate customers without proper authorization to order and stockpile vehicles. Additionally, some of the fleet vehicles were modified or customized, which Stellantis claims should exempt them from the repurchase requirement.

Source: Automotive News