Angry Nissan Dealer Sues Nissan For Hurting His Business

Industry News / 9 Comments

And he seems to have good reason.

As carmakers continue to make cuts to production, there is less and less new vehicle inventory for dealerships to sell. It's an incredibly frustrating experience. So frustrating, in fact, that one Nissan dealer in Yonkers, New York has filed a lawsuit against the Japanese automaker over its approval of a new Nissan dealer that's set to open nearby. According to Automotive News, the Yonkers dealer management claims that since inventory is already in short supply, it's simply unfair to open a competing dealership in such close proximity. The lawsuit specifically alleges a breach of contract and violation of state law that's intended to protect dealers from this very sort of situation.

"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?" said the Yonkers dealer co-owner and general manager.

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As of this writing, Nissan has declined to comment. According to the plaintiffs, the proposed new dealer will be less than six miles away. The lawsuit aims to block Nissan from allowing the new dealer to open. It should be noted the new dealership would be replacing a previously closed one. The Yonkers dealer is seeking unspecified damages along with attorneys' fees. What's interesting is that this lawsuit has the potential to set a precedent regarding the opening of new dealers in close proximity to existing ones.

Allowing a new privately-owned franchise to open up is relatively risk-free for automakers. In Nissan's case, it just wants to sell more units of the popular Rogue, Sentra, and other models. But existing dealers, even those that perform well, are burdened because they'd be competing for a fairly limited number of customers in the area. In addition, automakers regularly encourage dealers to invest significant sums of money for expansion purposes.

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Doing so makes it more difficult for dealers to get a return on investment. And allowing a new and nearby dealer to open makes it even more challenging.

"Cramming more dealers into a market only places additional stress on the existing dealers' balance sheet while not providing any real added benefit to consumers," said the dealership's attorney. Furthermore, the Yonkers dealer has succeeded in all sales and customer service expectations. Meanwhile, two previous dealers have already failed at the proposed location. On the one hand, this could be good for Nissan buyers as it'll allow them to "shop around" but that only works when there are actually vehicles to sell.

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Source Credits: Automotive News

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