A franchised automobile dealership has a lot of power and sway when it comes to their presence in a community. But no matter how big or small they are, these dealers ultimately have to act and perform according to the expectations of the automaker they are representing. Automakers who feel an outfit is not falling in line will employ a wide array of means to ensure compliance with a Volkswagen dealer in New York forcing Volkswagen of America to take the bold and unusual step of formally suing the dealership in court over poor performance.
Poking the bear one too many times
When dealerships and manufacturers get into conflict with each other, they often resolve their issues behind the scenes with little mention of the agreements that they reach especially if the manufacturer in question threatens to yank their brand away from them. In the case of Prestige Imports in New York, things have hit a breaking point. According to Volkswagen of America (VW0A), Prestige cost the automaker 1,500 auto sales since 2011 and dealership brass have done little to fix the problem.
According to VWoA’s legal complaint, the company tried to give Prestige ample time to fix their issues with the company first contacting them in 2010 to address the metrics. However, by 2011, the company sent a “Notice of Default” to Prestige giving the dealership until February 28, 2012 to improve before later extending it to December 31, 2013. Things continued to deteriorate and by mid-2023, VWoA grew frustrated at Prestige’s “unacceptable results,” and sent a new “Notice of Default.” The automaker then once again extended the cure period until September 30, 2024, but Prestige “continued to ignore many of VWoA’s suggestions for improvement and offers of assistance,” according to the filing. Prestige allegedly reported spending zero dollars on advertising new VW vehicles in 2024 a bold act of defiance against the company.
“Prestige’s longstanding poor sales performance not only constitutes a material breach of its fundamental contractual obligations but also provides clear “due cause” for termination under the applicable New York statute governing termination of motor vehicle dealership franchise,” VWoA said in its complaint.
What’s next?
Neither Volkswagen nor Prestige Imports are publicly commenting on the matter with VWoA saying it has a policy of not commenting on pending litigation but it’s very rare to see things between a franchise dealership and an automaker break down in this fashion and even rarer to see it go to court.
Look for this to also be an anomaly with many franchise dealerships often having strong and positive relationships with automakers which in turn not only helps the dealerships make a profit when they are willing to work together with the company when it comes to input on certain issues, but also give customers in a key market the opportunity to purchase a vehicle that they want and trust.
Carl Malek has been an automotive journalist for over 10 years. First starting out as a freelance photographer before making the transition to writing during college, his work has appeared on numerous automotive forums as well as websites such as Autoshopper.com.
Carl is also a big fan of British vehicles with the bulk of his devotion going to the Morgan Motor Company as well as offerings from Lotus, MG, and Caterham. When he is not writing about automobiles, Carl enjoys spending time with his family and friends in the Metro Detroit area, as well as spending time with his adorable pets.