Car Dealer-Do you really have the right to reject a new car?

According to a recent NY Times article:

The Chrysler Group said Monday that it has not yet occupied tens of thousands of cars in stock. This is already considered high by industry standards. Chrysler said it regularly excluded billions of dollars worth of these vehicles from the aggregate of unsold vehicles and trucks because they were not assigned to a particular dealer or ordered by a customer. (New York Times, October 24, 2006)

When I started learning about the automobile industry, dealers and manufacturers had the names of cars that were manufactured but not ordered. Its name was “Sales Bank”. A “sales bank” is a practice that claims to have been abandoned by manufacturers after being destroyed by the system during the 1970s oil crisis.

By the early 1980s, when the dust settled down, Automotive News had published the following articles:

Ernest Dagostino, Rhode Island, has filed a lawsuit against Chrysler Corporation in the US District Court alleging that Chrysler has terminated the franchise after Chrysler refused to purchase a “gas guzzler.” In an unreported case, a federal court jury found against Chrysler and Chrysler has appealed. Chrysler agreed to withdraw the appeal and paid D’Agostino a settlement (Automotive News, October 1982).And

Fred Drendall of Drendall Lincoln-Mercury / Pontiac claims that high flooring costs forced him to refinance his dealer when he was threatened by a Ford spokesman when he tried to cancel his order and succumbed to pressure to order a car. Then I sued Ford Motor Company. He eventually ended and had a heart attack. (Automotive News, December 1982).

They struggled in the car business.

Currently, most sales and service contracts have the following provisions:

2. (D) Stock. The dealer will keep the current model inventory of such line or series of vehicles in stock according to the company’s guide, or meet the dealer’s share of the current and expected demand for vehicles in the dealer’s area. It shall be maintained in sufficient quantity. Maintaining vehicle inventory by the dealer is subject to our acceptance of the dealer’s orders. (Ford Motor Company, Mercury Sales and Service Contract, Standard Regulations.)

However, most states have court law dealer days with the following provisions:

Art. 4413 (36), Subchapter E. Prohibitions. Sec 5.02 Manufacturer; Distributor; Representative. (B) It is illegal for a manufacturer, distributor, or representative to do the following: (1) Automobiles, appliances, parts, accessories or other merchandise unless voluntarily ordered or contracted by such a dealer. (Texas Automobile Commission Code)

It is illegal for a manufacturer, manufacturer branch, distributor, or distributor branch authorized under this code to enforce or attempt to enforce a dealer in this condition and shall violate this code. (A) Ordering or accepting car deliveries. , Its parts or accessories, appliances, equipment, or other merchandise not required by law that was not voluntarily ordered by the dealer. (Section 11713.2 California Vehicle Code)

In addition to state law, Court Law National Dealer Day also states that manufacturers and distributors tell dealers “automobiles, parts, accessories, or accessories that dealers do not need, want, or feel that the market can absorb. It is forbidden to force you to accept consumables. “” 1956 USCode.Cong. & Admin.News, page 4603.

However, the law has always been a double-edged sword, and generally there is a thin line between good and bad behavior. For example, it has long been resolved that the reason for the dismissal was that the dealer refused to adopt the manufacturer’s entire vehicle line and chose to sell a competitor’s model instead. For example, Randy’s Studebaker Sales, Inc.v. See NissanMotorCorporation, 533 F.2d 510 (10thCir. 1976), at 515.

Therefore, the dealer should check with a competent car lawyer who is familiar with the laws of the jurisdiction in which the vehicle is delivered in certain circumstances before deciding whether to accept or reject the delivery of the vehicle. ..

Note: This article is not intended to provide legal advice and should not be construed as such.