California dealer group says Chrysler LA dealership is illegal

Automotive News is reporting that the California New Car Dealers Association (CNCDA) has filed a petition with the California New Motor Vehicle Board (CNVB) calling for an investigation into Motor Village LA, a prototype new car dealership Chrysler Group opened in Los Angeles last November as a testbed for new retailing strategies and as a showcase for new Chrysler and Fiat vehicles. The dealer group wants the state to discipline Chrysler for operating an illegal, manufacturer-owned dealership. Disciplinary measures could include revocation of Chrysler’s license to sell cars at Motor Village LA.

California law prohibits a manufacturer from operating a dealership within ten miles of an independent dealer selling the same brand. California law does grant a one-year exemption provided the manufacturer sells the dealership to an independent owner operator by the end of the first year. Motor Village LA does have a dealer operator but the CNCDA charges arrangement is a sham as the dealer operator does not have any significant money invested in the dealership, as required by California law.

A Chrysler spokesman says the company disagrees with the CNCDA and looks forward to discussions with the CNVB.