Toyota Drops Suit Against Group 1 Over Purchase of S.C. Stores

Toyota Motor Sales U.S.A. Inc. has dropped its lawsuit to block retailer Group 1 Automotive Inc. from acquiring a set of South Carolina stores, Automotive News reported.

Another buyer is now waiting in the wings to purchase those stores.

Toyota filed its lawsuit June 28 in U.S. District Court in South Carolina to prevent Group 1 from buying Gene Reed Toyota-Scion and Lexus of Charleston, both in suburban Charleston, S.C. On Tuesday, Toyota asked the court to dismiss that suit “without prejudice,” which means that Toyota can refile the suit at another time.

After the lawsuit was filed, the owner of those stores, dealer Gene Reed, agreed to sell the operations instead to Hendrick Automotive Group, the nation's seventh-largest dealership group last year with 52,305 new vehicles retailed. Reed said he contacted Rick Hendrick, owner of the Hendrick group, after the challenge to Group 1 -- and he received a better offer.

In its lawsuit, Toyota said it had not approved of Group 1's purchase of the stores as required by the framework agreement between Toyota and Group 1, the nation's fourth-largest dealership group last year with 83,182 new vehicles retailed.

Toyota also said in the filing that Group 1 is ineligible to acquire Toyota or Lexus dealerships because the retailer doesn't meet the performance criteria set forth in that framework agreement.

Group 1, which was prepared to challenge the Toyota suit, expressed disappointment in the latest development.

“Under the terms of our recent agreement, Mr. Reed had the right to terminate the contract and pursue another buyer. He elected to do so which effectively prevented our company from answering the lawsuit and taking the necessary legal steps to gain approval to acquire Mr. Reed's dealerships,” Group I spokesperson Pete C. DeLongchamps said in a statement.

“We found the lack of support from Toyota in this matter to be disappointing and surprising given our recent approval and support to acquire a Toyota dealership in the same state,” said DeLongchamps.

Toyota spokeswoman Celeste Migliore said Gene Reed and Group 1 resolved the matter, and as a result, Toyota dismissed the lawsuit.

When asked whether Group 1 will be blocked from future purchases of Toyota stores, Migliore said, "That's going to be re-evaluated going forward. This was an individual situation. Certainly as other situations come up, they'll be considered under their own merits."