The Motor Industry Vehicle Board in New Hampshire recently ruled that Subaru of New England “unreasonably withheld consent of sale” of Prime Subaru Manchester to Group 1 Automotive Inc. in 2021.
Despite the ruling on August 12, the fate of Prime Subaru Manchester remains uncertain.
The dealership’s fate has been in limbo for nearly a year. And a conclusion doesn't appear imminent despite the ruling. Distributor Subaru of New England is blocking the sale over what it has labeled as poor performance by Group 1 at another Subaru dealership. Subaru of New England plans to appeal the decision.
The board wrote in its decision that it believes Subaru of New England "preferred another buyer for Prime" over Group 1. The board rejected the distributor's rationale that an existing Group 1-owned Subaru store, Ira Subaru in Danvers, Mass., was the "worst of the worst" of its dealerships in service performance. The board also denied a counterprotest by Subaru of New England.
Subaru of New England plans to appeal the board's decision, first in a rehearing to the motor vehicle board. A final determination whether Group 1 can acquire Prime Subaru Manchester will be in a holding pattern for a while.
GPB Automotive Portfolio limited partnership, a holding company, will continue to operate the dealership until a final ruling, reported an August regulatory filing.
"We are extremely disappointed in the New Hampshire Motor Vehicle Industry Board's decision," Bryan Dumais, vice president of market development for Subaru of New England, said in a statement.
“[The decision] violates Subaru of New England's rights under state law and our dealer agreement," he added. "It is unreasonable to force anyone into a personal services relationship with a poor performer that has let you down in the past. The board made fundamental errors of law on both the protest and counterprotest and conducted an unfair hearing that we will give it the opportunity to correct through an application for rehearing. Subaru of New England will act to protect our rights under the statutory process and further proceedings in court if necessary."
The New Hampshire Department of Safety reports a motion for a rehearing was filed Thursday, Sept. 1.
Automakers can decline a proposed buyer in dealership transactions and instead select a buyer of their own choosing. However, they must keep terms of the sale the same.
"While [Subaru of New England] had a right to pick its franchisee, it could not reject a qualified franchisee, Group 1, either, unless it had sufficient legal reason for doing so," the board wrote. "In this case, it did not."
The dispute dates to September 2021 when Prime asked Subaru of New England to sign off on a proposed sale of the Manchester dealership to Group 1. Subaru of New England was reluctant to enter the sale because of ongoing problems at Ira Subaru, according to the board’s order. The problems cited in the document include low customer satisfaction and net promotor scores in 2021, and high employee and management turnover.
Prime Subaru Manchester filed a protest with the board in December. It contended that Subaru of New England did report why it had rejected the sale to Group 1 nor did it exercise its right of first refusal within the contractually required timeline.
This is not the first time an automaker has blocked Group 1 from acquiring stores. Toyota sued Group 1 to prevent the retailer from acquiring two Toyota and Lexus dealerships in South Carolina in 2010.
Originally posted on Auto Dealer Today
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