Hartsdale Hyundai dealer sues Hyundai over image standards

Three years after Hyundai Motor America Corp. offered financial incentives to a White Plains dealership to relocate to a modern facility in Hartsdale, the auto company allegedly changed the ground rules and put the dealer at a competitive disadvantage.

Profits for Central Avenue Hyundai have since plummeted by 18.2%, according to a complaint filed June 3 in Westchester Supreme Court, while average profits for other dealers in the region have increased by 93%.

Hyundai “has been purposely starving Central of inventory,” the complaint states, “causing significant damage … in the form of lost sales, revenue and profit.”

Hyundai of White Plains operated from 2009 to 2016 on Westchester Avenue across the street from The Westchester mall, sharing a showroom and service facility with an affiliated Chrysler / Jeep / Dodge / Ram dealership.

Hyundai wanted the dealership to open a new home that would conform with its image and branding standards. It offered up to $400,000 toward designing a new facility, according to the complaint, and up to $100 per new car sold there.

The dealership, operated by Jonathan Grant, spent about $3 million renovating a structure at 111 South Central Ave., Hartsdale.

“The paint was barely dry on this new facility,” the complaint states, when Hyundai “fundamentally changed its image program with the result that Central no longer qualified.”

Under new branding and image standards, the dealership would have to spend millions of dollars on new renovations, according to the complaint, and would have to shut down temporarily, cutting off sales and service revenues. If it did not comply, it would be ineligible for sales incentives up to $1,000 on the wholesale prices of new vehicles.

“Sink millions of unrecoverable dollars into unjustifiable facility improvements,” Central says in describing its dilemma, “or suffer from substantially higher effective wholesale costs that will render the dealer non-competitive.”

Central Avenue Hyundai complained to the New York Department of Motor Vehicles, alleging that Hyundai had violated state regulations, but then withdrew the complaint.

Hyundai, the dealership claims, retaliated by reducing the allocation of new cars. Central Avenue Hyundai received nearly 42% fewer vehicles during the first three months of this year, compared to the same period in 2021. Thirteen other Hyundai dealers in the region have received from 6% more to 33% fewer vehicles.

Central Avenue Hyundai claims that Hyundai violated the New York Franchised Motor Vehicle Dealer Act.

Auto companies may not require dealers to alter or remodel an existing facility within ten years of a previous remodeling, according to the complaint. They may not allocate new vehicles in an unreasonable way, impose unreasonable sales performance standards or sell identical new vehicles to different dealers at different prices.

Hyundai spokesman Ira Gabriel declined to discuss the allegations.

Central Avenue Hyundai is asking for unspecified damages and for orders prohibiting Hyundai from enforcing its new facility standards and sales incentives.

The dealership is represented by the ArentFox Schiff law firm in Manhattan.