General Motors has lost a court battle to a California-based Chevrolet dealership after the automaker attempted to revoke its franchise.
Folsom Chevrolet filed the lawsuit after GM said the dealership underperformed and moved to strip the dealer of its franchise. Folsom Chevy brought the California New Motor Vehicle Board into the equation, and ultimately, GM was found on the wrong side of the case. The sales measurement qualm comes from the Retail Sales Index (RSI). Many automaker employ RSI, which measures sales data and compares the dealer to a statewide average.
Automakers then set a dealer target based on the brand’s market share (Chevrolet in this case) for each vehicle segment. Automotive News reported that Folsom Chevy 129th out of 133, 124th out of 128, and 115th out of 131 in 2013, 2014 and 2015. The dealer argued that construction hurt sales, but the New Motor Vehicle Board dug deeper.
The board found GM failed to incorporate brand preference, geography, and demographics in calculating the RSI for Folsom Chevrolet and the automaker failed to establish good cause for the dealer’s termination with a lack of evidence.
GM has already said it strongly disagrees with the decision and it will likely appeal the case. Folsom’s legal team added the attempt to revoke the franchise is also in violation of California law.