A federal appeals court ruling in favor of a Chevrolet dealership in New York could give dealers nationwide more protection against repercussions for missing factory-issued sales targets in areas where a brand is historically weak.
The 2nd U.S. Circuit Court of Appeals in Manhattan said General Motors used "unreasonable and unfair" metrics when attempting to terminate the franchise of Beck Chevrolet in Yonkers, N.Y., in 2009. GM was wrong to use statewide sales averages to give Beck a failing grade without accounting for the fact that Chevy has disproportionately low market share in the New York City region, the court determined.
The Dec. 29 ruling said GM cannot evaluate "a dealer's sales performance by a standard that fails to consider the desirability of the Chevrolet brand itself as a measure of a dealer's effort and sales ability." A GM spokesman said the automaker was "reviewing the decision and considering our options."
Beck's victory mirrors previous rulings by New York's highest court and its Department of Motor Vehicles.
After the state court ruled against GM in May 2016, the automaker stopped issuing quarterly ratings for dealerships in New York state. It's unclear whether having a similar ruling from a federal court will cause GM to make that change in other states, or whether other manufacturers will change their assessments of dealers as well.
"This is probably one of the most important pro-dealer decisions in the last 30 years," Beck's president, Russell Geller, said last week. "It gives the franchise dealer some even ground now."
Dealer groups in the state praised the ruling and Geller's pursuit of the case since suing GM in 2011. "Decisions like this one serve as a precedent upon all courts in New York, and throughout the country, protecting all dealers in the future from similar abuses by Franchisors," the Greater New York Auto Dealers Association said in an email to its members.