Warning: Declaration of plugin_findreplace::addPluginSubMenu() should be compatible with mijnpress_plugin_framework::addPluginSubMenu($title, $function, $file, $capability = 10, $where = 'plugins.ph...') in /home/pg4b1yzvrqqo/domains/test.drivingsalesnews.com/html/wp-content/plugins/find-replace/find_replace.php on line 17

Warning: Declaration of plugin_findreplace::addPluginContent($links, $file) should be compatible with mijnpress_plugin_framework::addPluginContent($filename, $links, $file, $config_url = NULL) in /home/pg4b1yzvrqqo/domains/test.drivingsalesnews.com/html/wp-content/plugins/find-replace/find_replace.php on line 17
VW Dealership Sued By Manufacturer Over $500,000 Loan Dispute | DrivingSales News

VW Dealership Sued By Manufacturer Over $500,000 Loan Dispute

September 8, 2014 0 Comments

VWAmerica650x400

Volkswagen of North America is suing a dealership in Pennsylvania. VW claims that the dealer didn’t make proper use of a $500,000 loan. A Federal lawsuit that was filed in the U.S District Court in the Eastern District of Pennsylvania alleges that Chapman Volkswagen, in Philadelphia, PA didn’t build the new dealership they agreed to construct with the loan money.

The problem that led to the lawsuit dates back on May 23rd, 2011, when Chapman VW acquired an aging dealership from Northeast Auto Outlet and agreed to terms on a $500,000 loan from VW North America. The loan was intended to get construction on a $4.3 million dollar facility underway. The situation didn’t play out as it was envisioned that day.

Chapman reportedly missed deadline after deadline. The contract required construction to begin not later than November 16th, 2011 and to be completed by Dec 31, 2012. By September of 2012, construction had still not begun. Chapman filed for an extension on the construction completion deadline and a reduction in the size of the facility from 19,000 to 16,000 square feet. VW North America Ok’d the reduction in building size but did not agree to postpone the previously agreed upon completion date. Fast forward to May of 2013. Construction still hadn’t started and Chapman VW asked to shrink the facility down to 7,736 square feet. VW North America denied the request. September 9th, 2013 rolled around and construction still hadn’t started. VW North America told the dealership that they expected repayment of $450,000 (number based on a $50,000 annual depreciation plan) by September 20th of that year. Volkswagen also threatened to take the money back via an open parts account if the dealer didn’t pay up. When October 17th 2013 arrived, Chapman Volkswagen filed a complaint with the Pennsylvania State Board of Motor Vehicles Manufacturers, Dealers and Salespersons against VW North America over their proposed loan collection method. Chapman also alleged that VW had submitted “unreasonable standards” for sales goals that would inhibit the ability for the dealership to participate in the variable bonus program. The dispute continues, and according to reports from the Pennsylvania Legal Record, as of September 8, 2014, Volkswagen North American still has not collected the loan money.

About the Author:

The DrivingSales News team is dedicated to breaking the relevant and the tough stories affecting car dealers. Have questions for DrivingSales News? Reach the team at news@drivingsales.com.

    Warning: count(): Parameter must be an array or an object that implements Countable in /home/pg4b1yzvrqqo/domains/test.drivingsalesnews.com/html/wp-includes/class-wp-comment-query.php on line 399