Chrysler’s Motor Village in downtown Los Angeles, which opened early this year, could soon be shut down due to an investigation by the California Department of Motor Vehicles. Chrysler currently sells its full range of Chrysler, Dodge, Jeep, Ram and Fiat vehicles at the $30 million, 189,000-square foot store, but it may have violated state franchise laws that could jeopardize its sales operations.
According to a report by the Automotive News, the California DMV prohibits automakers from opening factory-owned dealerships within 10 miles of independently owned dealerships. And Chrysler’s Motor Village is located within 10 miles of not just one, but three independent dealerships. Oops.
Chrysler opened Motor Village in January in hopes of boosting the brand’s image in downtown L.A. where most of the cars sold are imports. It also had plans to test out innovative sales and marketing ideas to eventually share with the entire network of Chrysler dealerships. "Our intentions here are not to harm or create any kind of disadvantage for any other dealer,” said John Tangeman, Chrysler's national dealer placement manager. “I want to come into this market in an appropriate way and structure a store, have it become successful and have everybody grow.”
Everything seemed fine for Motor Village until March when the California New Car Dealers Association petitioned the state’s New Motor Vehicle Board to investigate Chrysler’s alleged violations. The board sided with the association and formally requested the DMV to investigate. If Chrysler is found to be in violation, the DMV could suspend or revoke its state business, essentially shutting down Motor Village or at the very least turning it into nothing more than a place where customers window shop and kick tires.
Peter Welch, president of the state dealers association, responded to the investigation and said “We can't have rogue manufacturers not following the law and intentionally trying to circumvent it through sham devices to meet whatever the flavor-of-the-month new marketing strategy is.”
Chrysler has been unsuccessful in completing an exemption by partnering with an independent dealer, who would eventually have to buy out the automaker from the store, though the association claims Chrysler is not eligible for any exemptions whatsoever.
"We responded to the allegations today, and we look forward to responding to them in front of the DMV," said Chrysler spokesman Ralph Kisiel. “Beyond that, it's a pending matter so we can't discuss the matter publicly."