Chicago Business Litigation Lawyer Blog
The allocation spreadsheet arrives on a Monday morning. Two crosstown competitors received the inventory the dealer ordered months ago. The factory’s stair-step bonus program pays a per-unit kicker the dealer cannot possibly hit because the dealer cannot get the cars to sell. Then the region manager calls to explain that the dealer’s “minimum sales responsibility” number is slipping, and unless volume climbs, the incentives the dealer does receive will be clawed back.
Illinois dealers should not accept this as the cost of doing business. The Illinois Motor Vehicle Franchise Act does not tolerate arbitrary allocation, price discrimination across dealers, or the use of new-vehicle sales performance as a lever to cut a dealer out of used-vehicle and certified pre-owned programs. The statute is specific. The remedies are serious. And in our experience, the dealers who document these practices in real time are the dealers who get paid.
The central Illinois statute on allocation is 815 ILCS 710/4(d)(1), which prohibits a manufacturer, distributor, or wholesaler from adopting or implementing “a plan or system for the allocation and distribution of new motor vehicles to motor vehicle dealers which is arbitrary or capricious.” 815 ILCS 710/4(d)(1). The statute goes further. Under 815 ILCS 710/4(d)(2), a dealer may submit a written request and compel the manufacturer to disclose “the basis upon which new motor vehicles of the same line make are allocated or distributed to motor vehicle dealers in the State and the basis upon which the current allocation or distribution is being made or will be made to such motor vehicle dealer.” 815 ILCS 710/4(d)(2). Factories hate that request. They are required to answer it.