Hyundai is suing in federal court to open a new storefront in Danvers, Massachusetts after a nearby dealership complained that the move violated state regulations.
The automaker originally planned to open McGovern Hyundai in mid-January. McGovern Automotive Group runs multiple outlets in Massachusetts, New York, and New Hampshire, including McGovern Hyundai of Brockton, roughly 50 miles south of Danvers. However, Pride Hyundai, located only seven miles away in Lynn, filed a complaint claiming that the new storefront would break Massachusetts law Chapter 93B, which prevents automakers from opening multiple stores in the same market area without first proving “good cause.” Pride Motor Group runs three dealerships, all located in Lynn.
Pride Hyundai further argued that the new storefront would “effectually erase competition,” further strain new vehicle supply, and “have a significant detrimental effect on the sales and service of existing Hyundai dealerships in the area.” The dealership’s attorney, Scott Carman, also blamed the manufacturer for inventory shortages that he argued have contributed to underwhelming sales numbers. The automaker currently maintains eight stores within proximity to the planned location in Danvers.
In its lawsuit submitted to a federal judge, the automaker noted that its contract with the Lynn dealership did not guarantee exclusive rights to the region and instead allowed for the opening of locations “in or near the primary market area” currently overseen by Pride Hyundai. The car manufacturer also claimed that, without the new storefront, “both HMA [Hyundai Motor America] and the public are harmed” on a daily basis.
Although the automaker maintains the new storefront would “foster brand awareness in a broader market and would be beneficial” to the people of Danvers, Pride Hyundai has already filed a counterclaim alleging the new dealership would cause a 25% decrease in sales and service orders. The lawsuit also alleges that the automaker has contributed to the dealership’s difficulties by failing to appropriately allocate inventory, frustrating “Pride’s ability to meet Hyundai’s own sales expectation numbers.”
Hyundai is seeking a declaratory judgement and an injunction allowing McGovern Hyundai to open as planned. McGovern Automotive Group is not involved in the court battle.
