General Motors and Chrysler dealers are challenging the way the factories have redrawn their sales areas, complaining that the new boundaries have shrunk their territories.
Most of the legal protests have been filed with the Department of Inspections and Appeals in Iowa, where the law treats a reduction in a sales area as if it were a franchise termination, thereby giving dealers the right to protest.
Sixteen Chrysler dealers and 16 GM dealers in Iowa are protesting reductions in sales areas.
Another five GM dealers in Louisiana, North Carolina and Texas are filing similar protests, says GM attorney Mark Riashi.
Dealers fear that having a smaller territory might distort the formula that the manufacturers use to rate sales performance, reduce new-vehicle allocations and hurt resale values, says Martha Martell, an attorney for the Iowa Automobile Dealers Association.
GM and DaimlerChrysler Corp. have revised dealer sales areas using 2000 census tracts from the U.S. Census Bureau instead of ZIP codes.
Jim Dimond, national dealer placement manager for DaimlerChrysler, says the census tracts are a more stable way to carve out territories because they change every 10 years instead of every year as ZIP codes do.
Neither manufacturer would comment on specific pending legal cases.
Meanwhile, seven Ford dealers in Illinois, Louisiana, Maryland, Missouri, Ohio and South Carolina are griping because Ford Motor Co. has enlarged their sales territories.
If a dealer's vehicle sales volume remains the same but the sales territory is increased, that reduces the dealer's market share, says Dan Myers, the dealers' Tallahassee, Fla., attorney. If market share falls low enough, the dealer may be placed on probation by the factory and then terminated if share doesn't improve.
The Ford dealers have not filed formal legal complaints.