Dealers say a New York judge should throw out a consumer's request for class-action status for a lawsuit accusing Penske Automotive Group Inc. of keeping $75 the dealership received from a scrappage company for a cash-for-clunkers trade-in.
On Aug. 14, Penske Automotive Group's Westbury (N.Y.) Toyota Ltd. estimated the 2000 Chevrolet Astro van that Philip Allegretti of Seaford, N.Y., was trading in had a scrap value of $125, the suit said.
By law, the dealership could keep $50 of that for administrative costs. But the dealership kept all $125, the lawsuit says.
The law required a dealer to estimate for the customer what a salvage company would pay for the clunker trade-in. But the law did not say who should get any money in excess of $50.
In an Aug. 19 Webinar put on by the National Automobile Dealers Association, federal officials said any excess payment "is subject to negotiation between dealer and purchaser," recalls Deborah Dorman, president of the Eastern New York Coalition of Automotive Retailers. A dealer could negotiate with a customer to keep more of the scrap value to cover costs, such as the sodium silicate used to immobilize the engine.
The "Dealer FAQ" section of the program's Web site says that if a dealer discloses a "best estimate" of the vehicle's scrap value, the law does "not require the dealer to later refund the difference" if the payment is higher.
"It cost the dealer, in reality, way more than $50 to handle these claims," Dorman says. "As long as the dealer made some rational effort upfront, and kept no more than $50 for administration, I don't see how this lawsuit can stand up."