EDITOR'S NOTE: This story has been revised. The petition filed by a dealer association in California does not specify a dealer operator by name.
The California New Car Dealers Association says Chrysler is operating an illegal factory-owned dealership in Los Angeles.
The store is Motor Village L.A., which Chrysler established as a prototype to showcase its brands and test new retail concepts. The company said in November that it plans to open more such stores in partnership with dealers.
The dealer association filed a petition March 21 with the California New Motor Vehicle Board calling for an investigation and asking the board to discipline Chrysler, possibly suspending or revoking the store's business license.
The petition alleges the dealer operator has no significant investment in the store. Under state law, the operator would have to have money at risk to make the operation legitimate.
Chrysler spokesman Ralph Kisiel said in a statement that Chrysler disagrees with the dealer association and "looks forward to discussing the matter with the Department of Motor Vehicles."
In California, manufacturers cannot own dealerships within 10 miles of other same-make independently owned stores. Motor Village L.A. is within 10 miles of three other Chrysler dealers, the petition says.
The association says Motor Village L.A. is not eligible for legal exemptions, which let automakers own stores near other dealers for one year or in partnership with dealers who have made substantial investments in the operations and agree to buy out the factories.
The petition says Chrysler Realty owns the $30 million-plus building that houses Motor Village L.A. and is charging no rent for the first six months. The monthly rent is scheduled to rise gradually from $50,414 in May 2011 to $90,000 in 2015. The market rate for rent is more than $200,000 per month, the association says.