VW dealers mobilize to head off lawsuits

Volkswagen retailers tapped a five-member committee to open settlement talks with the automaker aimed at recovering financial damages sustained by VW’s 652 U.S. dealerships in the wake of the company's emissions crisis.

The decision came at a nearly two-hour dealer-only meeting Friday on the sidelines of the National Automobile Dealers Association convention in Las Vegas, and ahead of a Saturday make meeting where VW brand Chairman Herbert Diess and North America chief Hinrich Woebcken are expected to speak to dealers.

Jason Kuhn, chairman of Kuhn Automotive Group in Tampa and one of the five negotiators named to the committee, said the quintet hope to begin settlement talks with VW leadership as soon as possible. Kuhn said it was too early to discuss what forms of compensation an acceptable settlement should include.

“The task is to meet with the Germans to negotiate a settlement for the dealers and to bring a settlement package back that we feel is acceptable to get past this,” Kuhn told Automotive News after the private meeting Friday. “At the end of the day, we both need to get past this, and doing it in a courtroom is not acceptable.”

Kuhn said the other members of the committee are:

• Mike Sullivan, who owns two VW stores as part of his LAcarGuy network of dealerships in Southern California
• Jimmy Ellis, president of the Jim Ellis Automotive Group, which has two Atlanta-area VW dealerships
• Richard Fisher, owner of the Autobarn Evanston Dealer Group, which has one VW dealership in Evanston, Ill.
• Jack Bertolet Jr., president of J. Bertolet Volkswagen in Orwigsburg, Pa.

Talk of dealer lawsuits against the factory have gained momentum in recent weeks following the abrupt departure of VW of America CEO Michael Horn on March 9.

Leonard Bellavia, a prominent dealer attorney based in Mineola, N.Y., told Automotive News earlier this week that he had already drafted a dealer lawsuit seeking class action status, but that his clients were awaiting the conclusion of Saturday’s make meeting before deciding how to proceed.

By forming the committee, VW dealers aim to reduce the risk that restive dealers will sue the automaker in large numbers.

'Almost unanimous consensus'

Kuhn said the “almost unanimous consensus” of VW dealers who attended today’s meeting, which he estimated represented at least half of VW’s U.S. dealerships, was to avoid litigation “and start selling cars again.”

“These are our business partners and we’re going to be in business with them for a long time,” he said, “and we do not want to be on the other side of the aisle from them in a courtroom.”

Some individual dealers may still sue, he acknowledged, but forming the negotiating committee would help to unify most dealers behind an out-of-court compensation process.

“The dealer network, I believe, has been splintered up until now, and I believe that we are now more unified than before, at least since this crisis began,” Kuhn said. “This is a tremendous success that came out the meeting.”