Prime files protest against Subaru of New England in N.H. over denial of Group 1 acquisition

Prime Subaru of Manchester, N.H., has filed a protest with the state's Motor Vehicle Industry Board over Subaru of New England's refusal to approve Group 1 Automotive Inc. as buyer of the dealership — the last remaining store in the Prime Automotive Group portfolio.

The protest, dated Dec. 10, seeks a hearing and cites violations of law between the distributor and dealership and breach of its dealer agreement. The store asked for the hearing because it claims distributor Subaru of New England refused "to consent to the sale" to Group 1 and because of "its contingent exercise of a right of first refusal."

Manufacturers and distributors have the right to decline an original buyer on a proposed dealership transaction and instead assign the sale to a buyer it chooses, but have to keep the same terms of the deal.

Prime Subaru said Subaru of New England provided a "turndown letter" on Oct. 28, and reaffirmed its decision in a Nov. 9 letter, according to the protest. The filing said Subaru of New England didn't provide a reason for rejecting the sale, nor did it exercise its right of first refusal within its contractual time frame. Prime Subaru also alleges that Subaru of New England "purported to exercise its right of first refusal if Prime Subaru filed a protest over the turndown," according to the protest.
An executive with Subaru of New England did not respond to requests for comment.

A meeting of the New Hampshire Motor Vehicle Industry Board is slated for Jan. 27 in which it plans to distribute the Prime Subaru-Subaru of New England case, according to the board's website.

In November, Group 1, the nation's fourth-largest new-vehicle retailer, bought the vast majority of Prime Automotive, closing on 28 dealerships in two transactions.

Group 1's Pete DeLongchamps told Automotive News that Subaru of New England is the "only holdout" among distributors and manufacturers in approving dealership transfers as part of the Prime Automotive acquisition.

"We just don't understand why Subaru of New England wouldn't readily approve the transaction," said DeLongchamps, Group 1's senior vice president of manufacturer relations, financial services and public affairs.

Prime Automotive continues to operate the Subaru dealership.

The Prime group sold its second-to-last dealership this month: a Toyota store in Lancaster, Mass., in a planned deal previously reported by Automotive News.

DeLongchamps previously told Automotive News that Group 1 came to an agreement with Toyota to remove one of two Toyota dealerships initially in its Prime acquisition because it would have had too many stores in one geographic region with the brand.

On Dec. 7, dealer Kurt Koch bought Prime Toyota Route 2, Prime confirmed to Automotive News. The store was renamed Koch Rt 2 Toyota.

Group 1 of Houston ranks No. 4 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 140,221 new vehicles in 2020.

Jefferies brokered the Koch-Prime transaction.