Dealership Add-Point Activity Ramps Up

BSM has most recently been retained to represent two existing dealerships in the protest of proposed new General Motors’ dealerships in Texas.  Like most states, Texas law provides a process by which existing dealers can protest the addition of a same line-make dealership within their relevant market area (defined differently in each state).  The protest then places the burden on the OEM to demonstrate that the proposed new dealership is necessary.  

State law will provide a list of criteria to be considered when the judge makes a finding on the necessity of the new dealership.  These items include convenience for customers, viability of the proposed new dealership and financial harm to existing same line-make dealers.

We are seeing an increase in proposed new dealerships by various OEMs, including General Motors, Honda, Jaguar Land Rover and Mercedes Benz.  Dealers should clearly understand their rights under state law when provided notice of a proposed new dealership point and discuss with experienced motor vehicle dealership counsel exercising the right to challenge the new dealership.