New York dealership Sun GMC, Inc., has filed a lawsuit against General Motors, seeking $15M in damages and a jury trial. The complaint alleges that the automaker deliberately starved the dealership of inventory in an attempt to drive it out of business.
Filed June 3 in the U.S. District Court for the Eastern District of New York, the lawsuit states that GM has, for several years, grown stingy with the dealership’s inventory, causing a negative impact on the dealer’s customer scores and sales goals.
“Sun cannot sell what it is not supplied,” the lawsuit states.
It all seems like an attempt to put dealership owner Patrick Cassino out of business, according to his attorney, Leonard Bellavia, Esq., founding partner of Bellavia Cohen P.C.
GM representatives did not immediately return an email requesting comment.
For context: Cassino has been a dealer since 1986 and has owned the dealership in Wantagh, New York, since 1993.
The dealership’s allocation has been dwindling the past decade or so, to the point that last year, it gave Sun a goal of 1,000 sales, but only supplied half that number, according to the complaint.
The filing also states:
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In 2017, GM allocated 1,200 vehicles to the dealership, the same amount it was expected to sell, but the amount has lessened every year.
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Just 380 vehicles were invoiced in 2023, according to the court documents.
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And in 2024, 426 vehicles were invoiced. Sun sold 420, but still received an “Unsatisfactory” RSI rating.
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Last year, 501 vehicles were invoiced, but GM’s sales expectation was more than 1,000.
For the past six months, Sun has received fewer than 20 vehicles per month on average.
As a result, Sun’s “large outside lots stand empty” and the dealer has “at times put used vehicles on display in its showroom.”
“Customers drive by and think there’s something wrong,” Bellavia said. “And there is something wrong, but it’s not of his doing. He looks like he’s about to soap the windows.” – Leonard Bellavia, Bellavia Cohen P.C.
Zooming in: Bellavia said it’s a nefarious strategy to create a constructive termination, or in legal terms, a de facto termination.
“By not providing dealers with sufficient inventory, they effectively beat the dealer into economic submission to do whatever the end game is that the manufacturer wants, whether it’s a relocation, a renovation, a sale,” Bellavia said.
Systemic schemes: Sun’s suit argues that GM’s allocation system is rigged in two ways.
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First, via a tiered “consensus cycle” algorithm that favors higher-tier dealers.
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The other is through a discretionary pool called the Strategic Targeted Market Initiative (STMI), which gives regional managers their choice of distributing inventory, the lawsuit states.
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It also said that GM uses the STMI pool to reward favored dealers, while leaving Sun without its fair share.
Because of that, GM’s use of a performance metric called the Retail Sales Index (RSI), a statewide average-based standard, is a trap.
“Sun’s RSI ratings are directly affected by Defendant’s allocation decisions,” the complaint states. “Such materially reduced inventory levels limit Plaintiff’s ability to meet performance thresholds established by Defendant’s own metrics.”
GM has also expected Sun to sell specific models it never actually supplied, including Sierras and Yukons, according to the lawsuit.