Latest Volkswagen Suit: 'Illegal' Dealership Pricing Scheme

The suit also suggests that VWG artificially inflated its sales goals, to the disadvantage of car dealerships. "[Volkswagen Group of America] has continued to tout artificially inflated sales goals which, even before the CleanDeisel scandal, would have required Volkswagen to increase its sales by 100,000 each year for the next four years, a monumental task in the hypercompetitive U.S. Market,” the suit alleges, citing an article in Automotive News from last year that suggested that VW erred on its sales goals, just before the scandal hit.

Napleton's real complaint with VWG, however, is that it sold an Illinois-based dealership to him last year without disclosing that a scandal -- which would render its floor stock almost unsellable -- was about to hit.

"VW pushed through Ed Napleton’s purchase of a Volkswagen franchise in Urbana, Illinois, at top dollar, as if the Dieselgate scandal was not about to toss the Volkswagen brand value of a proverbial cliff,” the suit alleges.

As to why Napleton is suing VW: It isn't just his own loss. Napleton, who owns 56 franchises across five states, says he believes that he has a responsibility to speak up for "dealerships large and small. Individual dealers and small dealer groups are often at the mercy of the immense vehicle manufacturers with  respect to critical pricing terms and vehicle allocations.  These smaller firms are often unwilling for fear of reprisal, or unable financially, to hold vehicle manufacturers to the legally required standards of fair play and non-discrimination."

And this isn't the first time that Napleton has sued a car manufacturer. In January, Napleton's Chicago-based dealership joined another firm to sue Fiat Chrysler Automobiles for what they say amounted to racketeering for paying dealers to falsify sales statistics.

One question that stands out in this David and Goliath story against Volkswagen, is, well, timing. Why now? Why launch a class-action alleging preferential treatment to dealers that play ball with an in-house credit source, if automotive corporations have been including incentives to buyers to use their credit companies for years? As a consumer, I automatically assume that a sale that benefits the corporation's credit services is good for the dealer as well as the corporation. Is this to say that dealers are never supposed to receive remuneration for filling out those credit applications and spending added time with potential credit customers?

But Napleton's litigation brings up another point: the hard sell to customers who may not be in the best of financial health to buy a car. It's a refrain we have seen previously in the crash of the housing market in 2008, as well. The question that was central to the issue at the time revolved not around real estate firms, but banks who became the middlemen to successful but ultimately disastrous transactions. In this case, what responsibility do dealers have to ensure that a consumer's wellbeing is kept in mind? According to this class-action litigation, a great deal.

As with the housing market, the outcome of litigation like this one could say a lot about not only how manufacturers sell cars, but also how dealerships succeed in executing those deals. It's a Pandora's box of risk that some may not want opened so quickly.

Image credit: Flickr/Dave Humphreys