Volkswagen Is Suing a Dealership Over Poor Sales

Volkswagen of America accuses the dealer of costing it 1,500 sales since 2011.

Photo by: Anthony Alaniz / Motor1

By: Anthony Alaniz

Mar 6, at 1:00pm ET

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A Volkswagen dealer in New York might not be part of the franchise much longer. Volkswagen of America (VWoA) has sued Prestige Imports for its poor sales performance, and the automaker is looking to end its dealer agreement with the retailer. According to the complaint, Prestige has cost the automaker 1,500 new-vehicle sales since 2011 and has done little to fix the problem.

VWoA first contacted Prestige about its low sales in 2010 before sending an official “Notice of Default” dated August 15, 2011. It initially gave Prestige until February 28, 2012, to improve its sales metrics, which VWoA extended to December 31, 2013. Prestige still failed to improve its sales, but the automaker continued working with the retailer for several years.

However, by mid-2023, VWoA grew frustrated at Prestige’s “unacceptable results,” and sent a new “Notice of Default.” The automaker extended the cure period until September 30, 2024, but Prestige “continued to ignore many of VWoA’s suggestions for improvement and offers of assistance,” according to the filing. Prestige allegedly reported spending zero dollars on advertising new VW vehicles in 2024.

“Prestige’s longstanding poor sales performance not only constitutes a material breach of its fundamental contractual obligations, but also provides clear “due cause” for termination under the applicable New York statute governing termination of motor vehicle dealership franchise,” VWoA said in its complaint.

Prestige Imports did not immediately respond when reached by Motor1 about the lawsuit. VWoA, meanwhile, told Automotive News it does not comment on pending litigation.