Inevitably some new vehicles will be damaged during transport from the factory to the dealership.  Many dealers question whether they must accept delivery of a new vehicle damaged during transport.  In many cases the answer is an emphatic NO!

 

     The Franchised Motor Vehicle Dealer Act (the Franchise Law) prohibits a manufacturer from forcing a dealer to accept delivery of a vehicle which has sustained substantial damage during transport.  Specifically the franchise law states that

 

it shall be unlawful for any franchisor, notwithstanding the terms of any franchise contract...to refuse to repurchase for cost, including transportation charges, a new vehicle which has been substantially damaged by the franchisor or its agent.

 

New York law also requires a dealer to disclose to a consumer, in writing, prior to sale, damage in which the retail cost to repair such damage is in excess of five percent (5%) of the MSRP (don't make the mistake of relying upon your cost or wholesale rates!!).  Once a dealer provides such notice then the consumer may cancel the transaction.  As New York law considers damage in excess of five percent (5%) of the MSRP to be substantial and material enough to warrant the cancellation of the sale then it is our opinion that such damage would also meet the definition of "substantial" under the Franchise Law and would prohibit a manufacturer from requiring a dealer to accept delivery of a vehicle which sustained damage in excess of five percent (5%) of its MSRP.     

 

     The Franchise Law also states that it is unlawful for a manufacturer:

 

to sell or transfer to a franchised motor vehicle dealer a new motor vehicle which has been subjected to repairs with a retail value in excess of five percent of the lesser of the manufacturer's or distributor's suggested retail price where such repairs are performed after shipment from the franchisor including damage to the vehicle while in transit without so notifying the franchised motor vehicle dealer to whom such new motor vehicle so repaired is sold or transferred.

 

The notice from the manufacturer must be in writing, detail the repairs, and be provided prior to the receipt of any payment for the vehicle.  If the manufacturer does not provide the dealer with such notice then you may recover from the manufacturer any losses incurred due to such failure. 

 

     If you learn that a vehicle was damaged prior to or during transport from the manufacturer you should request from the transporter or manufacturer a detailed list of the repairs.  If the documents show that the retail cost of the repairs exceed five percent (5%) of the MSRP then you should send a letter to the manufacturer demanding that they take back the vehicle and issue you a full credit of any amounts paid plus any floor-plan interest incurred to date.  If the manufacturer denies or ignores your request then reach out to the LaBonte Law Group for immediate assistance.