Detroit Area Mercedes-Benz Dealers

[pastmaster]

This is in The Detroit News, today. It may be a look on how things are done where the BIG BOYS, play.

Sunday, November 6, 2005


Area dealer, Mercedes in legal fight

Owners of 3 Metro dealerships say DCX division has blocked their expansion effort.

By David Shepardson / The Detroit News

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The owners of Metro Detroit's three Mercedes-Benz dealerships are suing the DaimlerChrysler AG division, claiming the company prevented them from acquiring a fourth dealership in southeast Michigan and made numerous commercial threats.

Charles L. Ghesquiere and his sons, Lee and C.J. Ghesquiere III, filed suit in U.S. District Court in Detroit against Mercedes Benz USA, seeking to block the company from opening a new dealership in St. Clair Shores next year.

The Ghesquieres own Mercedes dealerships in Novi, Rochester Hills and Bloomfield Hills.

"Despite the substantial investment the Ghesquieres had made in the Mercedes-Benz line and their success in selling and servicing Mercedes-Benz vehicles, it appears that MBUSA, without justification, simply did not want to place another dealership in the hands of the Ghesquieres and instead headed down a path of deception to prevent the Ghesquieres from exercising their contractual right of first refusal," according to the 110-page complaint.

Mercedes-Benz USA spokesman Geoff Day said the company refutes the grounds and merit of the suit.

"Certainly the company acts in good faith with our dealers and our aim is always to ensure that both MBUSA and our dealer partners are best placed to maximize all and every market opportunity," Day said.

Mercedes-Benz has awarded a new Metro Detroit dealership in St. Clair Shores to Gregory Jackson, Day said.

"You may know he was selected as Black Enterprise magazine's No. 1 automotive dealer," Day said.

Jackson founded Detroit-based Prestige Automotive Group in 1989.

The company operates Prestige Pontiac-Buick-GMC in Ypsilanti, Prestige Pontiac in Mount Morris and Prestige Chevrolet in Flushing.

It also owns Ford dealerships in Jacksonville, Fla., Dayton, Ohio, and Lansing and generated $1.1 billion in 2004 sales, according to Black Enterprise magazine.

Prestige Automotive is almost twice as large as the nation's next biggest African-American-owned dealership.

The Ghesquieres did not return phone calls seeking comment.

The family has sold Mercedes-Benz cars for 30 years, but relations between the two sides apparently have soured in recent years.

In 1996, Mercedes-Benz approached the Ghesquiere family to acquire and subsequently close the Wood Mercedes-Benz dealership in northeast Detroit.

Charles Ghesquiere spent $1.5 million to acquire the dealership and then spent $9 million to renovate a Bloomfield Hills location, the suit says.

The family later spent $6 million to buy land and construct a new dealership in Novi. In 1999, the family spent another $6 million to build the Rochester Hills dealership, the suit claims.

Under that agreement, the automaker agreed to allow the Ghesquieres the right of first refusal to establish another dealership in Metro Detroit if the company determined it needed another outlet. That right expired in May 2003.

Soon after, the relationship between Mercedes-Benz USA and the Ghesquieres began to deteriorate, the suit says, after a change in Mercedes-Benz management in September 1999.

"The greater Detroit market area, which includes the (Ghesquieres) dealerships, was determined by MBUSA to not be selling and servicing a sufficient number of Mercedes-Benz vehicles," the suit says.

The suit claims the company knew in 1999 that it wanted to add another Metro Detroit dealer.

According to the suit, an unnamed Mercedes-Benz regional manager claimed "the Ghesquieres had too many dealerships" and that they "needed to be broken" because they "had too much power."

Mercedes-Benz attempted to stop construction of the family's Rochester Hills location, the suit claims.

Mercedes-Benz informed Charles J. Ghesquiere in a letter dated July 30 that the company had awarded a new dealership on East Nine Mile in St. Clair Shores and it would open in the first half of 2006.

The location of the new dealership is a few miles from the original Wood dealership acquired by the Ghesquieres in 1996 and closed.

After complaining, a Mercedes sales manager "threatened the Ghesquieres with a market study which allegedly had been conducted on adding a new Mercedes-Benz dealership" in the Dearborn area.

"MBUSA informed the Ghesquieres that if they did not stop complaining about the proposed dealership in northeast Detroit, that MBUSA would proceed with opening a new dealership in Dearborn," the suit says.

The company further told the Ghesquieres that "the existing Mercedes-Benz dealers were 'spoiled' and that MBUSA needed new and less financially powerful dealers," the suit says.

Mercedes-Benz USA operates 336 new car dealer franchises in the United States.

U.S. District Judge John Corbett O'Meara ordered the company to respond to the suit by Nov. 17.

You can reach David Shepardson at (313) 222-2028 or dshepardson@detnews.com.

[jcyuhn]

My older brother works at a marketing consultancy in Detroit. (Urban Science Applications - http://www.urbanscience.com) The great majority of their business is automotive in nature. Anywho, the business started as a supplier of expert witnesses in lawsuits related to the opening of new automotive dealerships. Fighting a lawsuit filed by existing dealers is a normal and expected part of opening a new dealership - enough so to build a business case around it. My point being this isn't exactly news. Besides, the east side really needs a Benz dealer nearby - my mom was forced to drive an Oldsmobile!

- JimY

[Larry Delor]

St. Clair Shores?? Why would anybody want to open a Dealership there?

Must be for the Pointers... They must be afraid to drive south or west, so their only alternative is S.C.S.
The pointers are all american car money though (builders and suppliers)...I'm not so sure they would buy Benzes. Maybe things have changed since I used to hang around that part of Mi. Maybe Mt. Clemens is experiencing a rennaissance? (S.C.S. certainly wasn't the last time I was there... roads so horrible I got a stiff neck and motionsick a few times)

It might not really matter where the next Benz dealer goes... When GM goes, it's going to take a whole lotta folks with it....it is not going to be pretty....not one bit.