This week, a federal judge in the U.S. District Court for the Northern District of Illinois dismissed a lawsuit brought by Volkswagen Group of America, a subsidiary of the German-based Volkswagen Group. The automotive giant had been questioning the constitutionality of an amendment to the Illinois Motor Vehicle Franchise Act, frequently known as the “Multiplier Act”.
The said amendment structured the relationships among vehicle manufacturers, distributors, franchisees and dealers, aiming to separate dealerships that sell and service new cars from the original manufacturers. The ruling is important as it reportedly aligned the judge with the stance of Illinois law enforcement, by validating the argument of the secretary of state.
The judge’s ruling stated that the Multiplier Act did not prevent Volkswagen from informing their customers that a statute, which obligates manufacturers to reimburse dealers for services related to manufacturer-provided limited warranty, was the reason for a rise in price. Furthermore, the company was not prohibited from raising its prices to cover these expenses.
This lawsuit marks a critical point in the ongoing debates regarding the separations and relationships established among automakers, distributors, and dealerships. It is emblematic of the shifting nature of these relationships in the face of technological advancements and evolving market dynamics within the global automotive industry.