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Board sides with Subaru dealership in sale dispute

The New Hampshire Department of Safety said a motion for a rehearing was filed Thursday, Sept. 1.

According to the board’s order, Subaru of New England cited poor performance at Group 1’s Ira Subaru as a reason for blocking the Prime Subaru sale. Subaru of New England also provided two prospective buyers for Ira Subaru after Group 1 offered to sell the store to acquire Prime Subaru, the board wrote. That sale ultimately did not happen.

Pete DeLongchamps, Group 1’s senior vice president of manufacturer relations, financial services and public affairs, said via email that the publicly traded auto retailer is “pleased with the outcome” but declined to comment on the distributor’s criticism of Ira Subaru or on what may be coming next.

A spokesman for GPB Capital Holdings declined to comment on the board’s ruling.

Automakers and distributors generally have the right to decline a proposed buyer in a dealership transaction and instead select a buyer of their own choosing, but they must keep the terms of the deal the same.

“While [Subaru of New England] had a right to pick its franchisee, it could not reject a qualified franchisee, Group 1, either, unless it had sufficient legal reason for doing so,” the board wrote. “In this case, it did not.”

The dispute dates to September 2021 when Prime asked Subaru of New England to sign off on a proposed sale of the Manchester dealership to Group 1.

Jeffrey Ruble, now COO of Subaru of New England, told Daryl Kenningham, now Group 1’s president and COO, that Subaru of New England was “not excited” about the proposed sale due to ongoing problems at Ira Subaru,” according to the board’s order. Problems were said to include low customer satisfaction and net promoter scores in 2021, as well as employee and management turnover.

Subaru of New England called Ira Subaru “the ‘worst of the worst’ in service of its 64 dealers” and said customers left poor reviews about such things as service delays and communication, according to the order.

Prime Subaru Manchester filed a protest in December with the board, contending that Subaru of New England did not say why it rejected the sale to Group 1 nor did it exercise its right of first refusal within the contractually required timeline.

Group 1’s Kenningham proposed selling Ira Subaru to acquire Prime Subaru, the board wrote.

Subaru of New England offered one prospective buyer for Ira Subaru, according to the board — New England dealer David Rosenberg, former Prime Automotive Group CEO who started DSR Motor Group after GPB fired him in 2019. The board’s order said that Rosenberg offered $6 million for Ira Subaru, but Group 1 — which valued the store at $20 million — rejected the offer.

Reached by phone, Rosenberg confirmed he made an offer for Ira Subaru but said the price quoted in the order was inaccurate and that his offer was “significantly higher” than $6 million. He declined to disclose the bid amount.

The New Hampshire board’s order said Subaru of New England then presented a $10 million offer from “the Kelly dealership group,” which Group 1 also rejected. The decision does not reference the full name of the Kelly group. The board’s chairman declined to provide additional detail, citing the ongoing case.

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