California car dealer sues Mitsubishi over inventory

A California car dealer has filed a lawsuit against Mitsubishi Motors North America and its credit arm, accusing the companies of costing his dealerships millions in additional finance charges by forcing them to stock more vehicles than they could sell.

Abbas Ahmadi, the owner of four dealerships in Cerritos, Costa Mesa, Huntington Beach and Victorville, filed lawsuits against Mitsubishi Motors North America and Mitsubishi Motors Credit of America in a state court in 2013 and earlier this year.

In the lawsuit, Ahmadi claims that Mitsubishi set a goal of selling 500,000 cars throughout the United States by 2005 and thus increased the inventory that dealerships were required to stock, in a so-called "channel stuffing" process.

The dealer also claims that he agreed to carry an initial inventory financed for $1.7 million in 2012. But, the automobile major increased that inventory by nearly 50 per cent and hiked the finance charges by around $2 million.

In the court documents, he states, "The impermissible increases in new car inventory at Cerritos Mitsubishi continue to this day."

Ahmadi's lawyer Bobby Samini alleged that the carmaker's practices cost his client $10 million, excluding future losses, and requested a jury trial for determining the damages.

A spokesperson for Mitsubishi claimed that the lawsuits were entirely without merit and that the company was disappointed at Ahmadi's decision to file lawsuits. The spokesperson stressed that the company would vehemently defend itself in the cases.