Last month, Toyota dealer Roger Hogan prevailed in a lawsuit he filed in 2017. Hogan accused the manufacturer of fraud and breach of contract. A jury set aside the fraud allegations but found Toyota violated standards of good faith and fair dealing, in part by refusing to allot more than the bare minimum of truck and SUV inventory owed to Hogan’s Claremont and San Juan Capistrano, Calif., dealerships.
Pending appeal, Toyota now owes Hogan a cool $15.8 million for his troubles, which began back in 2011. The factory was then mired in the sudden unintended acceleration scandal and the resulting parade of recalls and bad press. Hogan was unconvinced Toyota’s efforts would fully redress the issue. He wanted every affected vehicle fixed. So he built a better mousetrap.
Hogan developed Autovation, a system designed to reach customers who had, for whatever reason, failed to receive or respond to the factory recall notice. He used it at his own stores and licensed it to other dealers.
Hogan believes his system worked too well, bringing in more vehicles than Toyota cared to repair, costing the factory millions. He claims executives began plotting to end their 40-plus-year relationship. And they went after Autovation, which Toyota said qualified as an unauthorized side business and relied on proprietary data mined from the factory’s systems.
More recently, Hogan stuck another thorn in the factory’s side by taking public his concerns that a software solution designed to prevent overheating in the third-generation Prius was ineffective. He demanded that Toyota replace inverters in as many as 20,000 vehicles and refused to sell 120 affected units sitting on his lots. He filed a petition with the National Highway Traffic Safety Administration the same month he sued Toyota.
“My philosophy is never put a customer in a car you wouldn’t put your own family in,” Hogan said after the trial concluded. “There’s no amount of money in the world to compensate for a lost family member. It’s just unconscionable, so we drew a line in the sand and the jury found we were justified in our actions and that Toyota concealed certain material facts to us.”
You don’t have to look too far to find gaps in our government- and factory-driven recall system. Every unperformed repair represents a needlessly endangered customer and missed income for the dealer. Hogan should have been commended for his efforts. Instead he took beatings.
One of the main reasons dealer associations exist is to defend the franchise system. One of the main reasons the franchise system needs protecting is the long history of incursions into the dealer’s business by manufacturers, including new players and long-established brands. And as Syncron’s Gary Brooks points out in this issue, manufacturers’ growing interest in sub services will only muddy the waters further.
Yet a dealer who finds a solution to a problem his factory should already have solved is met with fierce resistance. It could prove to be a landmark case. I’m glad he found justice.