ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, June 1, 1996 TAG: 9606030059
SECTION: BUSINESS PAGE: A4 EDITION: METRO
DATELINE: SACRAMENTO, CALIF.
SOURCE: ASSOCIATED PRESS
An administrative law judge has proposed barring Chrysler from delivering new cars to the state's dealers for 60 days as punishment for allegedly reselling cars and trucks returned under the ``lemon law.''
The state Department of Motor Vehicles on Friday asked Judge Keith Levy to review the proposal, out of concern that it might cause unintentional harm to consumers and innocent dealerships.
The agency also asked the judge to consider a possible ban on used car sales, which the DMV said could last even longer than the ban on new car deliveries.
No action will be taken while the review is under way, the agency said.
Chrysler has denied any wrongdoing. Spokesman Mike McKesson said the company had not had a chance to review the proposed action and had no immediate comment.
The proposal would suspend Chrysler's manufacturing license to do business in California, the nation's most populous state, where cars are nearly as ubiquitous as the telephone.
The sanctions would prohibit Chrysler from delivering any new automobiles to its California dealerships during the period, but dealership activities such as warranty work, distribution of parts, leasing or rebate programs and other such business could continue uninterrupted.
Dealerships could continue to sell cars during the suspension, and in fact could order in extra stock ahead of time so they would not be affected by the cut-off of deliveries, DMV spokesman Bill Madison said.
Levy also proposed a three-year probationary period for Chrysler and measures to change sales procedures, but did not propose a fine.
The DMV asked the administrative law judge to review ``the potential negative impact on the public and dealers'' of the proposed sanctions, the agency said in a news release.
Chrysler faces maximum penalties of $1.5 million in fines and a 90-day suspension of its business license.
If imposed, the sanctions would cap a two-year investigation into one of the state's largest-ever cases of ``lemon laundering.''
Chrysler allegedly resold 16 defective cars and trucks through an auction house in Northern California that eventually found their way to used-car lots.
At the lots, the vehicles were purchased by customers who were unaware that Chrysler allegedly bought these same vehicles back from unhappy customers.
The Chrysler sanction would mark the second such punishment against an automaker in California in three years.
In 1993, General Motors paid a fine of about $365,000 after allegedly reselling 71 defective cars without proper labeling.
LENGTH: Medium: 57 linesby CNB