DMV Decision on Chrysler Reversed

The state New Motor Vehicle Board on Wednesday reversed a decision by the Department of Motor Vehicles to slap Chrysler Corp. with a 45-day suspension of its business license for violations of the state’s “lemon law.”

The DMV said in October that Chrysler should be banned from supplying new vehicles to dealers for 45 days. The DMV charged the auto maker had resold 116 vehicles in 1991 and 1992 without properly disclosing that they were “lemons,” a term that refers to vehicles with chronic repair problems.

“The California New Motor Vehicle Board has confirmed what we’ve been saying from the start of this misguided prosecution: Chrysler Corp. has complied with state laws governing the sale of repurchased vehicles,” Chrysler attorney Lewis Goldfarb said in a statement.

The nine-member board, which normally hears disputes between dealers and manufacturers, said its “primary purpose is the protection of dealers.”

The panel found that the proposal to prohibit Chrysler from shipping new vehicles to its 240 California dealerships for 45 days would cost each dealer nearly $60,000 and “disproportionately affect dozens, if not hundreds, of dealers who have not been accused of any wrongful conduct.”

The board also accused the DMV of improperly withholding as evidence internal memos showing that DMV officials themselves were uncertain how the lemon law should be enforced. The board sent the matter back to the DMV, ordering it “to take additional evidence and reconsider its decision.”