A California man is suing BMW after finding that the company’s lease agreement favors selling its leased vehicles to branded dealers over third-party dealers, Automotive News reports.
Allen Ozeran was all set to sell his leased 2019 BMW X3 to Culver City Toyota at the end of it’s lease in October. The residual value on the X3 was $27,078.05, but given the current used car market, when the lease was up in October, that value had shot up almost $13,000. Not being able to afford the buy-out, Ozeran entered into a contract with Culver City Toyota for them to buy his X3 for $31,000.
Everything looked good to go until the dealer contacted BMW Financial about the payoff. That’s when BMW declined to sell the X3. From the suit:
Following a routine procedure, on or about October 15, 2021, the Culver Dealer requested the payoff instructions from Defendant BMW Financial, seeking customer payoff information. BMW Financial, however, refused to provide payoff instructions to the Culver Dealer, stating that according to Defendants’ policy, as of October 1, 2021, third-party dealers were not permitted to provide payoff funds on behalf of lessees as specified in Defendants’ October 14, 2021 letter.
While BMW declined to comment on an open case, the company did speak to Automotive News about this change last September. Essentially, given the used car market and dealers needing inventory, BMW changed the lease agreement to favor its own dealers so they could have first dibs on purchasing lease returns. From Automotive News:
Our primary goal is to support BMW franchise dealers by creating opportunities to keep more vehicles in our franchise network,” he said then. “Therefore, we’re prioritizing franchise dealers on our online auction platform to ensure they have more opportunities to purchase off-lease vehicles. In addition, we will temporarily suspend payoffs from third-party dealers as of Oct. 1.
BMW then told Ozeran that state regulations said that only a BMW dealer or the vehicle’s lessee could receive the title, something Ozeran is claiming BMW mischaracterized in the suit. According to the suit, BMW gave Ozeran an ultimatum: give the car back or face a loan default. Not only was Ozeran’s back against the wall, the suit says BMW tacked on charges as well:
…vehicle surrender fees of $350; (2) bumpers scratches - $800; (3) wheels (rims) scratches - $400; (4) tires wear - $1,600; and more.
Those tacked on additional charges equaled more than the profit he would’ve received had he been able to sell the vehicle to Toyota.
Now with his father representing him and a suit that’s also seeking class-action status for others this may have happened to, Ozeran is suing BMW claiming the automaker interfered “with potential economic advantage and contractual relations; misrepresentation; violating the California Unfair Competition Law; demonstrating a lack of good faith and fair dealing, and unjust enrichment.”
This isn’t the first suit about BMW’s lease practices either; another local car dealer is suing BMW for the same reasons.