Stellantis Sues Dealership
In the auto industry, lawsuits usually go one way. Automakers are often the defendants in cases involving recalls, warranty disputes, or franchise disagreements. This time, the script is flipped. According to a report from ABC Affiliate KCRG off of Iowa, Stellantis has filed a lawsuit accusing an Iowa dealership of orchestrating a multimillion-dollar fraud scheme tied to vehicle inventory financing.
The complaint was filed by Stellantis Financial Services against Sky Auto Mall and its owners Igor, Yelena, and Alex Tovstanovsky. The dealership operates locations in Newhall and Center Point. According to the lawsuit, the dealership allegedly secured duplicate loans on the same vehicles, leaving the lender claiming more than $12.3 million in losses.
The Alleged $12 Million Loan Scheme
At the center of the case is a practice known in dealership finance as “double flooring.” Dealers commonly rely on floorplan financing to stock their lots, borrowing money to purchase vehicles and repaying those loans once the cars are sold.
Stellantis claims Sky Auto Mall used that system to obtain financing for inventory but then took out additional loans on the same vehicles through other lenders, including Ford Motor Company. The lawsuit alleges vehicles were moved between the dealership’s two locations to conceal the duplicate loans, while some cars were sold without repaying the associated financing, leaving roughly $1.4 million in proceeds unreturned.
Two Sets of Books and a Possible Inventory Seizure
The lawsuit also alleges the dealership kept two sets of financial records, one reflecting the duplicate loans and another designed to conceal them from lenders. Stellantis claims the dealership’s principals later acknowledged misleading the finance company after the alleged scheme was uncovered.
In total, the automaker says the dealership owes about $12.3 million, not including interest or fees. In a separate filing, Stellantis is also seeking permission from the court to seize vehicles, parts, and equipment tied to the financing agreement, which court documents say could exceed $20 million in value.
Shutterstock
The Dealership Model Is Already Changing
The lawsuit comes at a time when the traditional dealership model is already facing pressure from new car-buying trends. Online purchasing platforms have increasingly streamlined the process, allowing buyers to complete much of the transaction digitally rather than negotiating in person at a dealership.
At the same time, consumer sentiment about the buying experience is evolving. Recent industry surveys show buyer satisfaction reaching a 16-year high, even as vehicle prices remain elevated. This comes despite dealership reputations of persistent frustrations with in-person dealership interactions, including lengthy negotiations and confusing pricing structures.
Automakers are responding by exploring new sales channels. General Motors, for example, has launched a used-car marketplace to compete with online retailers such as Carvana. As digital retailing reshapes the industry, disputes like the Stellantis lawsuit add another layer of tension to a dealership system already undergoing significant change.
Getty Images