GM accusing car hauler of keeping 1,704 new vehicles hostage

Article by Christian A., on March 24, 2011

General Motors Co. filed a lawsuit in federal court in Detroit against car hauler Allied Systems Holdings, asking them to return 1,704 new vehicles they supposedly kept after the carmaker terminated the carrier's contract. These vehicles are valued at $46.6 million.

The models include the Chevrolet Silverado pickup built in Fort Wayne, Ind., and the Chevrolet Camaro built in Oshawa, Ontario. The conflict stemmed from Allied Systems’ demand for a price increase, which companies refused to accept.

Spokesman Dan Flores said that Allied Systems is holding about 1,650 GM vehicles at a storage site in Dearborn, Mich., and about 50 at a site in Fort Wayne, Ind. Flores said that Allied has failed to turn over these vehicles, and as a result, GM sued the car hauler in federal court to release the vehicles as well as pay for damages that may be sustained due to Allied's breach of its contract.

On March 17, 2012, GM terminated its contract with Allied and started seeking replacement carriers, after the company refused to deliver vehicles. The replacement carriers have already started pickup and deliveries. In the lawsuit, GM asserted that Allied's refusal to release the vehicles to GM will cause harm to third parties, including dealers.

GM said that without getting immediate access to and possessing the vehicles, these dealers may “suffer immediate and irreparable harm, including loss of goodwill and damage to customer relations.”

The dispute between GM and Allied started on March 10, when the workers at the car hauler threatened to launch strike over plans to cut by 20 percent the pay check of around 2,500 Teamster-represented U.S. and Canadian workers. According to the union, these pay cuts would be a violation of the Teamsters' car-hauling agreement. Around 600 Allied workers in Quebec and Ontario are reprensted by the Canadian Auto Workers Union.

After withdrawing its pay-cut plan, Allied moved to increase its hauling charges. But both Chrysler and GM are refusing the company's request to raise the rates it charges for hauling vehicles from plants to dealerships. Chrysler Group is also claiming that Allied is holding about 500 vehicles stored in Windsor, Ontario.

Chrysler spokeswoman Katie Hepler disclosed that the Ontario Superior Court has issued an order for the carmaker to retrieve about 200 of the cars immediately. As Allied drivers stopped picking up vehicles to be delivered to dealerships, minivans have been piling up at Chrysler's Windsor assembly site.

The Decatur, Ga.-based Allied Systems Holdings offers vehicle delivery, logistics, and other support services to the auto industry. Allied and its network of more than 3,000 subsidiary carriers hauls vehicles for carmakers like Ford, Honda, Toyota, Nissan and Volkswagen.

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