- Toyota Credit sues dealership group over missing vehicles and unpaid loans.
- Audit found $1.4 million in inventory gone, triggering “out-of-trust” claims.
- Case signals tougher enforcement as lenders crack down on dealer risk.
The relationship between automakers and dealers is often closer than most people realize. It’s not just a bunch of branding and signage. It involves financing, inventory control, and a deeply shared incentive to keep cars rolling. When that system works, it’s basically invisible. When it doesn’t, we get a story like this one. Toyota just sued a Connecticut dealership over what it says is more than $5 million that slipped through the cracks.
According to a lawsuit filed by Toyota Motor Credit Corporation, a March 27 audit at Stephen Cadillac GMC in Bristol found 16 vehicles worth more than $1.4 million unaccounted for. The dealership group also operates Stephen Toyota. Dealers typically rely on floorplan financing, where lenders fund inventory and are repaid when each vehicle is sold. Until that happens, the lender holds a lien on the vehicle.
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That’s important because Toyota Credit alleges the dealership sold or transferred vehicles tied to those loans without repaying them, a situation known as an out-of-trust sale. According to Automotive News, the complaint states the vehicles were “sold, leased, transferred, consigned, or otherwise disposed of” without satisfying the underlying debt. Here’s where things get even crazier, though.
Toyota alleges additional vehicles were removed from the dealership in the days following the audit. In total, the lawsuit claims more than $5.1 million is owed, including over $3 million tied to floorplan and capital loans. That is a rough look for any business, and worse still for one in a sector the FTC has been scrutinizing over various tactics.
The lawsuit, filed April 4 in the U.S. District Court for the District of Connecticut, seeks damages, control of the vehicles, and an order preventing further transfer of collateral.
The loans were reportedly personally guaranteed by dealership president Stephen Barbarino Jr. A lawyer representing the dealership said it is working with Toyota to resolve the matter. In the meantime, both dealerships are still up and running, though employees declined to comment when we contacted them.
