‘Lemons’ Return To Haunt Chrysler California Orders Automaker To Halt Shipments For 45 Days

California became the first state to ban an automaker for selling “lemons,” ordering Chrysler Corp. to stop shipping cars and trucks to its California dealers for 45 days.

The state’s Department of Motor Vehicles also restricted Chrysler from reselling lemons it buys back from dissatisfied customers for three years.

Chrysler said it would appeal the ruling to the state’s New Motor Vehicle Board, which mediates disputes involving car manufacturers.

“The DMV’s decision will not become effective, if at all, until the appeals process is exhausted,” said Jim Crawford, a spokesman for Chrysler, which is based in Auburn Hills, Mich.

Chrysler dealers could continue selling vehicles from their inventories if the ban is upheld. Repair work, parts distribution and other services also would continue.

The sanctions were less than the original 60-day recommendation made by an administrative law judge in May.

Chrysler was fined by New York in 1988 and Pennsylvania in 1989 for reselling lemons. It paid $2.54 million in fines and consumer settlements in those cases.

The ban in California could hurt much more, in reputation as much as money. California accounts for 8 percent of Chrysler’s sales. It sells an average of 21,000 cars and trucks in the state every 45 days, according to Polk Co.’s review of new vehicle registrations.

“Economic fines and penalties don’t faze Chrysler,” said Clarence Ditlow, director of the Center for Auto Safety in Washington, D.C. Today’s action “is the only way you can send a message to (Chrysler Chairman) Robert Eaton and the other cowboys at Chrysler that consumer protection laws are meant to be obeyed.”

Chrysler’s stock fell $1 to $32.75.

Chrysler Wednesday braced its 200 California dealers for the news. It told them it would appeal the ruling and do whatever was necessary to protect them.

“They’ve been assuring us they will appeal it to the board,” said Steve Rojas, owner of Fullerton Dodge in Fullerton, Calif. If the sanctions took effect, Rojas said he might have to lay off 56 of his 80 employees.

“Instead of getting a check from Fullerton Dodge, they’d be getting one from the state of California,” he said.