Subaru of America Inc. has won a key round in its battle to get rid of one of its oldest and most profitable dealerships, Forty-Niner Subaru in Angels Camp, CA.

The California New Motor Vehicle Board unanimously upheld Subaru’s termination notice against Forty-Niner. Owner Richard E. Wilmshurst has tangled off and on with the importer’s representatives, including an incident involving a gun, ever since getting a Subaru franchise in 1981.

Subaru’s complaint cites the “horrible” condition of the dealership, which was built in 1961 as a Chevrolet store in an historic mountain town in north- central California.

The auto maker also accuses Wilmshurst of engaging in heated arguments with Subaru representatives during visits.

Yet, despite the fact that Forty-Niner consists of two buildings – one without a restroom, notes Subaru – on opposite sides of Main Street, it is a high-selling and high-profit store.

Subaru legal documents indicate Forty-Niner’s sales in its so-called “area of responsibility” (AOR) fell from 140 in 2005 to 123 in 2006 and to 34 in the first four months of 2007.

Forty-Niner’s AOR sales were slightly higher in these three periods than other Subaru stores combined, but the importer maintained “that a well-performing dealership should dominate sales within its AOR.”

In reply, Wilmshurst said his customer base is aging and “is increasingly not able or inclined to spend high dollar amounts on vehicles designed for fairly rugged use in hilly or mountainous terrain by outdoor-oriented people.”

His facility lacks an enclosed indoor showroom and Wilmshurst has resisted Subaru’s demands for dealership upgrading and repairs.

Subaru says Wilmshurst is far from financially strapped, claiming Forty-Niner’s cash on hand is about $1 million. There is no mortgage on the facility nor any long-term debt. He operates without floor-planning loans, paying for his inventory in full.

Adding to the controversy surrounding Wilmshurst – a member of a family that entered the auto franchise business in Angels Camp with Chevrolet in 1933 – are incidents of rancor between him and Subaru representatives.

Jerry Van Wechel, Subaru’s regional market-development manager, testified before an administrative law judge that during a routine visit to Wilmshurst in 2000, the dealer set a handgun on his desk.

In response, Wilmshurst testified that he “never shot at anyone, physically harmed anyone, or threatened to shoot anyone.”

Subaru also maintained in its termination statements that Wilmshurst last

May used dealership funds for his personal benefit, unrelated to dealership needs.

Wilmshurst admitted doing so, explaining he used the money for bail after his arrest for assaulting an officer on May 17.

The vehicle board’s decision upholding the termination affirmed Subaru’s contention that taking away Forty-Niner’s franchise “would not be injurious to the public welfare and that the public welfare might actually benefit there from.”

During a 4-day hearing, Wilmshurst, acting as his own attorney, accused Subaru witnesses of lying. The board said the dealer’s “diatribe” diminished his credibility and his “version of events surrounding the relationship.”

Wilmshurst, 72, plans an appeal.

“Forty-Niner Subaru has a 100% customer satisfaction rating,” Wilmshurst tells Ward’s in a phone interview. “I am convinced Subaru’s attorneys arranged for Subaru officials to lie about me.”

He says the termination notice is retaliation for his suing Subaru for $400,000 damages for warranty cost underpayments. Subaru was upheld in that case.

“Unfortunately,” he says, “the board’s attorneys and public members too frequently take the side of the auto maker attorneys. But I’m not going away.”