It’s not a happy day when the U.S. Securities and Exchange Commission wants to talk with you about numbers. Nor is it likely to be much fun when the Department of Justice calls you in either. Unfortunately for Fiat Chrysler Automobiles NV, both federal agencies are investigating vehicle sales numbers, according to Reuters.
The probes stemmed originally from lawsuits filed by two Chicago-area dealerships. The lawsuits accused FCA higher-ups of trying to influence dealers to inflate sales reports. The dealerships, both part of the Ed Napleton Automotive Group, said competing dealers were offered tens of thousands of dollars in bonuses if they would file bogus reports of sales. FCA’s response at the time was that its financial reports were based on vehicles built and shipped, and that therefore the dealers claims were baseless.
Reuters reported that the federal probe could look into how car manufacturers reward dealers for hitting sales targets. The dealers who filed the lawsuits said factory-to-dealer payments were based on specific model sales, as well as reaching overall sales levels. The concern by the feds and the reason for the dealers’ complaints are that within this system the dealers allege FCA offered bonuses based on fudged figures.
Typically, car manufacturers release sales reports monthly, according to Reuters, and use that information — based on sales to individuals, rental fleets, and used by dealerships as loaners — to calculate bonuses and dealer profits per vehicle. The more cars a dealer moves, the more profit the dealer can make on each.
Maserati in dealers New York, New Jersey, and California have jointly filed a suit against FCA’s Maserati North America Inc. that is similar to the Illinois suit.
According to a Fiat Chrysler Automobiles statement cited by Reuters, the SEC and DOJ are looking into how the company reports sales, not shipments.