Half Of Volvo's China Dealers Caught Cheating
Geely-owned Volvo has uncovered what Reuters calls “widespread cheating by its car dealers in China.” Dealers inflated sales to win cash rebates for meeting targets. An investigation found thousands of fake sales booked in 2011. In order to make books balance, 2012 sales were under reported.
Volvo had reported an 11-percent drop in 2012 sales in China, According to the investigation, sales actually rose by 15 percent from a year earlier. “Half of the dealers” are said to have been involved in the caper.
Volvo spokesman Per-Åke Fröberg, asked by Reuters, did not want to use the word “cheating” and preferred “a retail delivery transparency issue” instead.
Fröberg said the issue should have “no effect on Volvo’s earnings whatsoever”, as earnings and financial results were based on wholesale deliveries. He said Volvo did not plan to adjust historic sales figures in China.
If fraud on such massive scale does not get caught for more than a year, one wonders how correct other numbers are. In Europe and Japan, actual registrations are counted. In China and the U.S. , sales are reported by manufacturers and dealers.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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How do we know these were real Volvos? Or real dealers? I remember walking the streets with an offer to buy a copy of some sort of Windows operating system for about 5 USD. The thing looked real, down to the 3-D hologram on the package. Amazing. Now, on a good day a Windows operating system might be worth about five dollars, it's hard to tell. But this was China, after all, and those margins were too dear for my pocketbook.
Car dealers caught cheating? I'm shocked! Shocked!
The Volvo response brings this to mind: "The Chinese are cheating! It must be stopped" "Round up the usual suspects" "Very well, Captain" A "retail delivery transparency issue"? The mind boggles!
Sounds like Volvo had a rebate program in 2011 based on cars sold to customers, so half of its dealers fudged the sales numbers and over reported customer sales to get a higher rebate when in fact the cars were still on the lot. While accounting in China can be an art, fudging sales numbers is not limited to Chinese Volvo dealers, it happens all the time, and yes, Virginia, it happens in the USA. Anyone who has been in sales has received a call from his manager near the end of the month or quarter to try and get orders to increase the backlog or get customers to place next month's order this month. In affect, eating tomorrow's lunch today. Shan't disappoint Wall Street, can we?