Fiat Chrysler Rebuffs Claims of Falsifying Sales

Fiat Chrysler Automobiles on Thursday released a statement strongly denying claims made by a Illinois dealer that the automaker was strong-arming its dealers into reporting bogus sales and illegally paying complicit dealers to continue its long-running sales growth.

This lawsuit is nothing more than the product of two disgruntled dealers who have failed to perform their obligations under the dealer agreements they signed with FCA US. They have consistently failed to perform since at least 2012, and have also used the threats of litigation over the last several months in a wrongful attempt to compel FCA US to reserve special treatment for them, including the allocation of additional open points in the US FCA network.

So, you’re saying it’s going to get ugly?

The two dealers, which are part of the large Napleton Automotive Group, alleged in their lawsuit this week that the automaker incentivized bogus sales from dealers to inflate their numbers through its regional sales offices.

In return, those dealers would receive larger allocations of cars that were quickly selling in a scheme called “earn and turn,” according to the lawsuit.

The allegations ground trading of FCA shares to a halt Thursday after the stock slumped more than 10 percent in European markets.

In its statement, FCA said it investigated the claims by the dealers and rejected them.

The lawsuit makes allegations of false sales reporting by FCA US. Notwithstanding numerous requests to provide evidence of this alleged activity, the plaintiffs have refused to substantiate their claims. FCA US carried out an investigation of the facts, and has determined that these allegations are baseless and plaintiffs were notified of this fact before they filed suit.

Which, of course they would.

If we let history be our guides right now as each side circles its wagons of lawyers, we know this: Maserati was accused of inflating sales last year, when dealers were asked to “punch” demonstration models that they hadn’t yet received, artificially boosting sales of its Ghibli sedan by 105 cars. We also know that Napleton has sued several automakers in the past, including Ford, General Motors and Volkswagen. In 2001, the dealer group sued Honda for not paying the dealer enough to complete warranty repair work, which was eventually thrown out by courts.

In comparison, the Larry H. Miller network of dealers — Automotive News’ No. 10 dealer in the U.S. by size vs. Napleton, which was ranked No. 41 — has not filed a lawsuit against an automaker. Neither has Lithia Motors (No. 8).

This could get seriously ugly, is what we’re saying.