By on January 14, 2016

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An Illinois dealer said in a lawsuit filed Tuesday that Fiat Chrysler Automobiles, through its regional sales offices, was intimidating and bribing dealers to report bogus sales at the end of the month to reach inflated sales targets. Automotive News reported first on the lawsuit.

The lawsuit filed by dealers of the Napleton Automotive Group accuses FCA of conspiring to inflate sales numbers through payments of tens of thousands of dollars to the dealer in co-op advertising accounts to disguise the practice. The lawsuit says FCA uses bogus third-party data from J.D. Power and Urban Science to falsely “verify” the sales figures and report publicly that the automaker has continued monthly sales growth since it emerged from bankruptcy in 2009.

The news of the lawsuit and its allegations sunk shares of Fiat so far that trading on its stock was halted in Europe, according to the Wall Street Journal.

The lawsuit alleges that dealers participating in FCA’s Volume Growth Program, which is a performance program that rewards sales, were enticed to falsify sales through an “earn and turn” program that would reward dealers that “sold” popular models with more of the same model. The lawsuit alleges that those sales were falsified at the end of the month, then backed out, to receive more popular selling models.

The lawsuit alleges that FCA asked the dealership group to falsely report sales of dozens of cars in exchange for $20,000, credited to the dealership’s advertising account.

FCA didn’t immediately comment on the lawsuit.

Last year, a dealer accused FCA-owned Maserati for falsifying nearly half their December 2014 sales by “punching” models that hadn’t yet been delivered.

Napleton ranked No. 41 in the top 125 largest auto dealers in the U.S. by Automotive News. It has filed several lawsuits against automakers since 1996, including lawsuits against Ford in 2001 and Volkswagen in 2010 for reasons unrelated to its current complaint against FCA.

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24 Comments on “Dealer Accuses Fiat Chrysler of Falsifying Sales...”


  • avatar
    JimZ

    Did they rehire Joe Eberhardt or something?

  • avatar
    DeadWeight

    This does not surprise me in the LEAST, and it’s not in any way, shape or form limited to FCA.

    Almost every automaker does this, calling it some type of program with an esoteric name (quota sales system on monthly, quarterly or yearly basis), where dealerships get $250 to as much as $1200 per vehicle they sell if they hit specific sales numbers…***better to “have to sell” an extra 3 or 5 or even 10 vehicles at a loss at the end of a quarter or even month in order to get that $250 to $1200 per vehicle sold on the prior 130 during the month.***

    …this is why you’ll see dealership GM’s and other salaried employees “buy” their wives, kids and siblings or parents a vehicle on the last day of a month, as just one example, and how I’ve gotten some amazing new car deals in the month of December during the last 3 days of the month.

    http://m.thisamericanlife.org/at-the-car-lot/

    AT THE CAR LOT
    The sales team at Town and Country Jeep Chrysler Dodge Ram in Levittown, NY, is hustling to sell their quota: 129 new cars by the end of the month.

    PHOTOGRAPHS BY JEFF MINTON

    • 0 avatar
      DeadWeight

      http://www.crainsdetroit.com/article/20121105/FREE/121109941/gm-dealer-upgrades-fuel-a-2-tiered-price-war

      ” The way the money is flowing from GM’s Essential Brand Elements program has triggered side effects. Dealers say the cash, awarded in quarterly bonuses, is stoking price wars and widening disparities between big retailers and small ones. And GM has had to crack down on some dealers for trying to wangle more cars than earmarked to them because the payments are based on vehicle orders.

      Because the cash is based on the number of units that GM ships to a dealer — $300 to $700 per vehicle for dealers who comply — it’s gravy for many high-volume dealers who are reaping much more Essential Brand Elements cash than they’ll ever spend on their dealerships. They’re free to use the bonus money as they see fit, creating disparities that lead to low-balling on price, especially in metro markets, many dealers say.

      Steve Rayman figures he’ll get $1.2 million in bonus money this year while selling more than 2,000 new Chevys at his sparkling new store in Smyrna, Ga., near Atlanta.”

      “It’s a big part of Byron Hansen’s profit, too — but he’s dropping out of the program. The Brigham City, Utah, dealer has been receiving roughly $90,000 in bonus payments while selling about 250 new vehicles a year. He has carefully jumped through the GM program’s hoops — hiring an architect to sketch renovation plans, for example.

      So far, though, none of the bonus money has gone to renovate his store, which is just 9 years old. Instead, he has used the extra cash to help him limp through a stubborn economic recovery made worse by the departure of a few big employers in northern Utah.

      Hansen, who sells all four GM brands at Hansen Motor Co., is among a group of smaller dealers now facing a GM deadline to make some dust, after the company focused its early efforts on higher-volume stores. GM says dealers who fall out of compliance with the program won’t have to return the money they have earned. Last year Hansen’s store eked out a $70,000 profit, he says; he would have lost money without the bonus cash.

      “All of the sudden the smaller dealers are bailing out of the EBE program,” says Hansen, who says he has talked to a dozen dealers who also are dropping out. “General Motors knows they have a problem.”

      ” Two-tier pricing

      Dealers who order big with an eye on the extra cash still have to move that metal. The bonus money allows dealers to discount cars more aggressively. But dealers can also use it to beef up advertising or commissions to sales staff, for example.

      One dealer who owns multiple Chevy stores across two states said he has seen rivals sell cars at $1,500 below true cost, even after the automatic holdback payment made after the sale. He blames the program’s cash and other back-end money that GM funnels to dealers.

      “It’s terrible business acumen, and it’s driven by egos,” says the dealer, who didn’t want his name published. “But when they’ve got an avalanche of cash coming in on the back end, they think they’re rich.”

    • 0 avatar
      Scoutdude

      Having bonus payments, additional allocations of high demand products for sales of slower selling products and similar types of incentives to meet monthly, quarterly or year end sales goals is something used across all sorts of businesses. However this is entirely different as it is payments for falsifying sales numbers. Yes in some cases the other programs do entice dealers to falsify sales numbers to get those payments, but it is not officially sanctioned and in some cases the mfg will revoke those bonuses if they find out that the numbers were falsified.

    • 0 avatar
      highdesertcat

      DW, “This does not surprise me in the LEAST, and it’s not in any way, shape or form limited to FCA.”

      So true! Something everyone in the new-car bid’ness already knows but doesn’t discuss in public.

      This is where insights from Buickman and Ruggles truly shine. FWIW, FCA is not the worst.

      If you think about it, which domestic automaker had the most to gain from falsifying sales numbers. Hint: it wasn’t FCA.

      • 0 avatar
        Scoutdude

        No FCA is the one that has something to gain from falsifying numbers as they love to advertise their growth. GM is sitting pretty good as the #1 in sales by mfg in the US. Ford is doing good too sitting as the #1 in sales by brand.

        • 0 avatar
          highdesertcat

          I should have worded my comment better. I was referring to the past 30+ years and which domestic automaker was fudging sales numbers, such as units shipped to dealers already counted as sales when they had not even arrived yet.

          It is true that TODAY FCA has something to gain from falsifying numbers.

  • avatar

    Aw, Say It Ain’t So Sergio!

    DeadWeight is actually right on this. They all do it. Saying otherwise is BS.

    And somewhere in the Detroit suburbs, Sweet Pete DeLorenzo in smacking his lips with glee that his nemesis may finally get his comeuppance.

    • 0 avatar
      Scoutdude

      DW is wrong as he commonly is. Yes every mfg has incentives to meet sales goals from time to time, that is the norm and no one hides it. Yes sometimes dealers falsify reports to qualify for those incentives. However there are mfgs that will take those payments back if they find a dealer outright lied about sales figures. Those same mfgs will however look the other way if say the dealer puts the car in use as a service loaner for a short period and then sell it as a lightly used car.

      This allegation is totally different as they say that they were offered brides for falsifying reports.

      • 0 avatar

        Scoutdude,

        I’m sure some makers want nothing to do with this. But the reality is that manufacturers do falsify, which is totally separate from incentives.

        In addition to subpar product and financing anyone with a pulse, Mitsubishi’s downfall from the “fastest-growing Japanese brand in the U.S.” to the morgue’s waiting room came by getting caught falsifying sales numbers.

        I know. I was there. I read the data and made-up names, and had to put the best face on it for the media.

        At least the COO and sales chief were fired for it. You know where they learned the practice? GM.

  • avatar
    formula m

    Sergio is as corrupt as they come

  • avatar
    Zackman

    Hmm… the sales bank has made a comeback! What’s next? Tent sales? Rebates? Chrysler started it all in the early 1970s.

    Get a car, get a check! Thank you, Joe Garagiola.

  • avatar

    This dealer is having a disagreement with FCA and elected to fire a shot across the bow of FCA as a defensive move to gain an upper hand in its disagreement.

    Every manufacturer pays one sort or another of a bonus, if its not cash its improved allocations. Its been going on for years. http://www.thestrada.net/thought-factory/2014/10/1/behind-closed-doors.html

    In Canada customers will wait towards the end of the month to get a better deal at any dealer not just FCA.

    Not a big deal for any dealer to call a vehicle a “demo” with the manufacturer, start the warranty, move it from the floor plan to its demo plan, and subsequently sell it as a slightly used vehicle.

  • avatar
    Vulpine

    Two things wrong with this lawsuit:
    1) Why is it just two dealerships that are owned by a single franchise that are filing this suit?
    2) Why is this not a criminal investigation and only a civil suit?

    Whether true or not, these two questions bring the whole lawsuit into question. Could it be that the franchise itself is the one that’s been doing questionable accounting?

    • 0 avatar
      and003

      Good questions, both of them. If these practices were going on, I would think more dealerships around the country would file suit. Furthermore, what proof does this dealer have of such practices?

    • 0 avatar
      Scoutdude

      #1 Maybe they are the only ones to have the guts to do so or they are the only one that is ethical enough to do so.

      #2 Because they can’t file a criminal case you need a gov’t prosecuting attorney to do so. If this lawsuit has merit then it is highly likely that a criminal case could be filed.

      • 0 avatar

        It’ll certainly be interesting to see how far this goes.

      • 0 avatar
        Vulpine

        #1 Maybe they are the only ones to have the guts to do so or they are the only one that is ethical enough to do so.
        — Highly unlikely since this is almost guaranteed to cost them the franchise no matter how it comes out.
        ——————————————–
        #2 Because they can’t file a criminal case you need a gov’t prosecuting attorney to do so. If this lawsuit has merit then it is highly likely that a criminal case could be filed.
        — Which is exactly why this is questionable, as a legitimate complaint should go to government investigators. The fact that it didn’t means these dealerships (one franchise) are after money, not justice.

  • avatar
    and003

    Speaking for myself, until Napleton produces proof beyond a reasonable doubt that FCA is engaged in such activities, I have to regard their claims as suspect.

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