By on January 15, 2016

 

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.

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9 Comments on “Fiat Chrysler Rebuffs Claims of Falsifying Sales...”


  • avatar
    JohnTaurus_3.0_AX4N

    Sounds like a lawer-happy dealer group trying to sue themselves rich.

    If this is/was true of FCA, other dealers will come forward and it will be huge. If only this dealer group is making the claims, and they have a history of filing and threatening legal action over unfounded allegations, itll be a huge waste of time. If thats the case, I hope all automakers associated with this dealer group will abandon it and maybe theyll figure out that biting the hand that feeds you isnt wise.

  • avatar
    tedward

    I’d be interested in seeing follow ups on this pissing match. Filing frivolous lawsuits is truly contemptible behavior, inflating sales numbers has repercussions far beyond the regional level (even though the game is to flirt with the line apparently).

    If it’s true that the dealer is playing a game of pr blackmail then I would never want to be associated with them even/especially as a customer. The fact that they timed this to coincide with detroit makes me lean towards skepticism of the dealer’s claims.

    • 0 avatar
      Vulpine

      Also agreed. I’ve stated many times that the “franchised dealer” method of sales has put the OEMs over a barrel. This is very clear evidence of that. I believe FCA would be perfectly within their rights to strip the franchisee of its brands across the board. I also believe that the many state laws supporting the franchise paradigm need to be reviewed and in many cases revoked specifically because of strong-arming tactics like this.

  • avatar
    Big Al From 'Murica

    In other news, VW also denies claims they cheated.

  • avatar
    SCE to AUX

    Somewhere, Elon Musk is laughing at this.

  • avatar
    seanx37

    Do sales figures really matter? Did FCA make a PROFIT? That is what matters.

  • avatar
    and003

    Aaron Cole wrote: “Fiat Chrysler Rebuffs Claims of Falsifying Sales”

    As well they should. All we have is Napleton’s word on that, and if their record for filing lawsuits against manufacturers is any indication, their word is meaningless without evidence to back them up.

  • avatar
    05lgt

    If you only knew ahead of time when someone was going to cause a stocks price to yo-yo like this. There might be money in it.

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