Not so Hot Anymore: Fiat Chrysler Changes Sales Reporting Method, Ends Winning Streak

In response to media reports, a lawsuit, and federal investigations into potential sales figure tampering, Fiat Chrysler Automobiles is changing the way it records sales.

This means that the automaker’s much-touted 75-month sales streak is dead. FCA admits that under the new method, its year-over-year monthly sales gains ended in September 2013. Ad copy is likely being rewritten as you read this.

FCA is accused of inflating its monthly sales numbers by adding sales at the end of the month, then rolling them back at the beginning of the next. An Illinois dealer group alleges racketeering, with dealer payouts in exchange for false sales reports.

A report published by Automotive News yesterday claimed that the automaker uncovered the practice during a review. Internal sources claim the review turned up between 5,000 and 6,000 uncompleted sales that found their way onto sales tallies. U.S. sales chief Reid Bigland reportedly put a stop to the practice.

In a statement, FCA said the new methodology will be applied to July 2016 sales:

The objective of this new methodology is to provide in FCA US’s judgment the best available estimate of the number of FCA US vehicles sold to end users through the end of a particular month applying a consistent and transparent methodology. It continues to include some level of estimation in respect of, for example, unwound transactions that straddle a month end and fleet deliveries, which may be placed into service at various times after shipment and delivery. FCA US believes, however, that the consistency in application and transparency of this new methodology provides the most appropriate data for the limited uses to which the monthly vehicle unit sales data should be applied.

FCA took the methodology and applied it to data collected between January 1, 2011 to June 30, 2016. When the “unwound” sales were removed, the numbers differed from those it reported at the time.

“Annual sales volumes under the new methodology for each year … are within approximately 0.7% of the annual unit sales volumes previously reported,” the automaker stated.

Responding to claims of sales tampering, FCA claims it used the previous methodology for 30 years, which was similar to that used by other manufacturers. However, a problem exists with its New Vehicle Delivery Report (where retail sales data is collected from dealers) and unwound sales.

“It is admittedly also possible that a dealer may register the sale in an effort to meet a volume objective (without a specific customer supporting the transaction),” FCA stated. “There is, however, no obvious economic incentive for a dealer to do so, since FCA US’s policy is to reverse all incentives due or paid to a dealer that resulted from the unwound retail sales transaction.”

[Image: Fiat Chrysler Automobiles]