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FCA Denies Pressuring Dealers to Inflate Sales Results

Dealer lawsuit alleges maker offered $20K to inflate numbers.

by on Jan.15, 2016

Fiat Chrysler is denying charges in a lawsuit claiming it offered $20,000 to a dealer to inflate sales reports.

Two dealers are claiming that Fiat Chrysler offered them $20,000 to inflate sales reports, making  it appear the automaker was performing better than it actually was. The allegations were made in a civil racketeering lawsuit filed against FCA.

The suit alleges that the automaker paid some dealers to falsify sales reports to “create the appearance that FCA’s performance is better than, in reality, it actually is.”

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The suit, which was filed in Illinois federal court, comes from two dealers in Illinois and Florida that are part of the Ed Napleton Automotive Group, which was the 31st largest dealership group in the U.S. in 2014, according to Automotive News.

The suit alleges that dealership principal Edward Napleton was asked, but refused, to falsely report sales of 40 vehicles in exchange for $20,000, which would have been distributed by Fiat Chrysler to the dealership’s advertising budget.

(Marchionne provides road map to FCA’s debt-free future. For more, Click Here.)

That came after a lower-level employee agreed to falsely report the sale of 16 vehicles without permission of upper management, according to the suit. The dealerships involved are Napleton’s Arlington Heights Chrysler Dodge Jeep Ram in Arlington Heights, Illinois, and Napleton’s Northlake Chrysler Dodge Jeep Ram in Lake Park, Florida.

Fiat Chrysler’s sales have been on a 69-month run of increases in the U.S. and if the sales were inaccurate in any way, it would have a significant impact on the company’s stock price as well as the public’s faith in automakers in general.

FCA reported U.S. sales of 217,527 units, a 13% increase compared with sales in December 2014 (193,261 units), and the group’s best December sales ever. The company’s 2015 sales were up 7% overall, it reported.

FCA officials were quick to respond with a statement dismissing the charges, and that it would vigorously defend itself against allegations from “two disgruntled dealers.”

(Reinventing the minivan: Chrysler betting big on the 2017 Pacifica. Click Here to see the story.)

“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,” said FCA in the statement.

“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.”

Officials at the automaker claim the suit is an effort by dealers to give them preferential treatment, including gaining new stores in the automaker’s dealer network.

“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,” the company noted.

(To see more about the effort to toughen the standards for crash test ratings, Click Here.)

“FCA US will continue to resist these pressures, safeguarding the relationship of trust and openness which governs its relationship with its dealers.“

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One Response to “FCA Denies Pressuring Dealers to Inflate Sales Results”

  1. GT101 says:

    Perhaps Marchionne is desperate to sell FCA?