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Thursday 8 December 2016
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Coming Clean: Fiat Chrysler Overstated Sales Figures 

Coming Clean: Fiat Chrysler Overstated Sales Figures 

Remember that 75-month sales Fiat Chrysler kept talking about? Well, it didn’t happen. In fact, its sales streak ended at 41-months in September 2013.

Fiat Chrysler made the admission after falling under scrutiny by the federal government over the way it reports sales practices. FCA also announced that it is changing the way it reports monthly U.S. sales to make the process more transparent.

In a statement, FCA said the objective of the new sales reporting 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.”

All told, under the new methodology, FCA actually increased its total U.S. vehicle sales since 2011 by a net 18,996 vehicles, the automaker said in a revised sales table.   The biggest increase — 14,966 vehicles — was made in 2014’s results. It also underreported results for 2011 and 2015 while over reporting in 2012, 2013, and 2016 to date.

The automaker said it went back and reviewed past monthly U.S. sales reports using the new methodology. It found a 3 percent monthly decline in September 2013, when it had previously reported a 1 percent increase. Likewise, in August 2015, its U.S. sales would have slipped 1 percent, instead of the 2 percent increase it reported. As recently as May 2016, its U.S. sales would have dropped 7 percent instead of the 1 percent gain it reported.

FCA said that its “annual sales volumes under the new methodology for each year in the 2011-16 period are within approximately 0.7 percent of the annual unit sales volumes previously reported.”

The automaker said it “seriously considered simply ceasing to report this sales data on a monthly basis, and to rely only on published quarterly financial statements as a gauge of improvement or deterioration in our U.S. activities.”

However, the company said it understands that monthly sales are used by “the automotive press in particular, to opine about the state of the industry and we accept that our decision to suspend monthly reporting would impact those constituencies and possibly may impair their perception, and in turn the public perception, of FCA US.”

FCA confirmed July 18 that its sales reporting process was under investigation by the Securities and Exchange Commission and the Department of Justice. Federal investigators visited all nine of FCA’s regional business centers and spoke with current and former employees as part of their investigation. It remains unknown whether the searches and interviews were conducted under a warrant.

This all started earlier this year when FCA was sued by two of its dealerships. They accused the automaker of a civil racketeering violation for falsely reporting sales, among other allegations. FCA sought dismissal of the federal suit in March, calling the allegations “baseless” and a “smear campaign” conducted by disgruntled dealers.

Meanwhile, some of Fiat Chrysler’s U.S. dealers are receiving subpoenas to provide documents and or testimony to a federal grand jury as part of the probe. However, an attorney representing some of those dealers they plan to object to the requests.

“The dealers we represent will be objecting to the subpoenas as they seek overly broad and unduly burdensome records, such as the home and cell phone numbers of all employees covering seven years. Also, all reported sales which were subsequently unwound,” wrote Len Bellavia, a lawyer with Bellavia Blatt & Crossett in Mineola, N.Y., in an email.

Bellavia wrote that it is “unfair that dealers should be dragged into this by expending time and money to help the Justice Department make out a case against FCA. FCA employee statements and records should be sufficient.”

Photo Credit: FCA