Fiat Chrysler says it did not ask dealers to falsify sales reports, as two Chicago-area FCA dealerships claim in a new civil lawsuit we first reported last week. But despite FCA’s quick and vigorous denial of the accusations, the automaker’s stock plummeted Friday. Shares hit a 52-week low, dropping as much as 4.6% in New York before staging a small rebound.
Two dealers in the Napleton Automotive Group allege that FCA US offered dealers large sums of money to report unsold vehicles as sold. FCA responded quickly to those accusations calling them “baseless” and “the product of two disgruntled dealers who have failed to perform their obligations” within their dealer agreements.
Monday, Automotive News talked about the alarms the case is setting off – and notes that dealers take carmakers to court all the time, so in its words, “why did this one lawsuit strip more than $1 billion from FCA’s market value?”
Automotive News reports that analysts say it’s largely nervousness about FCA’s ability to complete its ambitious goals by 2018 and over whether the entire scandal-plagued, plateauing industry can be trusted.
“In our opinion, the emergence of these allegations point to a possible weakness in sales quality,” says David Lim, senior analyst with Wells Fargo Securities. “We would not be surprised if other OEMs followed a similar tactic to varying degrees.”
Here’s what the suit alleges, in part, as outlined by Automotive News:
• FCA officials rewarded district sales managers for hitting sales targets — even though they knew the sales goals had been met only by way of false sales reports.
• An unidentified competitor conspired with FCA and reported 85 false new-vehicle delivery reports and received “tens of thousands of dollars as an illicit reward” as a result.
Napleton Automotive’s attorney Leonard Bellavia specializes in dealer litigation. Bellavia and Edward Napleton declined to comment on the case.
The new allegations follow a terrible year for FCA. The automaker paid a record fine in 2015 after the National Highway Traffic Safety Administration said it had mishandled more than two dozen recalls and under-reported deaths and injuries.