BMW Agrees $1.75 Million Settlement For Inflating Sales Lawsuit

Apr. 30, 2022 3:44 PM ET by Gerhard Horn Industry News / 3 Comments

If an agreement is made, BMW won't have to make an admission of wrongdoing.

BMW recently agreed to pay $1.75 million to settle a lawsuit claiming that it engaged in deceptive practices to inflate its retail vehicle sales in the USA.

BMW AG and its local subsidiary, BMW North America, and the plaintiffs supplied the court with separate briefs, asking for the settlement to be approved. According to Law360, these risks include proving that BMW's alleged misrepresentations were scienter, which means it knowingly misled investors.

"This is a particularly risky case, as there were substantial questions concerning the materiality of the alleged misrepresentations and defendants' scienter, and even more critically, there were arguably no provable damages," the brief stated.

BMW calls its settlement "fair, adequate and reasonable in light of the strong defenses available to the defendants."

The lead plaintiff, Mark Spanier, launched his complaint a month after the Securities and Exchange Commission (SEC) received an $18 million settlement from BMW for the same thing. If this settlement is approved, The Rosen Law Firm will receive up to one-third of the settlement and up to $40,000 in litigation costs.

As part of the original settlement with the SEC, BMW AG neither admitted nor denied the SEC's findings. The SEC previously investigated FCA for a similar issue.

The alleged activities BMW is accused of are essentially overinflating its sales figures.

BMW allegedly offered financial incentives to independent BMW dealerships to designate demonstrators and loaner vehicles as sales so they'd be counted as retail sales. This would inflate BMW's sales figures, making it a more attractive company to invest in. For the record, the X3 and X5 are the best-selling BMWs in the USA.

It's also claimed that BMW maintains a bank of unreported retail vehicle sales and would allegedly use it when it failed to reach sales targets in any given month.

The SEC alleged that BMW AG raised $18 billion from investors based at least in part on favorable sales figures, which were inflated via the means mentioned above.

If BMW is allowed to proceed with the settlement, it will represent a civil settlement in which the defendants will make no admission of wrongdoing.