Popular Tags Cars

Falsifying Sales Reports Costs Fiat Chrysler Big Time

Report / 2 Comments

Fiat Chrysler Automobiles has settled with the SEC for tens of millions of dollars.

The pressure for companies to show growth in sales is immense. That sounds like an obvious statement, but the demand goes against reality as upwards trends don't keep ramping up continuously forever - particularly when you're talking about a long-standing company playing at a global level.

According to Reuters, Fiat Chrysler Automobile's (FCA) US business bowed to the pressure by falsely reporting its new vehicle sales results, through various methods of fraud, to show a year-over-year monthly sales increases over a period of 75-months straight. The run of real sales increases ended in 2013, but the company showed it running all the way through to 2016. Unfortunately for FCA, during that time federal authorities including the US Justice Department and Securities and Exchange Commission (SEC) were investigating the possibility of the company with the suspicion it was misleading investors.

2018-2020 Jeep Wrangler Front View Driving via FCA
via FCA
Front Angle View via FCA

The SEC investigation showed that FCA had pressured parts of its business "to increase sales, maintain the year-over-year sales streak, and hit internal sales targets, particularly on the last sales day of the month."

It wasn't just fake reporting from inside the company but, according to the SEC, dealers were also paid to report fake sales in a company database which "contained false vehicle sales entries, including false customer names and dates of sales." All this was at the direction of FCA's head of US sales to "to misreport vehicle sales results and year-over-year growth percentages every month."

You Might Also Like
Scandals That Rocked The Automotive Industry
Scandals That Rocked The Automotive Industry
17 Le Mans Racing Icons
17 Le Mans Racing Icons
2015-2018 Dodge Challenger SRT Hellcat Front Side in Motion via FCA
via FCA
2014-2020 Jeep Cherokee Front Angle View via FCA

The result for FCA is that it's paying $40 million for misleading investors over the figures, and that comes on top of an undisclosed settlement with several dealers over claims of pressuring to falsify sales data, and settling a lawsuit with stockholders for $14.75 million in May. The settlement also means FCA isn't required, and doesn't, admit any wrongdoing and in a statement, and FCA representative says: "The settlement requires a payment of $40 million, which will not have a material impact on the financial statements of the Company."

Ther issue isn't over for FCA though as its US sales chief Reid Bigland is claiming FCA withheld 90 percent of his 2018 compensation because he cooperated with the SEC investigation. Bigland says in the lawsuit that the methodology for FCA's sales reporting has been in use since the 1980s.

via FCA
Front Angle View via FCA
via FCA
via FCA

Gallery

Front Angle View
2013-2019 FIAT 500 C Abarth In Motion
15
Photos