Maybe FCA's recovery was more false sales figures than real sales magic?
It looks like we may now know what magic formula has been fueling FCA's record-setting sales pace, as Bloomberg is reporting that the automaker is being investigated by the Justice Department and SEC for falsifying its sales numbers. The issue goes back to a story from earlier in the year where two Napleton, Illinois (near Chicago), dealerships sued the company for allegedly bribing them to inflate sales figures. However, that's a civil suit. Now it could turn criminal as the FBI is involved in the DOJ's investigation.
Bloomberg reports that FBI agents visited the homes of nine people across the country who run Fiat Chrysler business centers. According to Tom Loeser, one of the lawyers who is representing the Chicago-area dealerships in the civil suit again FCA, those July 11th meetings could turn out to be very serious. "Those are the people who would've have had conversations about reporting inflated sales inventory and then getting it credited back," Loeser told Bloomberg. But if true, isn't this just a pathetic attempt by FCA to look like it's a sales superstar when in reality it's just lagging behind the competition? Well, yes. But the bigger issue is that people buy and sell stock in FCA. When an automaker sells more cars stock prices go up accordingly.
Fiat Chrysler has responded to the investigations, commenting: "In its annual and quarterly financial statements, FCA records revenues based on shipments to dealers and customers and not on reported vehicle unit sales to end customers." The automaker is said to be cooperating with the dual investigations as well. While it's too early to pick a side either way things don't look good for FCA here, especially since allegations of it pushing dealerships to lie about sales stretch back to September 2015. That was when Automotive News broke a story that alleged Maserati North America was strong arming dealerships into reporting false sales figures, with those that didn't participate in the scheme getting punished via discrimination over incentives.