Fiat Chrysler Automobiles NV (NYSE:FCAU) has revealed that it overstated its sales numbers in the US since 2011 by reporting sold cars as sold.
The automobile manufacturer has been battling a lawsuit filed against it on grounds of reporting misrepresented sales reports. The lawsuit claims that the firm has been paying dealerships to report sold cars as sold. Fiat Chrysler Automobiles (FCA) recently released a statement revealing that the year-over-year increases reported for 71 consecutive years did not actually occur. This is because the company has been using a different method to analyze data.
Despite the statement, FCA did not confess to wrongdoing even though it has been facing multiple investigations. The Securities and Exchange Commission and Department of Justice have been carrying out fraud investigations on the firm. FCA is also facing lawsuits filed by two of its dealers in Chicago.
The company argued that the inaccurate numbers are caused by “unwinding” which means cases where dealers have been reporting the vehicles as sold then they end up reversing the transactions. This is something that most automotive manufacturers experience regularly when customers cancel their order or fail to secure financing. FCA claims that in most cases it has not recorded the sales reversal. The company claims that is dealers had 4,500 “unwound” vehicles in their stock as of June 30.
FCA also released a different statement where it revealed plans to pump $1.48 billion into the Sterling Heights plant. The announcement was made on Tuesday revealing that the firm plans to invest in the Michigan plant so that it can retool it for future production of Ram pickups. The vehicle manufacturer reported that it would stop producing the Chrysler 200 sedan in December this year so that it can prepare the plant for the production of the Ram pickup line. The latter are expected to be available in the market by January 2018. The company will discontinue production for the Dodge Dart and the Chrysler 200 because the US market is shifting towards SUVs and pickups.