Allegations by an Illinois car dealer that Fiat Chrysler Automobiles NV (NYSE:FCAU) had manipulated its monthly sales data have occasioned a wave of scrutiny on the Italian-U.S. automaker. The claims have set a stage of investigations by the U.S. Justice Department and Securities and Exchange Commission to certify the truth in them. The suit file in earlier in the year indicates that the automaker financially rewarded retailers for reporting falsified sales that would reflect how well the company has performed in its U.S. car sales.
Edward Napleton, the Illinois dealer an owner of Napleton Automotive Group alleges that Fiat Chrysler made an offer of $20,000 to his company to fallaciously report sales of 40 Fiat Chrysler vehicles. The offer was rejected. The suit asserts that FCA did not relent despite Napleton’s persuasion asking the company to refrain from such practice. Instead, it moves on to other dealers who apparently agree to oblige to FCA’s request of wrongdoing.
The unfolding of the investigations and the defense from FCA
In the investigations that are still at an early state, the Federal Bureau of Investigation agents have not mentioned the car dealers that FCA contracted to carry out the act. However, a lawyer for several of the auto maker’s dealerships Steve Berman has confirmed that the agents have already visited the homes of nine Fiat Chrysler regional managers.
In what seems like its defense, FCA says that its annual and quarterly financial results have nothing to do with sales to end customers. Instead f, they are pegged on shipments to dealers. In any case, it is acceptable for dealers to purchase cars for their own use that leads to meeting their month-end sales goals. FCA further argues that after a government-brokered bankruptcy restructuring the company has carried out an aggressive promotion.
What does the latest scrutiny of FCA mean to other automakers?
The investigation may not primarily be a hit on FCA alone but also to other automakers. Apparently, a clique of auto executives says that the practice is so common in the industry, and probably FCA did not just make the right steps.
Nonetheless, this is not FCA’s legal battle. It has also battled financial penalties for safety problems which have resulted to the recalling of millions of vehicles. Owners of newer Jeeps are also up in arms claiming that the company’s vehicles have a joystick like gear-shift that is not easy to use.