US dealer sues Fiat Chrysler of inflating sales reports
Jan 15, 2016 08:36 PM EST
Fiat Chrysler Automobiles (FCA) has been sued by the owner of two Chicago area dealerships for inflating sales reports as part of the carmaker's volume growth program.
Napleton Automotive Group, the owner of Chrysler Dodge Jeep Ram dealerships in Illinois and Florida, accused Fiat Chrysler of financially rewarding certain dealers to report false sales to "create the appearance that FCA's performance is better than, in reality, it actually is," USA Today reported.
The lawsuit comes after Fiat Chrysler recently reported monthly sales increases for 69 consecutive months in the U.S. Much of the sales growth linked to a stream of new products and attractive sales incentives.
In the lawsuit, head of Napleton Automotive Group, Edward Napleton, said that he was asked by FCA to falsely report sales of 40 vehicles in exchange for $20,000 which would have been distributed to the dealership's advertising budget. Napleton said he rejected the offer and told Fiat Chrysler workers at the company's business center that it should refrain from such practice.
Napleton Automotive alleged Fiat Chrysler moved on to other dealers who would participate in the arrangement. Nappleton Group , the 31st largest automotive group in the U.S. in 2014, claimed that a competing dealership falsely reported 85 vehicle sales and received $10,000 from FCA as a reward.
The suit filed on Tuesday in the U.S. District Court in Chicago claimed that Fiat Chrysler was aware of the practice, and disguised payments to dealers as incentives in order to protect them from a sales audit.
Napleton Automotive asks the court to damages from allegedly being excluded from a bonus program and the amount needed to cover costs and attorney fees.
Fiat Chrysler denied the allegations, saying the claims was without merit and that it had been "discussing with the dealer group the need to meet its obligations under some of its dealer agreements".
The head of Philadelphia FCA dealership and the former head of the FCA's national dealer council, David Kelleher, told Reuters that all the sales reported are real. Kelleher said that Napleton's dealers lost in a strategy that rewards meeting sales quotas. He said that FCA has an internal system that prevents false reports.
According to The Wall Street Journal, the lawsuit sent Fiat Chrysler shares down 4.5 percent in Thursday afternoon trading on the New York Stock Exchange.
Fiat Chrysler rountinely pay bonuses to dealers who increase their sales or quickly sell out of older models to make room for newer cars. The carmaker reported selling 2.24 million vehicles in the U.S. in 2015, which is the sixth consecutive year of sales growth.