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William Maley

Chrysler News: Internal Audit Reveals FCA Found 5,000 to 6,000 Bogus Sales

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Following the news last week that Fiat Chrysler Automobiles was under investigation by both the Department of Justice and Securities and Exchange Commission over inflated sales, Automotive News has learned from various sources that an investigation done by the company revealed misreported sales numbers.


According to the sources, FCA ordered an internal review last year over their sales reporting. What the review found is "that 5,000 to 6,000 vehicles had been reported as sold by dealers and then "unwound." It is unknown the time period that was covered by the review. After the review, U.S. sales head Reid Bigland attempted to put a stop to the practice. But a source said the overstating of sales has been creeping back in this year due to increased competitive pressures on FCA's field staff. Another source says this increased pressure is causing the turnover rate of FCA's sales staff to be four times higher than the rest of the company.


But why inflate the numbers in the first place? According to the sources, the inflation was to help preserve FCA's of U.S. monthly year-over-year sales increases (which currently stands at 75 months). This run is the longest streak of any automaker and has been a source of pride for them. But interestingly, Automotive News notes that FCA stopped mentioning this fact on its March sales release. This is also the same time they added this disclaimer,


"FCA US reported vehicle sales represent sales of its vehicles to retail and fleet customers, as well as limited deliveries of vehicles to its officers, directors, employees and retirees. Sales from dealers to customers are reported to FCA US by dealers as sales are made on an ongoing basis through a new vehicle delivery reporting system that then compiles the reported data as of the end of each month."


"Sales through dealers do not necessarily correspond to reported revenues, which are based on the sale and delivery of vehicles to the dealers. In certain limited circumstances where sales are made directly by FCA US, such sales are reported through its management reporting system."


FCA declined to comment.


Source: Automotive News (Subscription Required)

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Ugly, this will snowball and hurt FCA. Hopefully the board will finally can Sergio after all it happened on his watch.

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