Friday , January 22 2021
Breaking News
Home / Automobiles / U.S. Investigates Fiat Chrysler Over Sales Figures
U.S. Investigates Fiat Chrysler Over Sales Figures

U.S. Investigates Fiat Chrysler Over Sales Figures

WASHINGTON: Fiat Chrysler Automobiles has been on a hot streak for more than six years, reporting growth in new car sales in the United States for 75 consecutive months, a feat rarely seen in the auto industry. But now the federal government is asking whether those numbers are too good to be true.

The Securities and Exchange Commission is investigating whether the company has been improperly inflating its monthly sales totals, and whether those reports have misled investors.

As part of the S.E.C. inquiry, agents from the Justice Department earlier this month visited the company’s headquarters in Auburn Hills, Mich., and business centers in Dallas, Los Angeles, Detroit and Orlando, Fla., to examine records and interview company officials, a person briefed on the investigation said.

In a statement on Monday, the company said that it was cooperating with the S.E.C. and confirmed that the Justice Department had also raised questions about its sales reports. News of the Justice Department inquiries was first reported by Bloomberg News.

Fiat Chrysler’s sales reports came under scrutiny in January when two Chrysler dealerships filed a lawsuit alleging that the company pressured them to inflate monthly sales totals.

In the statement released on Monday, Fiat Chrysler offered no details on how it counted the number of cars sold each month. But it noted that it books revenue — a key figure that must be included in quarterly S.E.C. filings — when it ships vehicles to its dealers, not when they are purchased by consumers. Such accounting is standard practice in the auto industry. The company said that its financial reports were not under question.

Fiat Chrysler’s sales have been stoked by a number of new or redesigned models that have benefited from low gas prices. These include the Ram pickup truck and two Jeeps, the Cherokee and the Renegade.

But the Italian-American company has reported only solid, not spectacular, profits. For 2015, its net profit fell 40 percent to 377 million euros, or about $415 million, as earnings from Chrysler offset weaker performance on the Fiat side of the company.

Dealers for various other car companies have complained less formally about the automakers’ pressing them to buy vehicles as a way to burnish sales data.

BMW, Nissan Motor and Kia Motors, among others, regularly pay dealers to buy cars and keep them as demonstration models or lend them to customers whose vehicles are being serviced. The result is that automakers count as “sold” cars that have never left the dealer’s lot, and often they quickly appear as “used” models although they’ve never been driven more than 10 or 15 miles.

Those companies are not known to be under investigation. But the industry practice raises questions about whether new-car sales are as robust as they appear, and whether investors are being given an overly rosy picture of auto companies’ operations.

“We will see where this Fiat Chrysler thing goes, but all carmakers are under tremendous pressure, particularly from Wall Street, to show good numbers,” said Matt DeLorenzo, a managing editor at Kelley Blue Book. “In a high-pressure atmosphere, one could speculate there could be some abuse.”

The Fiat Chrysler dealers’ suit, filed in the United States District Court for the Northern District of Illinois, also alleged that Chrysler had paid other dealers to report vehicles as sold in a particular month, and then revise the sales reports a short time later.

It was filed by two Chrysler dealerships, one in Illinois and another in Florida, that are owned by the Napleton Automotive Group. In January, Fiat Chrysler said the dealers’ lawsuit was “baseless.”