The U.S. Justice Department and the Securities and Exchange Commission are currently investigating allegations made earlier this year by an Illinois car dealer that Fiat Chrysler Automobiles NV (FCAU) inflated its monthly sales figures. Edward Napleton, the dealer, said in a lawsuit filed against Fiat Chrysler that the car maker financially rewarded sellers for fabricating sales data, reported the Wall Street Journal. Fiat Chrysler dismissed this claim as "baseless" this past March.
Alleged Pressure From Chrysler
Since exiting bankruptcy protection in 2009, Fiat Chrysler has enjoyed 75 consecutive months of year-over-year sales increases. Much of that has been attributable to a strong consumer demand for its popular Jeep sport-utility vehicles. According to the journal, some dealers say that Fiat Chrysler has pressured them to "keep the streak going even as new-car demand cools." (See also: Who Are Chrysler Fiat Automobiles' Main Suppliers?)
On July 11, the inquiry reached a critical juncture when FBI agents visited the homes of several Fiat Chrysler regional managers, some of whom were named in the dealer's lawsuit, although they aren't defendants in the case, Napleton's lawyer told the news outlet. Napleton alleged that Fiat Chrysler offered his company $20,000 to manipulate sales figures for 40 of their cars. He said that he nixed the offer and advised others to do the same. This caused Fiat Chrysler to make their offer to other more amenable parties.
Bullish Sales Forecasts
U.S. car sales figures are based on prior month's sales. The Journal noted that some car makers say dealers can buy cars to meet monthly sales goals. This is commonplace "and a way to supply dealers with extra cars for driver-testing and service-department loans." At the same time, it's also a problematic practice because it could lead to an excessively bullish industry forecast.
The Journal further added that it is unclear whether regulators are investigating whether Fiat Chrysler dealers are incorporating their own car purchases in monthly reports to boost retail sales.
The company's U.S. sales were up 7% during the first half of the year versus 1.5% for the industry as a whole. Last year Fiat Chrysler was hit with safety issues that led to fines and recalls.
Defective Jeep Gear Shifts
Recently, owners of some of Fiat Chrysler's newer Jeep models sued the company saying that it has a defective gear shift that can cause vehicles to roll away without a driver, resulting in injuries and accidents. This defect has been responsible for 41 injuries and played a key role in the death of actor "Star Trek" Anton Yelchin, who was killed when his 2015 Jeep Grand Cherokee rolled down his driveway and pinned him against his brick mailbox, said a press release by the automotive consumer-rights law firm Hagens Berman.