- Associated Press - Tuesday, July 26, 2016

DETROIT (AP) - Fiat Chrysler has revised more than five years of U.S. sales figures and says a much-touted streak of 75 months of gains should have ended in 2013.

The company, in a lengthy statement issued Tuesday, said it would change the way it reports monthly sales retroactively to the start of 2011. The move comes as the Justice Department and Securities and Exchange Commission investigate whether the company inflated sales by pressing dealers to buy more vehicles.

Neither Justice nor the SEC would comment Tuesday. Higher monthly sales could influence the company’s stock price, although Fiat Chrysler said in the statement that its quarterly revenue figures would not change.

A chart issued by the company shows that it overstated sales for 30 months since January of 2011, while understating the numbers for 36 months. Using the new reporting method, the company’s string of 75 monthly year-over-year increases actually ended in September of 2013 at 40 months.

The net effect of the revisions is that the company actually understated its sales by nearly 19,000 vehicles during the past 5 1/2 years, Fiat Chrysler said. The company blamed the discrepancy on two sales-counting practices that it says will be stopped:

- Previously the company had a “reserve” stock of cars that had been shipped to big fleet buyers such as rental car companies but not recorded as sales. Managers had the ability to move those sales from one month to the next to make sure the company reported positive sales numbers. “Fleet sales will now be recorded as sales upon shipment by FCA US of the vehicle to the customer,” the company statement said.

- Dealers sign paperwork to sell a vehicle and then report it as a sale to Fiat Chrysler. But the sale might fall through because the customer backs out or can’t get financing. Previously FCA still counted these as sales, but made sure it didn’t count the same vehicle when it was sold later. Now the company will subtract sales “unwinds” when it finds out the deal has fallen through. When the vehicle is sold again, it will be counted as a sale.

There are no clear reporting standards for monthly sales, and criteria for a sale vary by automaker. But industry insiders say the numbers are often manipulated by both dealers and the companies.

For instance, companies will offer dealers hundreds or even thousands of dollars per vehicle if they sell a certain number above their sales from the same month a year ago. Dealers will try to make those numbers because doing so often can mean a difference of hundreds of thousands in revenue. Often dealers will buy the cars themselves, reporting them as sales and putting them in their fleet of loaner cars. Later they are sold as used cars.

“Typically the dealers could be under a lot of pressure from the companies to report sales to reach certain benchmarks to get their back-end money,” said Sheldon Sandler, CEO of a Princeton, New Jersey, company that advises dealers on when to buy and sell their businesses. “There’s nothing new about this,” said Sandler, adding that all automakers do it.

The federal probe into Fiat Chrysler’s sales began after a Chicago-area dealership group sued the company in January alleging that competing dealers got incentives to report false sales.

The Napleton dealership group contends that an FCA executive offered Napleton $20,000 to falsely report sales of 40 new vehicles. The lawsuit also alleges that the false sales give the appearance that FCA’s performance is better than it actually is.

The lawsuit alleges that a competing dealership reported 85 false new vehicle sales and got tens of thousands of dollars in return. It also says FCA offered to pay the $20,000 to Napleton disguised as co-operative advertising support.

FCA has said the lawsuit is without merit and pledged to defend itself.

FCA stock closed Tuesday up 12 cents at $7.

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide