Team-BHP - Fiat probed by USA over reporting of new car sales

Yet another case of bungling Fiat performance (source: Financial Times)

Quote:

Fiat Chrysler Automobiles is being probed by US authorities over allegations that it fraudulently inflated its monthly revenue totals, the company confirmed on Monday.

Both the Department of Justice and the Securities and Exchanges Commission are investigating whether the company acted improperly when it booked sales to dealers, rather than to end customers, as completed transactions.

The group, which also makes Jeep sport vehicles and Dodge trucks, acknowledged that it had recognised revenues from selling vehicles to dealers in a statement filed several hours after a report of the DoJ probe caused its shares to fall by 5 per cent.

Source & Full Article

Unfortunate, but it's a rampant practice in the industry. Just completed the Arrogance & Accords book which details how Honda encouraged its dealers to fake retail sales & customer names. In end 2015, BMW asked a lot of its USA dealers to fudge the sales data of unsold cars. You'll be surprised how many 'used cars' there are in the USA with merely 100 miles on the odometer. Dealers themselves fake data to earn incentives. As an example, if they've sold 90 cars and there is a fat incentive on selling 100, the dealer will wrongly book the remaining 10 cars as sold to collect that incentive.

Sometimes, I do get suspicious when I see some extraordinary numbers on the Indian sales charts too. But until they are proven wrong, we have no choice than to believe them.

The article on this website does not need subscription -
http://www.usatoday.com/story/money/...ment/87251304/

Not sure I get this though. These are publicly listed companies, and they have to show revenue and profit numbers every quarter. Inflated sales records implies inflated revenues (and possibly profits). So is Chrysler Fiat being accused of accounting fraud?

For non-listed companies, I have difficulty imagining how inflating sales numbers can be helpful. After all, other than car magazine readers & auto forum members, nobody else tracks these things.

Quote:

Originally Posted by smartcat (Post 4018264)

So is Chrysler Fiat being accused of accounting fraud?

Nope. The volume of cars is the same - only difference being when they are reported as sold.

Wholesale vs retail sales. Fiat-Chrysler is reporting some wholesale sales as retail. Many manufacturers in the USA do this to 'pad up' numbers.

Fiat Chrysler revises new vehicle sales figures

Quote:

Fiat Chrysler Automobiles on Tuesday said it has revised the way it counts monthly sales figures of new cars and trucks and now says its impressive sales streak of 75 months of consecutive sales gains actually ended in September, 2013.

The automaker issued a lengthy explanation of its sales reporting practices and revised its monthly and annual sales figures in the wake of media reports and a federal investigation that questions the way it reports sales.

As a result of the changes Fiat Chrysler's annual sales totals increased in three of the past six years by as much as 14,996 cars and trucks and decreased for the other three years by as many as 8,991 vehicles, according to chart the company released.

Quote:

Originally Posted by GTO (Post 4023914)

Fiat Chrysler revises new vehicle sales figures

Yes @GTO. FCA has indeed changed the way it books sales in the US after being investigated over possible fraud by the by the SEC and the US Department of Justice.

On the flip side, some good news for FCA, at last -

Fiat Chrysler helped by robust European sales.
Source:
http://europe.autonews.com/article/2...europe-rebound

Strong growth in Europe and demand for the Jeep brand pushed profits at Fiat Chrysler Automobiles up by 23 per cent in the first half of the year.

Six month operating profit rose to €2.37bn from €1.92bn a year ago, with net revenues flat at €54.5bn, though the number of cars it sold fell 1 per cent to 2.26m.

Demand for Jeeps remained strong, with global sales of the brand up 16 per cent in the quarter. But the company said there was significant demand for the new Levante, a larger SUV-sized model, that would drive sales in the future.