Two Fiat Chrysler Automobiles NV dealerships have filed a civil racketeering suit against the automaker, alleging the company offered dealers money to report unsold vehicles as sold.
The federal lawsuit alleges that the automaker’s North American-based operations “knowingly endorses and encourages the false reporting of motor vehicle sales by directly rewarding its local managers … with monetary and quarterly bonuses which are directly related to reported vehicle sales numbers,” among other claims.
The suit accuses the company of paying tens of thousands of dollars to dealers to report false sales at the end of the month. The timing, according to the suit, allowed the sales to be reported for that particular month, only then to be “backed-out” on the first of the following month before the factory warranty on the vehicles could be processed and start to run.
Fiat Chrysler says it is aware that the lawsuit was filed but “has not yet been served.” The company says the “claim is without merit” and filed concurrently with the automaker discussing with the dealer group the need to meet its obligations under some of its dealer agreements.
“The company is confident in the integrity of its business processes and dealer arrangements and intends to defend this action vigorously,” reads the company statement.
The dealers filing the suit, which was first reported by trade publication Automotive News, are part of Illinois-based Napleton Automotive Group. One is located in a Chicago suburb. The other is located north of West Palm Beach in Florida.
The establishments are seeking a judgment against the automaker as well as unspecified monetary damages that include attorney’s fees, costs and “such other relief as this court deems just and equitable.” A lawyer for the dealer group did not immediately respond for comment.
The suit specifically alleges that dealership principal Edward Napleton was asked to falsely sales of 40 vehicles in exchange for $20,000 that would have been distributed to him “as a credit under the disguise as cooperative ("Co-Op") advertising support.” Napleton, the suit says, “soundly rejected” the alleged proposal.
FCA US has recorded 69-consecutive months of year-over-year sales gains — the current longest running streak in the industry. The sales streak has been touted as recently as this week at the 2016 North American International Auto Show as a resounding achievement of the company’s plans.
Fiat Chrysler shares on the New York Stock Exchange were down 5 percent during early afternoon trading to $7.48.