Marchionne with accounting and law degrees without question understands FCA’s troubles.
What started earlier this year as a spat between two dealerships in Illinois against FCA’s booking as sales what were vehicles that actually remained in dealerships as subsidized loaners or demonstration units has now turned into a regulatory and legal nightmare for the Italian automaker.
Even though the practice of booking sales when a vehicle ships is universally used by automakers in the U.S., and many companies pay dealerships to have demonstration or loaner cars on hand, the lawsuit (Napleton Automotive Sues FCA for False Sales Reporting) has prompted investigations from the Department of Justice and the Securities and Exchange Commission. Fiat of course trades on the NYSE. The outcomes of both matters potentially have broad implications for the sales reporting practices of automakers and how some vehicles are invoiced to dealerships.
FCA is terse in its lawyered-up statement, saying only “that it is cooperating with an SEC investigation into the reporting of vehicle unit sales to end customers in the U.S. In its annual and quarterly financial statements, FCA records revenues based on shipments to dealers and customers and not on reported vehicle unit sales to end customers. Inquiries into similar issues were recently made by the U.S. Department of Justice. FCA will cooperate fully with these investigations.”
FCA has no choice of course. Other automakers will be following this mess closely.
