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Dealer chain accuses FCA of paying dealers to pad sales [UPDATE]

UPDATE: The story has been updated to include a full press release from Fiat Chrysler Automobiles on the Napleton Automotive Group's allegations. A Chicago-based dealership group has filed an explosive lawsuit against Fiat Chrysler Automobiles accusing the company of paying dealers to fake new-vehicle sales, Automotive News reports. Edward Napleton, president of the Napleton Automotive Group, filed the suit on Tuesday. It claims that FCA offered Napleton money to fudge end-of-month sales figures. According to the filing, dealers would report false transactions, only to "back out" at the start of a new month "before the factory warranty on the vehicles could be processed and start to run." According to Automotive News, FCA was aware of the false reports and rewarded dealership managers for hitting sales targets. The lawsuit cites one example at Napleton Arlington Heights Chrysler Jeep Dodge Ram where an FCA business center manager offered Napleton $20,000 "to falsely report the sales of 40 new vehicles." The payment would be disguised "as a co-op advertising credit to the dealer's account." Such a move would prevent a sales audit, AN reports. Napleton rejected the deal, telling FCA it was illegal. He later learned a similar arrangement was made with a competing dealer to falsify the sale of 85 vehicles. They were given "tens of thousands of dollars as an illicit reward for their complicity in the scheme." FCA has vehemently denied the accusation in a statement obtained by Automotive News. "While the lawsuit has not yet been served on FCA US, the company believes that the claim is without merit and was filed by internal counsel to the dealer group as FCA US has concurrently been discussing with the dealer group the need to meet its obligations under some of its dealer agreements," the statement said. "The company is confident in the integrity of its business processes and dealer arrangements and intends to defend this action vigorously." There are additional allegations, as well, claiming FCA "strong-armed its dealers to achieve sales numbers" and accusing the company of maintaining a "pattern of conduct towards its dealers [that] has been one of coercion and threats of termination having nothing to do with the actual performance of its dealers." FCA is riding a wave of 69 consecutive months of year-over-year sales gains. More on this one as it becomes available. FCA Strongly Rejects Allegations by Two U.S.

Marchionne says no offers are on the table for Fiat Chrysler

MONZA, Italy (Reuters) - Fiat Chrysler (FCA) has not received any offer for the company nor is the world's seventh-largest carmaker working on any "big deal", Chief Executive Sergio Marchionne said on Saturday. Speaking on the sidelines of the Italian Formula One Grand Prix, Marchionne said the focus remained on executing the company's business plan to 2018. Asked whether FCA had been approached by someone or whether there was an offer on the table, he simply said: "No." The company's share price jumped to record highs last month after reports of interest for the group or some of its brands from China. China's Great Wall Motor Co Ltd openly said it was interested in FCA, but had not held talks or signed a deal with executives at the Italian-American automaker. The stock move was also helped by expectations that the company might separate from some of its units. Marchionne reiterated on Saturday that FCA was working on a plan to "purify" its portfolio and that units, such as the components businesses, would be separated from the group. He hopes to complete that process by the end of 2018. "There are activities within the group that do not belong to a car manufacturer, for example the components businesses. The group needs to be cleared of those things," he told journalists. Asked whether an announcement could come this year, Marchionne said it was up to the board to decide and that it would next meet at the end of September. He said the time was not right for a spin-off of luxury brand Maserati and premium Alfa Romeo and the two brands needed to become self-sustainable entities first and "have the muscle to stand on their feet, make sufficient cash". "The way we see it now, it's almost impossible, if not impossible, to see a spin-off of Alfa Romeo/Maserati, these are two entities that are immature and in a development phase," he said. "It's the wrong moment, we are not in a condition to do it." He said the concept of separating the two brands from FCA's mass market business made sense and did not rule out this happening in future, but not under his tenure, which lasts until April 2019. "If there is an opportunity in future, it would certainly happen after I'm gone. It won't happen while Marchionne is around," he said.

Chrysler dealers terminated in bankruptcy still stuck in court

Part of the deal for the federal bailouts of Chrysler and General Motors was that both organizations were required to trim their vast array of dealerships. This move did not sit well with the people that would be losing out on franchises, though, and in Chrysler's case, 148 of the shuttered dealers have fought for money they feel they are entitled to.
These dealers believe that they should be compensated by the federal government, as Chrysler wouldn't have trimmed its sales centers had it not been ordered to by Uncle Sam. Now, thanks to the ruling of three judges on the US Court of Appeals for the Federal Circuit, the dealers will get a chance to argue their point.
According to Automotive News, the dealers argue that the mandatory shuttering of dealers was unconstitutional, because the federal government was taking property without compensation. If the dealers are victorious, not only would the government be out millions of dollars, but a precedent could be set that would allow similarly closed GM dealerships to cash in.