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FCA explains, updates sales reporting in wake of investigation

Fiat Chrysler Automobiles (FCA) is currently under investigation by the Department of Justice (DoJ) and Securities and Exchange Commission (SEC) for possible misappropriation of monthly sales. Not only that but a dealer group filed a lawsuit against the auto company for allegedly bribing dealers to falsify sales reports. In the wake of these mounting pressures, FCA released a report explaining their old sales reporting methods, as well as introducing the method they will use now. The report explains that sales will break down into three main categories. The first category is simply sales made by dealers in the United States that were purchased by your typical consumer. The second group is fleet sales that were purchased directly from FCA. The final group is a mix of various sales including sales by Puerto Rican dealers, cars used for marketing, and vehicles delivered to FCA employees and retirees. The original method of recording these sales relied mainly on the New Vehicle Delivery Report (NVDR). This system allowed dealers to report new car sales at the time of sale. These sales were used to create and report a total at the end of each month. Dealers also had the ability to "unwind" sales. What this means is that a dealer could cancel the sale of a car that was reported as sold in the event that a customer couldn't purchase the car or wanted a different vehicle. This would also return factory incentives to Chrysler and end the warranty period. Fleet and other sales were not recorded through this system, and were rather included in a separate "reserve" of vehicles. FCA explained that it did not know why this was the case, but the company speculated the reason may have been to avoid reporting vehicles that hadn't made it to road use yet. FCA also emphasized that their retail sales reports do not reflect quarterly earnings. The company explained that those earnings are based on vehicles purchased from FCA, which includes sales like the cars dealers buy for their local inventories. The new method also shows FCA's long run of sales increases wasn't as long as first thought. FCA has adopted a new system for calculating sales in light of concerns and confusion. This system retains the categories listed above, but changes how it counts them. The dealer reported numbers will now only include sold vehicles and will deduct sales of unwound vehicles that month.

Fiat Chrysler's Q3 profit boosted by strong North American earnings

MILAN, Italy — Fiat Chrysler Automobiles (FCA) reported a 17 percent jump in third-quarter adjusted operating profit on Tuesday, helped by a strong performance in its key North American market and improving operations in Europe and Latin America. The world's seventh-largest carmaker still makes the lion's share of its profits in North America, so improving, or at least maintaining, its margins there is a key focus. The carmaker reported an 8 percent adjusted operating profit margin in the region, up from 7.6 percent a year ago, despite a drop in sales and shipments. "FCA's profitability in North America remained strong in the quarter despite a weakening market there," a Milan-based analyst said. FCA's profitability compares with an 8.3 percent North America margin reached in the quarter by bigger U.S. rival GM , showing CEO Sergio Marchionne making progress towards his goal of closing the margin gap with GM and the company's other U.S. rival, Ford, by 2018. The company's confirmation of its full-year outlook also pushed shares higher, a trader added. The stock was up 2.8 percent by 1129 GMT, outperforming a 1 percent rise in the European auto index. FCA has been retooling some U.S. factories to boost output of sport-utility vehicles (SUVs) and trucks while ending production of some unprofitable sedans to strengthen profitability as the U.S. car market comes off its peak. The company said a drop in North America shipments due to lower fleet sales and discontinued models was partially offset by higher deliveries of Ram trucks and two models from the Alfa Romeo stable: the Stelvio sport utility vehicle and Giulia sedan. Profitability also improved in Europe, helped by sales of the Stelvio and the new Jeep Compass, and Latin America, while margins at Maserati remained strong at 13.8 percent due to strong demand for its first SUV, the Levante. In a later conference call, investors are looking for hints on the new strategy to 2022 which the company promised to unveil early next year. Chief Executive Sergio Marchionne said earlier this year that FCA would streamline its portfolio and that components businesses, including Magneti Marelli, would be separated from the group, possibly via a spin-off. While FCA confirmed its targets this year, doubts remain about its exposure to a weakening U.S. market, recall costs and potential fines over emissions after it was targeted by European and U.S.

Could Chrysler leave Michigan for Tennessee?

Detroit's Big Three could become the Big Two. According to an AP report in The Detroit News, state officials have been lobbying for Fiat-Chrysler CEO Sergio Marchionne to select Tennessee as the location for Fiat's joint headquarters with Chrysler Group LLC.
This weekend, Marchionne met with Tennessee governor Bill Haslam at a ceremony celebrating the expansion of a Fiat subsidiary plant in the city of Pulaski. The AP report does not mention any serious talks about headquarters relocation, only that Tennessee officials have been "working me over pretty well," according to Marchionne.
Fiat hopes to complete its merger with the Auburn Hills-based automaker sometime next year, and earlier reports have stated that the company is seeking $10 billion in financing to buy the remaining bits of Chrysler. If the company were to relocate, it would join Nissan and Volkswagen in having major American automotive operations in Tennessee. Of course, that whole "Imported From Detroit" thing would need to go out the window, as well.