Fiat Chrysler to pay US$40 million for inflating sales numbers

The US Securities and Exchange Commission imposed a fine of US$40 million($59 million) on Italian-American automaker FCA, over the charge of manipulating the sales figures for five years.

It is reported that Fiat inflated sales through dealers who reported fake sales and get paid for that. The firm asked the dealers to create a cookie jar of the unreported sales i.e. hide the actual sales figures in the strong months, and at the time of slow-down, get that unreported sale from the cookie jar and record them as they happened now.

The company carries this practice for five years between 2012-2016. When it discloses the sales figures in 2016, it claimed that it had a “reserve” stock of cars that had been shipped to big fleet customers such as rental car firms but not recorded as sales.

The firm is ready to pay the fine and has promised to stop this deceitful practice. Now it is committed to maintaining strong control of sales reporting standards. It also mentioned that the fine amount will not have any material impact on the financial statements of the firm.

Antonia Chion, associate director in the SEC Division of Enforcement quoted, “New vehicle sales figures provide investors insight into the demand for an automaker’s products, a key factor in assessing the company’s performance”.

She further stated that this case highlights the need for companies to truthfully disclose their key performance indicators.

Besides this, Fiat Chrysler is also facing federal investigations of illegal payments done to union officials through a training centre and also charged with allegations that its diesel-powered trucks were programmed to cheat on emissions tests. Thought the firm refused the allegations but the prosecutors have charged an employee earlier this week.

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