Pulling no punches, Fiat Chrysler Automobiles US (FCA US) slammed a racketeering lawsuit filed yesterday calling it “nothing more than the product of two disgruntled dealers who have failed to perform their obligations under agreements they signed with FCA U.S.”
Tuesday, the Napleton Auto Group, an automotive dealer chain with more than 50 stores in four states, filed suit in U.S. District Court in Chicago, alleging sales falsification, strong-arm tactics, and other actions. The dealerships named in the suit include the auto group’s Chrysler Jeep Dodge RAM dealerships in Arlington Heights, Ill., and in Lake Park, Fla. Its suit claimed, among other things, that the automaker conspired with dealers to inflate the carmaker’s sales reports. Further, the suit alleges the automaker offered dealers money to handle the report falsification.
FCA lambasted the dealerships, saying they failed to provide evidence supporting the claims before the filing of the suit. “Notwithstanding numerous requests to provide evidence of this alleged activity, the plaintiffs have refused to substantiate the claims … FCA US carried out an investigation of the facts, and has determined that these allegations are baseless, and plaintiffs were notified of this fact before they filed suit,” the automaker said in a statement.
The suit alleges dealers were paid to report false sales on the last day of the sales reporting month. After the sales were booked and reported, the dealerships then “backed them out” or canceled them (unwinding them is the industry parlance). Each sale was canceled “before the factory warranty on the vehicles could be processed and start to run,” said Automotive News today.
The trade paper pointed out that sometimes manufacturers, to encourage churn and drive higher sales, often dangle bonuses and other incentives to dealers who increase new-vehicle orders or quickly sell out of older models on a lot.
Continuing its attempt to savage the dealer, FCA accused the dealership of threatening suit if it wasn’t awarded FCA sales points. At this time, the Napleton group operates more than 50 dealerships in Illinois, Florida, Pennsylvania and Missouri, representing 32 franchises.
“This lawsuit is nothing more than the product of two disgruntled dealers who have failed to perform their obligations under the dealer agreements they signed sith FCA US,” the automaker emphasized. “They have consistently failed to perform since at least 2012 and have also used the threat of litigations over the last several months in a wrongful attempt to compel FCA US to reserve special treatment for them, including the allocation of additional open points in the U.S. FCA network,” the automaker stated emphatically. Interestingly, FCA implies that two separate dealers were making the allegation, instead of one dealer group.
Edward Napleton, dealer-principal, declined comment on the suit. In the suit, the Napleton group alleges that the dealer was offered $20,000 to report falsely sales of vehicles. He turned down the deal and told the automaker to stop the practice. Instead, FCA went on to other, more cooperative dealers.
FCA said it would not be intimidated by the racketeering lawsuit. The automaker, in a rare display of pique at the media, said that it found “it unfortunate and disappointing that reputable media would be willing to be used in questionable litigation practices without a full understanding of the facts.”