FCA back pedals sales success

Under fire from at least one Federal probe, Fiat Chrysler has been forced into an embarrassing backdown, admitting its six-year US streak of month-on-month sales growth actually ended three years ago.

The US arm of FCA had been boasting of an unbroken run of monthly sales gains dating back to April 2010, but a Federal Government investigation has forced the manufacturer to change its sales-counting methodology. The new accounting procedures showed its streak ended in September 2013, with the full 2013 calendar year actually declining three percent.

“Our review of industry practice has not revealed a standard reporting practice,” the company admitted in a statement.

FCA, which just announced a second-quarter profit of US$353 million, up 25 per cent on a year ago, insisted the miscalculation involved only about 4500 over-reported sales out of 7.7 million, but Federal investigators haven’t taken it lightly.

There were reports yesterday that a Federal Grand Jury was about to be put into action to investigate the company’s accounting procedures for irregularities, which is particularly damning for a publicly listed company.

The news is a massive blow to FCA boss Sergio Marchionne, who said he and his company would cooperate fully with investigations by both the Securities and Exchange Commission and the Department of Justice, to determine whether the over-reporting had broken securities laws.

News of the over-reporting leaked out in January, with a group of US FCA dealers suing the company for paying more money to dealers who falsified their sales numbers. Though FCA dismissed the claims at the time, the DoJ and the SEC investigated further.