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Fiat Chrysler Inflated Sales Numbers, Leads To Class Action Lawsuit By Shareholders

By Jinger Jarrett
Published on: 08:23 PST, Jul 30, 2016

Fiat Chrysler is struggling as it was recently revealed that the car maker inflated its sales numbers and claimed thousands of car sales that never happened. A class action lawsuit by the shareholders in now taking place as Fiat Chrysler plans to stop making small cars to focus on making Jeeps and Rams.

Jalopnik reported that Fiat Chrysler had been posting thousands of sales, but the data pointed to the sales being fake. Fiat Chrysler is being investigated by the Federal Bureau of Investigation (FBI) and the Securities Exchange Commission (SEC).

Two company sources reported that Fiat Chrysler executives ordered an internal review in 2015 that discovered the thousands of fake sales where there was no buyer. Another insider at Fiat Chrysler said that the employee turnover rate was four times higher at the company’s nine business centers than the rest of the company.

The over-the-top sales allowed the company to set a record of 75 months in a row where the high sales were the longest running active streak of any auto maker. Reid Bigland, the U. S. sales head, put a stop to the practice after it was discovered, and lawsuits were underway.

The Car Connection reported that the sales stats were inflated, and the SEC and the U. S. Justice Department were set to investigate. In January, two dealerships filed lawsuits against Fiat Chrysler claiming that Fiat Chrysler had ordered them to inflate their sales claims. Although the lawsuit didn’t explain exactly how the sales were recorded, it did state the following.

“FCA asked the dealerships to submit inflated sales stats on the last day of particular months, then back the sales out of the system on the following day. Doing so would have allowed the false sales to be counted for the given month, but kept the factory warranties on the affected vehicles from being processed, which would’ve made backing the sales out of the system more difficult to do.”

Tech Times reported that Fiat Chrysler would stop making small cars in the U. S. and would focus on the Jeep and also Ram trucks instead. Sergio Marchionne, CEO at Fiat Chrysler made the announcement and said that the last cars would roll off the assembly line at the end of 2017. Factories that are currently assembling the Dodge Dart and Chrysler 200 will stop building the cars and switch to delivering SUVs and trucks. Fiat plans to invest $1.5 billion in its assembly plant in Sterling, Michigan.

The Sterling, Michigan plant was responsible for assembling the Chrysler 200 C, and with the decline in car sales, approximately 1,300 employees were laid off from the plant. Once the plant is upgraded, it will be used to assemble the Dodge Ram trucks.

In a press release released through PR Web, it was announced that the shareholders of Fiat Chrysler were involved with a class action lawsuit against the company. The class action lawsuit was recently announced and filed by the law firm Kessler Topaz Meltzer & Check, LLP and covers the purchase period between October 29, 2014 and July 18, 2016.

Shareholders who purchased the Fiat Chrysler stock have until September 27, 2016 to petition the court to be appointed a lead plaintiff in the case. The complaint alleges that Fiat Chrysler failed to reveal the true financial condition of the company to shareholders who purchased the stock. Specifically, this meant that Fiat Chrysler inflated their sales figures to inflate the price of the stock.

[Photo by Sean Gallup/Getty Images]

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