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FCA Dealers Threaten To Sue Over Incentives

March 03, 2020 Eric Sorensen
IEN Radio
FCA Dealers Threaten To Sue Over Incentives
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IEN Radio
FCA Dealers Threaten To Sue Over Incentives
Mar 03, 2020
Eric Sorensen

Over the past two years, Fiat Chrysler has seen some dramatic highs and some crushing lows. After the automaker endured the sudden passing of longtime leader Sergio Marchionne in 2018, it concluded 2019 with a binding agreement to merge with Peugeot to form the world’s fourth largest car company.

Sandwiched in between these events was FCA’s quiet settlement of a lawsuit that stemmed from a 2016 case where the company was accused of manipulating dealer sales figures. A group of dealers in Illinois had held fast to a lawsuit claiming FCA was guilty of racketeering and anticompetitive practices when it pressured dealers to inflate sales numbers in exchange for a greater allotment of the fastest-selling models.

And while FCA settled this dealer suit and averted a lawsuit, it appears they weren’t able to breathe easy for long. Automotive News is reporting that a new group of dealers, this time in New York, is threatening FCA with a lawsuit for an entirely different reason.

The New York State Automobile Dealers Association has reportedly sent a cease-and-desist letter to Fiat Chrysler, alleging the auto maker’s dealer incentives give an unfair advantage to larger dealerships.

Fiat Chrysler is attempting to clear inventory at the manufacturing level, a strategy designed to avoid saddling plants with thousands of unassigned vehicles when dealer orders mismatch what’s been produced. This year, FCA is offering dealers a $1,500 voucher for every vehicle they buy from the inventory pool and some angry dealers say this is tantamount to 2-tiered pricing: rewarding larger dealers -- those, typically, with more cash to carry inventory -- by selling them vehicles at a lower price.

According to Automotive News, Fiat Chrysler claims its vehicle surplus is due to a production method that’s been trimming costs at the manufacturing level and not, as the dealers claim, because it’s over-producing and pressuring dealers to ease the glut. Bloomberg reported last fall that CEO Mike Manley said that “Working with our dealer network to achieve and maintain discipline with stock levels continues to be one of (the company’s) top priorities.”

Show Notes

Over the past two years, Fiat Chrysler has seen some dramatic highs and some crushing lows. After the automaker endured the sudden passing of longtime leader Sergio Marchionne in 2018, it concluded 2019 with a binding agreement to merge with Peugeot to form the world’s fourth largest car company.

Sandwiched in between these events was FCA’s quiet settlement of a lawsuit that stemmed from a 2016 case where the company was accused of manipulating dealer sales figures. A group of dealers in Illinois had held fast to a lawsuit claiming FCA was guilty of racketeering and anticompetitive practices when it pressured dealers to inflate sales numbers in exchange for a greater allotment of the fastest-selling models.

And while FCA settled this dealer suit and averted a lawsuit, it appears they weren’t able to breathe easy for long. Automotive News is reporting that a new group of dealers, this time in New York, is threatening FCA with a lawsuit for an entirely different reason.

The New York State Automobile Dealers Association has reportedly sent a cease-and-desist letter to Fiat Chrysler, alleging the auto maker’s dealer incentives give an unfair advantage to larger dealerships.

Fiat Chrysler is attempting to clear inventory at the manufacturing level, a strategy designed to avoid saddling plants with thousands of unassigned vehicles when dealer orders mismatch what’s been produced. This year, FCA is offering dealers a $1,500 voucher for every vehicle they buy from the inventory pool and some angry dealers say this is tantamount to 2-tiered pricing: rewarding larger dealers -- those, typically, with more cash to carry inventory -- by selling them vehicles at a lower price.

According to Automotive News, Fiat Chrysler claims its vehicle surplus is due to a production method that’s been trimming costs at the manufacturing level and not, as the dealers claim, because it’s over-producing and pressuring dealers to ease the glut. Bloomberg reported last fall that CEO Mike Manley said that “Working with our dealer network to achieve and maintain discipline with stock levels continues to be one of (the company’s) top priorities.”