Fiat Chrysler Franchise Dealerships
Hagens Berman represents a group of family-owned Fiat Chrysler franchise dealerships in a lawsuit against FCA US LLC for a systematic inflation of sales and related conspiracy that favors certain dealers over others for their involvement.
The lawsuit states that once dealers take part in Fiat Chrysler’s volume growth program or VGP they are provided subsidies on each and every new motor vehicle sale, meanwhile, dealers who choose not to participate in the VGP do not enjoy the kickback. According to the suit, certain dealers who are a part of the VGP have reported 85 false new vehicle delivery reports and receive tens of thousands of dollars as “illicit reward” for their collusion in Fiat Chrysler’s nationwide scheme.
“FCA has and continues to engage in a practice wherein it provides performance driven incentives to its dealers. One of these performance driven programs is commonly referred to as the ‘volume growth program’ or ‘VGP,’” the complaint states. “…FCA, through its business zones, has actively solicited its VGP dealers (hereinafter referred to as “Conspiring Dealer”) to falsely report sales and thereby has created a defacto multiple tiered pricing based upon its VGP incentive program by funneling money to Conspiring Dealers.”
The suit goes on to say that Fiat Chrysler has been “strong-arming its dealers” to achieve sales numbers and that its actions have been “arbitrary and capricious as well as coercive.”
Dealership owners who choose not to participate in Fiat Chrysler’s VGP also are not eligible to get into a “bonus round” in which incentives to dealers significantly increase, according to the complaint. Dealership managers also receive monetary incentives within the program, and are further incentivized through Fiat Chrysler’s “earn and turn” practice, in which the automaker rewards dealers who sell a particular model with more of the same model. This practice, the lawsuit states, causes dealers who falsely report their sales to tend to report only the most desirable models to enhance their inventory, to the detriment of dealers who choose not to participate in the scheme.
Fiat Chrysler benefits from this practice as it results in the inflation of the number of year over year sales which, in turn, create the appearance that its performance is better than, it actually is. These results are reported to the public at large and investment community.
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