A woman walks past a logo of Fiat Chrysler Automobiles (FCA) in Turin March 31, 2014.Giorgio Perottino/Reuters
Fiat Chrysler Automobiles NV said on Monday that the U.S. Securities and Exchange Commission is investigating the auto maker's reporting of vehicle sales in the United States.
The U.S. Department of Justice has made similar inquiries, Fiat Chrysler said in a brief statement on Monday, after Bloomberg and Automotive News reported that the two arms of the U.S. government were investigating the company's sales.
In its annual and quarterly financial statements, Fiat Chrysler said it reports revenues based on vehicle shipments to dealers and customers and "not on reported vehicle unit sales to end customers."
The U.S. probes follow a lawsuit filed earlier this year by a dealership group based in Chicago that claimed bonus payments to dealers encourage them to report false monthly vehicle sales numbers. The company said it is co-operating with the investigations.
The so-called stair-step incentives – which several auto makers offer both in United States and Canada – reward dealers as they hit sales targets. The payments rise as levels are met or exceeded.
In its monthly sales reports, FCA Canada Inc. says it leads the sales race in Canada.
"Dealers have become addicted (with some reason) to the massive incentive to hit 'VPA' objective," a Canadian dealer said by e-mail, referring to vehicle performance allocations, the bonuses FCA Canada gives to dealers if they meet sales objectives.
Questions were raised about the bonus system last year after searches of dealers' websites in Canada revealed many of them holding dozens of 2015 and 2014 vehicles they were calling "used" that had fewer than 200 kilometres on their odometers.
A search of the website of one Toronto-area Chrysler dealership on Monday showed that 52 of 69 used cars from the 2016 model year had fewer than 83 kilometres on their odometers.
One Dodge Charger model was advertised as having three kilometres.
Canadian dealers have said the bonus system leads some to meet the bonus targets by buying the new vehicles themselves, registering them as sold and then putting them on their used-car lots. The practice is legal.
FCA Canada president Reid Bigland, who is also head of U.S. sales for the auto maker, said last year that many of the vehicles with few kilometres on them were loaners or demonstrators and that the company tries to offer loan vehicles to all customers who bring their cars in for service.
When news of the lawsuit by the Chicago dealership group broke in January, the company said the suit was without merit and described it as the product of "two disgruntled dealers who have failed to perform their obligations."
The company also took a swipe at media outlets for reporting the details of the lawsuit.
An Illinois court is considering a motion by Fiat Chrysler to have the lawsuit dismissed.