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Dealer chain accuses FCA of paying dealers to pad sales [UPDATE]

UPDATE: The story has been updated to include a full press release from Fiat Chrysler Automobiles on the Napleton Automotive Group's allegations. A Chicago-based dealership group has filed an explosive lawsuit against Fiat Chrysler Automobiles accusing the company of paying dealers to fake new-vehicle sales, Automotive News reports. Edward Napleton, president of the Napleton Automotive Group, filed the suit on Tuesday. It claims that FCA offered Napleton money to fudge end-of-month sales figures. According to the filing, dealers would report false transactions, only to "back out" at the start of a new month "before the factory warranty on the vehicles could be processed and start to run." According to Automotive News, FCA was aware of the false reports and rewarded dealership managers for hitting sales targets. The lawsuit cites one example at Napleton Arlington Heights Chrysler Jeep Dodge Ram where an FCA business center manager offered Napleton $20,000 "to falsely report the sales of 40 new vehicles." The payment would be disguised "as a co-op advertising credit to the dealer's account." Such a move would prevent a sales audit, AN reports. Napleton rejected the deal, telling FCA it was illegal. He later learned a similar arrangement was made with a competing dealer to falsify the sale of 85 vehicles. They were given "tens of thousands of dollars as an illicit reward for their complicity in the scheme." FCA has vehemently denied the accusation in a statement obtained by Automotive News. "While the lawsuit has not yet been served on FCA US, the company believes that the claim is without merit and was filed by internal counsel to the dealer group as FCA US has concurrently been discussing with the dealer group the need to meet its obligations under some of its dealer agreements," the statement said. "The company is confident in the integrity of its business processes and dealer arrangements and intends to defend this action vigorously." There are additional allegations, as well, claiming FCA "strong-armed its dealers to achieve sales numbers" and accusing the company of maintaining a "pattern of conduct towards its dealers [that] has been one of coercion and threats of termination having nothing to do with the actual performance of its dealers." FCA is riding a wave of 69 consecutive months of year-over-year sales gains. More on this one as it becomes available. FCA Strongly Rejects Allegations by Two U.S.

GM says it favors fuel-efficiency rules based on historic rates

WASHINGTON — General Motors backs an annual increase in fuel-efficiency standards based on "historic rates" rather than tough Obama era rules or a Trump administration proposal that would freeze requirements, according to a federal filing made public on Monday. The largest U.S. automaker said the Obama rules that aimed to hike fleet fuel efficiency to more than 50 miles per gallon by 2025 are "not technologically feasible or economically practicable." The Detroit automaker said that since 1980, the motor vehicle fleet has improved fuel efficiency at an average rate of 1 percent a year. Fiat Chrysler Automobiles NV said in separate comments that the auto industry is complying with existing fuel efficiency requirements by using credits from prior model years. As a result, even if requirements are frozen at 2020 levels, "the industry would need to continue to improve fuel economy" as credits expire, it added, warning if the government hikes standards beyond 2020 requirements "the situation worsens ... without some significant form of offset or flexibility." Fiat Chrysler and Ford urged the government to reclassify two-wheel drive SUVs as light trucks, which face less stringent requirements than cars. A four-wheel drive version of the same SUV is considered a light truck. Ford backs fuel rules "that increase year-over-year with additional flexibility to help us provide more affordable options for our customers." GM's comments said it was "troubled" that President Donald Trump's administration wants to phase out incentives for electric vehicles. The Trump plan's preferred alternative freezes standards at 2020 levels through 2026 and hikes U.S. oil consumption by about 500,000 barrels per day in the 2030s but reduces automakers' collective regulatory costs by more than $300 billion. It would bar California from requiring automakers to sell a rising number of electric vehicles or setting state emissions rules. The administration of former President Obama had adopted rules, effective in 2021, calling for an annual increase of 4.4 percent in fuel-efficiency requirements from 2022 through 2025. GM has been lobbying Congress to lift the existing cap on electric vehicles eligible for a $7,500 tax credit. The credit phases out over a 12-month period after an individual automaker hits 200,000 electric vehicles sold, and GM is close to that point.

Fiat Chrysler CEO Marchionne's health crisis forced succession scramble

Former Fiat Chrysler Chief Executive Sergio Marchionne for more than a year assured investors that he and the automaker's board were working on an orderly succession plan ahead of his expected departure in 2019. But a health crisis that left 66-year-old Marchionne incapacitated in a Swiss hospital set off a transition last week that was sudden and rushed, banking and industry sources said. The company announced on Wednesday that Marchionne had died, succumbing to complications from surgery. It emerged that Marchionne's successor was far from settled. Indeed before last week's crisis, many company executives remained in the dark, four banking sources who spoke to Fiat Chrysler executives told Reuters. The scramble to replace Marchionne led to the resignation of a senior executive who was passed over for the top job, the sources said, and exposed fissures between the Italian and North American sides of the world's seventh-largest automaker. Fiat Chrysler Chairman John Elkann named Michael Manley, head of the company's Jeep and Ram truck divisions, to replace Marchionne at an emergency meeting in Turin, Italy on Saturday. In doing so, Elkann followed Marchionne's wishes to appoint Manley his successor, two sources said. The company has portrayed Manley's appointment as the product of lengthy deliberation. "Sergio and John have always been totally aligned on the choice of Mike Manley," Fiat Chrysler's main spokesman Mike Keegan said on Tuesday, when asked whether there were differences over the succession. Elkann's office declined to comment. Manley could not immediately be reached for comment. This description diverges from what Marchionne himself told investors on June 1 during a day-long strategy presentation in Balocco, Italy. Marchionne said that he and Elkann "from time to time have these chats" about succession, but the issue would not be decided until next year. "It's a 2019 issue," Marchionne said. "So it's not going to happen until we close '18. It just won't happen." He went on to say that the company's board would not engage in a "rubber stamp process." Some analysts have also expressed skepticism that a final decision had been made. "My view is Marchionne and Elkann were still arguing about succession and had different views on the right candidate," Sanford Bernstein analyst Max Warburton said in a note on Monday, referring to the June 1 presentation.