While the matter was heard within US jurisdiction, the implications may generate repercussions within Australia as the internal VFACTS numbers continue to show that plus or minus 150,000 vehicles a year are “called” by dealers who are under pressure from falling short of sales targets and have no choice but to achieve target bonuses or close their doors.

The lawsuit, taken against FCA by seven of its US dealers, has now been settled and the details suppressed.

But it has left in its wake a series of questions with regulators about the legality of the alleged practice of fictitiously calling cars as retailed to meet OEM targets in order to provide bonus payments to participating dealers and generous bonuses to management within the OEMs.

The lawsuit, filed in January 2016, described the participating FCA retailers as “conspiring dealers” and accused FCA of “racketeering”. The racketeering allegation was subsequently dismissed.

The heart of the action alleged that FCA conspired with certain dealers to falsely claim fictitious sales in return for “tens of thousands of dollars” thus giving those dealers an unfair competitive advantage against non-participating dealers in that market.

As well, because they were able to meet targets, the “conspiring dealers” were given preferential access to fast-moving and high-margin models. By not taking part, non-conspiring dealers were excluded from various bonus programs, the lawsuit alleged.

The lawsuit said that FCA routinely attempted to avoid detection of the bonuses because it “could possibly expose the conspiring dealers to a sales audit which would require them to disgorge any monies made as a result of its over-reporting of sales”.

It said FCA disguised the increased payments to the “conspiring dealers” as things such as “CoOp money and/or factory-based incentives, not directly tied to sales”.

The court papers said that FCA also consistently sought to “directly control and otherwise intimidate dealers to bow to its will under the constant threat of the termination of their dealerships for contrived defaults in FCA’s dealer agreement”.

When details of the lawsuit emerged, FCA found itself facing actions on a number of unexpected fronts.

Firstly, the company was forced to restate its sales figures for the previous five-and-a-half years by eliminating any bogus numbers which were so great that the numbers had distorted the company’s results. As a result, claims of a sales growth streak over three years had to be reversed and the sales accounts restated.

The “falsification of the sales numbers and the subsequent restating of the correct number” for the five-and-a-half years then attracted the attention of shareholders who claimed the company had artificially inflated the price of FCA shares by making false statements about sales levels.

This attracted two lawsuits from shareholders which court documents say were settled by FCA for $US14.75 million ($A20.6 million).

But the matter is not over.

According to Bloomberg, the court action by the FCA dealers attracted the attention of the US Securities and Exchange Commission which is asking whether the mis-reporting of sales on such a scale amounted to attempt to deliberately mislead shareholders about the true financial condition of the company. This could be interpreted as falsely manipulating the share price of the company.

Bloomberg said: “The probe is ongoing.”

By John Mellor