September 3, 2015 — Last Friday, Stuart Hayim, owner of Recovery Racing, a group that owns Maserati and other luxury franchises in New York, New Jersey and Florida, filed a $200 million lawsuit against Maserati North America alleging the automaker forced dealers to participate in discriminatory incentive and sales programs designed to prop up sales numbers prior to Fiat Chrysler Automobile’s IPO in late 2014.
The lawsuit claims Maserati rewarded dealers who agreed to “punch” vehicles with retroactive incentive payments worth thousands of dollars. Participating dealers could sell vehicles for thousands of dollars less than dealers not complicit in the scheme.
“Punching” is a common practice in the auto industry to make monthly sales numbers look better than what they actually. (Read what TBR wrote in 2014 about BMW and other automakers inflating sales. Meanwhile, another piece from TBR last October reports on the settlement of a lawsuit filed against BMW for cheating customers out of full warranties due to the practice of punching).
Typically, an automaker will “ask” — some dealers might say, demand — its dealers to classify a certain number of vehicles as being test drive or demonstrator vehicles which in essence, allows them to be classified as sold even though a customer hasn’t bought it yet. classifying test drive vehicles as as sold before they are actually purchased by customers.
With the widespread trade press attention the lawsuit against Maserati is getting, we’ll see if forces automakers to pull back from the practice.
It’s a practice many dealers don’t like because it ultimately drives down prices, even though they tend to make it back on the bonuses or incentives. But it is a problem for analysts and investors who depend on sales information being accurate — which, it obviously isn’t.