Fiat Chrysler VGP Dealership Lawsuit

The plaintiffs in this lawsuit allege that Fiat Chrysler (FCA) has engaged in and continues to engage in a performance driving program dubbed “Volume Growth Program” (VGP) in which dealers that sell higher volumes of vehicles can attain a VGP status.  The VGP program provides dealerships subsidies on each and every new motor vehicles sale that other dealerships cannot attain and has led to many dealers falsifying sales reports.  This unfair competition scheme sows a “pattern of racketeering activity” and has allowed to company to used false sales numbers to increase its stock as well as invest in conspiring dealerships.

            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.  The VGP program is arbitrary and capricious due the fact that Fiat Chrysler is strong-arming its dealers to achieve sales numbers that are untrue and not clearly defined.  If they do not reach VGP levels, the level increases 20% the next month, further encouraging dealers to submit false sales reports, which keeps the VGP level relatively deflated.  Dealers are also rewarded for “earn and turn” practices.  This is when Fiat Chrysler rewards dealers selling a particular model with more of that model, at the expense of other dealerships.  This encourages false reporting to obtain better vehicles.   Fiat Chrysler further encourages false reports by rewarding local managers with monetary and quarterly bonuses which are directly related to reported vehicle sales numbers.  These sales reports have been used to encourage investment into the company.

            The plaintiffs in this case, Napleton’s Arlington Heights Chrysler Dodge Jeep Ram and Napleton’s Northlake Chrysler Dodge Jeep Ram are two Fiat Chrysler dealerships in Illinois that do not participate in the VGP.  Dealership owners who choose not to participate in the program are not eligible to get into a “bonus round” in which incentives to dealers significantly increase, according to the complaint.  They are also not eligible for Chrysler’s “earn and turn” program in which dealers who sell a large amount of a make and model vehicle receive more of that vehicle.  Because the plaintiffs do not engage in falsified reports, they cannot say that they sell more desirable models, so in turn they receive less desirable vehicles. 

            Based on all the facts, the plaintiffs allege that Fiat Chrysler committed a “pattern of racketeering activity,” violated the Clayton Act, violated the Robinson-Patman Act, violated the Federal Automobile Dealer’s Day in Court Act, and violated 815 ILCS 710/4(b).

Article Type: Lawsuit
Topic: Antitrust
No case events.
Tags: Collusion and Price Fixing