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FCAU keeps plunging after lawsuit

Discussion in 'Car Dealer Hangout' started by Dave Z, Jan 18, 2016.

  1. Dave Z

    Dave Z It's me, Dave
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    A single dealership group, Napleton, filed a civil racketeering suit against FCA US, claiming that the company was bribing dealers to claim fake sales and then back them out of the system days later. Comments at Allpar and Automotive News, which first filed the story, indicate that the dealerships are not FCA’s most reputable, tend to underperform, and that FCA tried to close one of the dealerships (Ed Napleton Dodge of Westmont, Illinois) in 2009.

    [​IMG]

    The result, though, was devastating. While the stock market as a whole fell, FCA had been gaining on the launch of the 2017 Chrysler Pacifica. The lawsuit overshadowed the new minivans, and the stock of both FCA (FCAU) and Ferrari (RACE) have been falling ever since. FCAU is now at $7.34 per share, and RACE is at $40.02 (the Ferrari stock may be falling for other reasons; it has lost well over 10% of its value since FCAU owners were given shares.)

    FCAU had risen up to $11.24 per share earlier this year. It reached $8.19 on Tuesday, following the new vans, in a falling market; and has since slid every day.

    FCA reacted fairly slowly, giving Automotive News a “no comment” while it launched an internal investigation. After the story went public, it took around a day for FCA’s reaction — categorically denying the claims, citing an internal investigation — to be posted.

    [​IMG]

    Automotive News’ Larry Vellequette asked analysts about the drop in the stocks. He reported that analysts are more concerned about whether FCA can reach its ambitious sales targets for the 2018 plan, and that the suit probably did not indicate any lawbreaking. FCA carries a worrying amount of passenger-car inventory, and the Alfa Romeo gamble is seen as risky. The company has increased year-over-year sales in the US every month for 69 months, but calling the legitimacy of that record into question may have been the final straw.

    The “scandal” may also be totally unrelated to FCAU’s drop; stocks in general have been falling rapidly as oil reaches dangerously low prices and China’s internal troubles panic the markets. As investors go to safe havens, FCA and RACE may simply be too risky for some.

    Read the whole post here.
     
  2. Fast Eddie

    Fast Eddie Valued Member
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    Now is the time to buy more FCAU stock!!!
     
  3. ImperialCrown

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    I think that generally everyone's stock is down on the China and Oil jitters. The media portrayal of the FCA dealerships lawsuits were unfortunate, but the 24-hour news cycle has passed. Hopefully this kerfuffle won't drag on and will disappear into the background.
    News out of the Chinese markets looks good today.
     
    Bob Lincoln likes this.
  4. Dave Z

    Dave Z It's me, Dave
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    Yes.

    That said, I was watching the stock hour by hour. It started climbing against the market when the minivans were shown and crashed as the market rose when the lawsuit came.

    Today we will see what we will see.

    Yes, now IS the time to buy FCAU stock... if you realize that any stock purchase is a gamble.
     
  5. Robert Johnson

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    The 5 year agreements that Fiat dealers signed in 2011 are coming up for renewal........there are some whispers that there are a lot of Fiat dealers are refusing to renew.
     
  6. ScottB

    ScottB Active Member

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    Gee, what a surprise! :p Guess they don't like bleeding money.
     
    Robert Johnson likes this.
  7. runfromcheney

    runfromcheney Member

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    I think it is more from fears that another recession is around a corner thanks to China and Brexit. The general opinion is that FCA can't survive a downturn in its current condition as profits are too thin and its debt load is too high...they are the only automaker with a negative industrial value due to it's huge debt load. Ford is in better shape but all the debt they loaded up on to survive the 2008 downturn is a reason why their stock price has been stuck for the past couple years.

    [politics removed]
     
    #7 runfromcheney, Jul 17, 2016
    Last edited by a moderator: Jul 18, 2016
    Prabhjot and floridaman2013 like this.
  8. Dave Z

    Dave Z It's me, Dave
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    FWIW, SM has planned to be “net positive” in 2018. It’s one reason why he did not expand more when he could. Yes, the factory swap will be expensive, but anyone else would have built a new plant (or, less likely, revived an old one) and then dropped, say, Warren.
     
    Prabhjot likes this.
  9. Dave Z

    Dave Z It's me, Dave
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    I don't think I need to tell you to keep your politics away from your keyboard. Next time it's an official warning.
     
  10. ImperialCrown

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    I see that this has matured into an FBI/SEC investigation.
    FBI, SEC investigating FCA
    These are serious accusations. All parties had better have all their proof available for government scrutiny.
    GM had a similar lawsuit against it from a dealer(s) and was cleared of wrongdoing. Hopefully the same happens here.
    I have worked at dealers that were under audit or had warranty claims denied/charged-back or felt that the company somehow discriminated against them. It sounds like sour grapes, but I will be interested how it turns out.
     
    Dave Z and MPE426HEMI like this.

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