BMW – Bayerische Motoren Werke AG (ETR: BMW) stock closed up 2.68% to 64.03 Euros on Monday, with investors buoyed by last week’s settlement in the US.
The German car manufacturer has agreed to pay an $18 million fine to settle allegations that it inflated its monthly sales numbers in the US for five consecutive years.
BMW and two U.S. subsidiaries settled with The US Securities and Exchange Commission after being accused of disclosing misleading information whilst raising approximately $18 billion in a number of corporate bond offerings.
It was alleged that between 2015 to 2019, BMW inflated reported retail sales in the US. The misleading information helped BMW close the gap between the real retail sales volume and internal targets and “publicly maintain a leading retail sales position relative to other premium automotive companies.”
The SEC confirmed that BMW cooperated with the investigation. BMW AG, BMW North America and BMW US Capital neither admitted nor denied the allegations. However, as well as agreeing to pay the fine, all three also agreed to stop violating securities laws.
Stephanie Avakian, the SEC director of the division of enforcement said of the BMW settlement:
“BMW paid dealers to inaccurately designate vehicles as demonstrators or loaners so that BMW would count them as having been sold to customers when they had not been.”
“BMW misled investors about its U.S. retail sales performance and customer demand for BMW vehicles in the U.S. market while raising capital in the U.S.,”
BMW said in a prepared statement:
“There is no allegation or finding in the order that any BMW entity engaged in intentional misconduct.”
“The BMW Group attaches great importance to the correctness of its sales figures and will continue to focus on thorough and consistent sales reporting.”
Not the First Car Manufacturer Caught Out
BMW (ETR: BMW) is not the first major car manufacturer to face penalties for inflating sales figures in recent years. Last year, Fiat Chrysler settled an SEC complaint for $40 million. The SEC alleged that the automaker misled investors by inflating its monthly numbers over a five-year period.
According to the SEC, between 2012 and 2016, Fiat Chrysler US issued press releases on a monthly basis which falsely reported new vehicle sales. FCA US also falsely touted a “streak” of consecutive monthly year-over-year sales growth. However, the growth streak had been broken in September 2013.
In 2017, General Motors Co. agreed to pay a $1 million settlement with the charges from the SEC that the US auto giant failed to inform its accountants in a timely manner, of a defective ignition switch which prevented them from evaluating the impact of a recall or potential financial losses.
