Volvo China Dealers Caught Falsifying Sales Report

Published: Thursday, March 28, 2013, 12:40 [IST]

Volvo Car Corporation, a wholly owned subsidy of Chinese Zhejiang Geely Holding Group has uncovered a widespread case of cheating by its Chinese dealerships. The case came to light after the management grew suspicious over the sales reports submitted by the dealers, which showed discrepancies with sales estimations.

An internal source from Volvo Car has revealed to Reuters that out its 151 total authorised dealers in China "half the dealers" largely over reported 2011 sales report and to balance the figures, vastly under reported sales in 2012. All this was done to avail special cash incentives, which the automaker provides to its dealers on reaching certain milestones.

In 2011, these dealers reported the sale of 47,140 Volvo cars, which was in fact 7000 more than the actual figure of 39,871. Naturally, this created an excess stockpile of unsold cars in the dealerships. Thus, the dealers were forced to report lower sales in 2012 to clear the excess stock. This resulted in a sales drop over the past year, when in fact sales had increased by 11 percent in 2012.

Volvo Cars did not incur any material losses due to this fiasco because the automaker books sales once the cars are shipped to dealerships and not after they are sold. Never-the-less, this has created a havoc of sorts since it led to the company making wrong estimates and plans based on the false reports.

The Swedish automaker has since then let all its Chinese dealers know that future practises such as these would not be tolerated.