BMW AG BAMXF is under investigation by the U.S Securities and Exchange Commission (SEC) due to its sales practices, per Wall Street Journal.
The SEC is looking into the U.S. activities of BMW to ascertain whether it is involved in a technique known as sales punching.
A sale punching is a well-known way to boost sales statistics. It is described as a process in which a dealer registers cars that are still standing on car lots as being sold. It appears as inflated sales, which on a monthly balance sheet look good but create other problems down the line.
Notably, BMW is not the first manufacturer to be targeted over its sales practices by the U.S regulator. In September 2019, Fiat Chrysler FCAU agreed to pay a $40-million penalty to the SEC for misleading investors by inflating monthly sales figure over five years (between 2012 and 2016). The company inflated its new-vehicle sales by paying dealers to report fake sales numbers.
Notably, Fiat Chrysler joined General Motors GM and Ford F in ending the practice of disclosing monthly U.S. sales numbers. The companies will now report the U.S. sales numbers quarterly, while most of the other car manufacturers will still report results on a monthly basis.
Shares of BMW have underperformed the industry it belongs to over the past year. Its shares have appreciated 0.4% compared with the industry’s growth of 13%.
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Additionally, BMW is faced with lawsuits by European authorities on charges of collusion with rivals to manipulate prices on emissions control technologies. The Zacks Rank # 3 (Hold) company is also under pressure in the United States on account of the U.S.-China trade war, which has impacted SUV exports from its factory based in Spartanburg, SC.
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