The Wall Street Journal has revealed that BMW is accused of falsifying sales data and is being investigated by the SEC – U.S. Securities & Exchange Commission. The regulator holds primary responsibility for enforcing federal securities laws. The government department acts as a kind of check-and-balance system to ensure the validity fairness of organisations operating within the USA. The SEC is pursuing BMW over the practice of “sales punching”. Sales punching works when a company such as BMW instructs their car dealers to register cars and list them as sold. In actuality, the registered cars remain unsold.
In fairness, if one can use such a term, the SEC is also investigating other car companies who engage in using the very same sales malpractice. Fiat Chrysler recently revised several years of monthly sales increases once the SEC started sniffing around. So why do companies use “sales punching”? Afterall the likelihood of getting caught and fined by federal regulators is a possibility not to be ignored.
The reason is always to do with money. For a company such as BMW, a successful sales year can generate positive headlines in the motoring press and at large. The media tends to believe anything a “respected” organisation says. With BMW, acting like a lap dog gains trust in the media and therefore access. But the latter is rather superficial as much as it is damning about the motoring media at large.
The real issue here is that BMW committed fraud. Fraud is fraud whether its low level or high level, in this case, BMW has committed a very high-level fraud. Overstating sales increases share price thus fooling investors to plough more money into stocks that are overvalued.
In the short term, there is one main beneficiary to “sales punching”… BMW executives. Executives get rewarded with bonuses and promotions whether it’s at the dealerships or the BMW boardroom. It literally is money for nothing. BMW acknowledged the investigation and would not comment further with the on-going procedures.
Will this case affect BMW’s public image? No not one bit, BMW is always in demand. The only issue is we now know that the demand isn’t as intense as we were led to believe.
