Volvo China Caught Claiming 7,000 Phantom Sales

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has caught its Chinese dealers cheating when reporting sales in 2011 and 2012. After an investigation into its inventory, Volvo found that its Chinese dealers were mis-reporting sales to get cash rebates for hitting sales targets.

Volvo began the investigation when sales fell 11% in China in 2012 after increasing by 15% in 2011. It found that half of its 151 dealers misreported sales in 2011 to get the rebates.

The problem was that once the dealers reported sales, Volvo shipped them cars to replace the sale. So in 2012, the dealers had twice the cars on the lot, and they did not want them replaced. Their solution was to under report sales in 2012. Volvo believes that sales actually increased by 15% in 2012 instead of decreasing by 11%.

The report indicates of the 47,140 Volvo sales in China in 2011, about 7,000 were fake.

Volvo is now cracking down on the dealers and will send investigators to Chinese dealers occasionally to check stocks.

Source: Reuters