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Chinese dealers of Volvo cars accused of cheating as they deceive the company about sales

Friday, 22 March 2013
Volvo Cars has revealed widespread cheating among its dealers in China. Dealers are said to have blown up the sales figures in order to get discounts as a reward for achieving certain goals, writes Reuters, citing a source in the Volvo.

The news agency writes that the Swedish auto maker Volvo has uncovered widespread cheating by its car dealers in China, where retailers inflated sales to win cash rebates from the company for hitting volume targets.

An investigation by the struggling, Chinese-owned car maker uncovered thousands of fake sales booked in 2011 -- but also an under-reporting of sales in 2012 to make the books balance. That meant it actually performed better last year than it had thought, according to a senior Volvo executive.

Volvo, owned by Chinese company, Geely Group, reported a decline sales in the Chinese market with 11 percent last year. The figure raised doubts about Volvo's approach to the important market. But it turned out that sales contrary, had increased by 15 percent compared with the year before, according to the highly placed source.

Volvo discovered the fraud last year and, at a meeting with dealers on March 7 and made it clear to them that they must cease to inflate sales.
"We think we've fixed the problem, but it was a painful process, "says Reuters source, who spoke to promise not to be named.

Volvo's press officer Per-Ake Froberg would not use the word "cheating" but told Reuters that there were questions about the reports, which did not affect the outcome, because sales are booked for deliveries and not for the order.

Whether Volvo under Geely's ownership could turn around the storied Swedish brand has broader implications for corporate China's global expansion.
Chinese companies have poured tens of billions of dollars into foreign acquisitions in recent years - much of it into resources businesses - but they have had little success digesting and managing major consumer brands, writes Rueters.
by Scancomark.com Team

Additional related link

Dealer cheating causes havoc at Volvo's China unit

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