Report: The SEC Is Investigating BMW Over Alleged ‘Sales Punching’

The automaker says it is "fully cooperating" with the investigation

A BMW spokesperson told media outlets on Monday that the U.S. Securities and Exchange Commission opened an investigation into the Munich-based manufacturer. At the moment, the agency is working to determine whether the company engaged in inappropriate sales practices.

“We can confirm that we’ve been contacted by the SEC and are cooperating fully with the investigation,” the spokesperson said on the matter.

According to a Reuters report, BMW is being investigated for a tactic known as “sales punching”. Essentially, the idea is for a manufacturer to artificially boost its sales figures by “selling” cars to its own dealers. Even if the car is used as a loaner or a test vehicle, it counts as a retail sale for the manufacturer. Particularly in the past few years where companies have been doggedly pushing for record sales, these sales can put one automaker over the top, allowing it to claim a title as the “best-selling” brand among its rivals.

Common practice?

Sales punching is not a new concept, and BMW has underwent some scrutiny for the practice before. With other recent investigations into sales practices, the company may not be the only one to do it either. An Automotive News article from 2016 — When is a sale not really a sale? — points out that BMW may have engaged in sales punching to extend its best-seller title ahead of Mercedes-Benz and Lexus.

In 2015, BMW’s gap between its sales figures and registration stood at 3.2 percent. At the time, the company said its January registrations outpaced sales thanks to some carryover from owners being slow to register cars they bought in December 2014. However, a former BMW employee told AutoNews that the company offered dealers “Speciality 8” bonuses, offering better deals on certain cars to boost sales figures. Some of the cars dealers bought would then reportedly sit on the lot, waiting to find an actual owner to buy it. In some cases, they would be loaned out as courtesy vehicles or demonstrators.

Neither BMW nor the SEC commented further on the investigation.