A high-stakes legal case has erupted in the United States between Stellantis Financial Services and an Alfa Romeo dealership in New York, now permanently closed, with serious allegations revolving around suspected financial fraud.
According to Automotive News, at the center of the controversy is the improper use of “floorplan” loans, a key tool for automotive dealership operations. What is floorplan financing? It’s a wholesale credit line that automotive manufacturers’ financial divisions, like Stellantis, provide to dealers to purchase vehicles for showroom display.
Stellantis takes legal action against Alfa Romeo dealership over alleged financial fraud
The vehicles, in this case Alfa Romeos, while physically present in the showroom, remain the property of the bank until they are sold. Just like a real estate mortgage, the cars serve as collateral for the loan. Once the vehicle is sold, the dealer is required to return the principal amount and accrued interest on the financing. This mechanism allows dealers to maintain a wide availability of vehicles without tying up capital, a particularly useful formula in uncertain market times.
In this case, the Alfa Romeo dealership allegedly violated contractual clauses by selling numerous vehicles without returning the amounts owed to Stellantis Financial Services, keeping the proceeds and leaving the financial group with neither money nor cars.
For Stellantis, this constitutes a deliberate and organized act, very different from insolvency caused by economic difficulties. The closure of the sales point further complicates the recovery of assets and funds, pushing the automotive group to take judicial action.
The episode involving this Alfa Romeo dealership is clear evidence of how necessary it is to strengthen internal controls by automotive groups and their financial companies, especially during a period of transformation and instability. Those who purchased a car or signed a contract with that dealership, meanwhile, could find themselves in difficulty regarding warranties, maintenance, or spare parts.
