The 12 Fiat 4x4s and 4x2s - valued at R4.7 million - were seized by the town’s Vehicle Crime Investigation Unit.
It was al erted to the vehicles by a municipal official, according to a police source.
The police, however, would not say if the official was from the local municipality.
Ladysmith police spokesperson Captain Charmaine Struwig said those involved placed the order in Gauteng using a provincial government department’s letterhead.
“We believe this is a scam and whoever is involved knew that the department that was used to place the order had some business with the municipality.
“The vehicles were ordered from a vehicle manufacturing company in March.
“Company officials received an order from what they thought was a government department.
“The vehicles were manufactured, and as per the delivery address given in the order, it was delivered to a municipal premises in Ladysmith,” Struwig said.
She said that when the municipal official was called to take delivery of the vehicles, he realised something was suspicious.
“The official was vigilant and informed the police. We contacted the provincial government department concerned and they had no knowledge of this delivery.
“We then communicated with the manufacturer who said they would open a case.
“On our side, we opened an inquiry,” she said.
Captain Nqobile Gwala, provincial police spokesperson, said it was suspected that these vehicles were part of a scam to defraud the company and that the suspects intended to move the vehicles across the border.
Fiat Chrysler would not comment on the matter. Spokesperson Ferro Domingo said they were investigating.
“Until we have more information on this we can’t say anything.
“The vehicles are still at the Ladysmith police pound and the police are still investigating,” Domingo said.
Siya Maphalala, municipal spokesman, said: “This has just been discovered, and ours is to discover how and when these vehicles ended up in municipal property. By Monday, we will have a full report.”