Posted on 12/17/2008 2:31:26 PM PST by TenthAmendmentChampion
DETROIT (Reuters) - Chrysler which has over 100,000 US employees is closing it's plants for at least one month as the company does it's best to save money and sell off existing stock. Earlier in the day Chrysler LLC's finance arm has told dealers it may temporarily stop loans used by dealers to stock vehicles because the retailers pulled money from a fund that helps finance them.
Chrysler Financial Chief Executive Tom Gilman sent letters to dealers, dated Dec. 12, that asked them to refrain from withdrawing large amounts from a "cash management account" used to finance the loans, a source familiar with the letter said.
Withdrawals from the fund, which have totaled more than $1.5 billion since July, have caused a drain on Chrysler's resources and could limit the company's ability to offer financing to dealers to buy vehicles, according to the letter.
Chrysler Financial said in a statement that it finances 75 percent of all vehicles shipped to U.S. dealers and continues to support its dealer network with "uninterrupted" wholesale financing. The letter said about $60 million a day is being withdrawn from the account, which is "well above our historical daily advances."
Chrysler dealers were paid a bonus if they kept money in the account.
Talk about potential bankruptcy at Chrysler, which is seeking federal loans to survive through March, has spooked dealers, who withdrew heavily from the account in the past few months.
Chrysler has asked dealers to only withdraw "what is absolutely necessary" from the fund, according to the letter.
Chrysler, which has seen sales fall 28 percent so far this year, is also facing pressure from some suppliers who were insisting on being paid in advance for goods.
Daimler-Chrysler shareholders were practly begging Daimler to dump Chrysler in the Atlantic rather than sustain more losses.
yitbos
I believe GM is also closing all or most of it’s North American plants. As of 12/1 they have 853000 cars or 139 days of inventory. 60 days is considered normal. Ironically, the GM vehicle with the least amount of days inventory is the Suburban at 60 days. Go figure!
Boycott UAW-built automobiles.
Gotcha. Dealers are encouraged to let their gross profits build in this fund, and they’re electing not to. Nor would I.
Methinks the bottom cards in the house o’cards may be getting shaky.
MM
I always marvel when I watch the Food Network shows about how many gummiworms are produced every day in some factory, or when I watch How It's Made on the Discovery Channel and count 5-6 people total involved in the production of a complex tool. I see all the increases in productivity and I wonder how an increasing population can remain fully employed.
Wouldn't it theoretically be the case that even a consumer driven society would at times be sated enough to draw back on purchasing, or investments in productivity and supply chain management efficiencies get to the point where we just don't need that many workers for the current population? Or at least the work wouldn't be full-time anymore. If government and complex laws didn't suck a large portion of people from productive labor, it would probably have happened long ago.
or run a salvage yard...
“Methinks the bottom cards in the house o’cards may be getting shaky.”
And the wind is kicking up.
And a bunch of folks in just that situation moved to Detroit to make that money. Ford paid up to 5 dollars a day in the 20s, good money. They used firehoses (in January) to drive off job seekers.
I have a friend that fell for the ‘tires for a lifetime’ plan on the Honda Accord. I told him...did you even check what kind of crappy tires they give you PLUS Honda expects you to pay out the a$$ for all the repairs at the dealership to keep in line with the program? (NO!) He has finally caught on and told Honda to shove it. LOL! A couple weeks ago, we ordered parts over the internet from a great place, did some minor work on his car and ended up coming in $450 under what the dealership quote was.....and that just on a few items!
AMEN, if I were a bakery and bread wasn’t selling, I sure as hell wouldn’t keep baking loaf after loaf. The idiots who freak out about this, don’t understand supply/demand dynamics. If Chrysler wanted to really really move inventory, they’d slash prices to a ridiculous degree and clear inventory out. They are taking a loss as it is...
We had a large Chevrolet dealer here in Tampa shut down a month or so ago but keep the service part of the business, and the body shop, open.
Maybe the government should use the bailout money to buy several hundred thousand new cars from the Big Three, then raffle them off. The cars could be apportioned to the states based on population, like the House of Representatives and tickets would sell for a couple of dollars or so. I would think the Big Three would give them a good price on unsold, and not likely to be sold, cars.
People who are driving around in old junkers creating lots of pollution and using lots of gas would be able to spend a few bucks and maybe end up with a new car. The money the raffle raises would go to pay back the government for the money used to buy the cars in the first place.
I know the downside to this is huge, but they’ve got to do something with those hundreds of thousands of unsold cars!
In other words, they are announcing an extended Christmas vacation.
I work for a large tire manufacturing company and we have already had 3 ten day shutdown periods to reduce inventory. It sucks for the workers, who are already being sent home on a rotating basis due to lack of work, but it is a great opportunity for me to do my capital projects.
Is your podcast radio show new? And do you plan to set up RSS syndication? Let me know, I love offbeat podcasts.
I can't speak for the non union and mgt. employees but for the UAW workers, they will get their unemployment as well as their SUB payments which will equal about 95% of their basic 40 hour wage.........
Its contingent on seniority....
BTTT
Jeez...what did folks think was gonna start happening? It's not good in the short term, but if it allows the market to correct itself and let the car companies bury the unions, then this will all definitely be a good thing in the long run.
There is a storm to weather in the meantime.
Look for a Florida invasion.
Ping.
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