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 The letter said about $60 million a day is being withdrawn from the account, which is "well above our historical daily advances."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.
Somebody mentioned Lee Iococca and a FReeper posted a picture of Imogene Coca. Weak joke.
http://www.imdb.com/name/nm0168042/
What are you proposing — market solutions? You silly American!
I am wondering about that, as I am in the market to buy a car.
If production stops/slows, as is apparent across the board, supply will eventually get tight. Right now the dealers are saying the companies see no point in lowering prices or offering incentives (beyond the usual ones) b/c they are not working anyway-—selling a few highly discounted cars doesn’t make the program that depends on volume work.
Also there are tons of cars in paid storage in California; they took them off the boats, but had no where to transport them in the U.S. as they are all excess inventory at the moment.
But how soon this will bring down prices, I don’t know.
It was mostly conservatives who pushed “buy American,” and all that got them was the UAW buying the White House for Barack Obama-—and now refusing to cooperate, even if it means killing their companies.
So be it. I won’t be “buying UAW” again.
Except today no one really wants the fleet of cars sitting on the locks-—not even the finance company.
I’m in the market for a car and went to one dealer that had 21 copies of the model I’m looking at and had zero 2009’s on the lot. Said they “hadn’t gotten them in yet.”
Hmmm.
Right.
Then what is the point of closing down the plant for a month? The only thing they'll save money on is the electric bill.
May I ask where you got your inventory numbers, and whether such info is available for the other carmakers?
Thank you!
Yep.
“They probably have an excess of inventory right now.”
The dealers are really hurting, if you have cash you can make some super deals.
A good friend of mine just about has a dealer ready to sell him 5 Dodge diesel pickups with sticker price of $42 each for a total of $80k cash.
He doesn’t need even one at the time but it’s just tood a deal to pass up.
we have a good buddy with a car hauler that can get all 5 and transport them to California and reselling them
I’m thinking of going in half with him on them.
Wasn’t that weak.
Yes our laws are idiotic (corporatized to protect vested interests, car dealers and tax collectors).
If they are transported here, not driven, you don’t have to pay double sales tax and they don’t have to have any amount of miles on them, you can sell as many cars as you like, that 3 car thing went out over 20 years ago.
The guy i’m working with has sold at least 8 cars and trucks this year and has 4 for sale right now and he isn’t a dealer, he owns a big welding company, cars etc. are just a sideline for spending money.
He wheels and deals in clasic and custom cars on the side and ownes over a million dollars worth that he keeps in his 5,000 sq. ft. garage at his house.
Maybe they should pay the storage company in cars?
Thanks for the correction, that is good to hear.
I got it from a friend who got it from Automotive News. However, the "data" section requires a subscription which I do not have. The big 3 auto manufacturer's inventory is located there if want to sign up and pay for it.
If you would like to be added or dropped from the Michigan ping list, please freepmail me.
Oh and good luck with your venture, I hope you and/or your friend make a bundle!
no, that is a fund dealers have to pay the floorplan from. Dealers are not only scared to keep their cash with mopar, but are probably cutting inventory also
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