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 The letter said about $60 million a day is being withdrawn from the account, which is "well above our historical daily advances."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.
But I thought Paulson said the banks were all fixed now!
Good to hear from MI and what the local media says.
For those of us living here, the buzz has been Chrysler will not make it, if anything the money will be for the orderly dis-assemblage of them. Who gets the Ram Truck, who gets Jeep and who gets the Mini-Van ( the big prize IMHO).
The big looser in this? VW.....
Their highly rated van (more than Chrysler products) are made on the same assembly line.
The cash management fund is obviously the dealer’s money. My understanding is that debits and credits are constantly flowing back and forth between mfr and dealer, and thus it works smoother if the dealer simply leaves funds in the cash mgmt account that Chrysler can deduct from when cars are purchased or add to when cars are sold that are Chrysler-financed.
No, the floor plan is funded by dealer deposits in a “floor plan fund”, and the dealers are withdrawing their deposits.
Well, duh. Chrysler has been crying bankrupt for months - would you lend them money?
Don't let a little thing like facts stand in the way! LOL
I think that under the more recent GM contracts, worker compensation comes to about three dollars more an hour than their foreign counterparts. It's not huge sums of money.
No, I must as smart as you. LOL
I agree with your comments. They seem to be fabian socialists one and all.
We create the problem and then promise you we’re the ones to rescue you.
And Bush didn’t out them for it. That’s a shame...
Geez, and the union workers wonder why the real 'working man' hates their guts and doesn't want to bail them out.
I used to live 20 minutes north of the Chrysler HQ in Auburn Hills. So much of the local economy was automotive-related I tried to keep up on the news. I can’t help but remember the day Chrysler gave the UAW EVERYTHING that they asked for during contract talks. EVERYTHING, they didn’t even negotiate. You could hear the disbelief in the reporters’ voices, wondering “what were you thinking??”
Now we know. They weren’t thinking. And now they want the US taxpayers to bail them out of this huge mess.
Just like it was all through the Clinton administration...nothing but good news. All lollipops and roses.
I haven't been to a dealership in 20+ years, other than to buy a small part or two. I got me a private mechanic who is doing well for himself and for me. Location: top secret. Don't try to tail me, either.
I know a guy that works for a supplier to the big boys. Last week the owner said, “Bye. See you January 15.” I guess he felt this coming, too.
One extra week, wow
kinda like rubber necking a wreck on the inteerstate...
Related - “Chrysler Suppliers are Demanding Cash”:
http://www.freerepublic.com/focus/f-news/2148281/posts
If they’re not building cars, they don’t have delivery trucks showing up at the docks looking for cash.
As in, "Where in a real fix now!"
>>Just file Chapter 11 and be done with it.
L <<
I don’t believe the Dems will allow that since a bankruptcy filing would reopen the union contracts...
“Does anyone know if the workers get paid anyway?”
UAW employees get 95% (!!!) of thier base pay.
All other employees get SCREWED...
According to CNBC, UAW workers get 95% of normal wage during the shutdown.
I worked for Montgomery Ward at one time and the company that makes a famous blue jean brand demanded pre-payment for all invoices.
Such a pity...maybe they should close the plants permanently.
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