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 The letter said about $60 million a day is being withdrawn from the account, which is "well above our historical daily advances."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.
I hope you don't have a large deposit at risk. Have you thought about trying to swap your order for one already on a dealer's lot somewhere?
I wish! We could use the business such as it is...
Get a Ford. I'll be you'll be happier. Besides, when the ignition fires-up it won't go "RShinnnnnnnng".
That’s right. No homeless, no unemployed...
Well, they have to be careful about that. If they sell at a discount now, that’s just fewer buyers at decent prices that will be left.
Yeah, it does suck. Sorry to hear it.
Congress likes to talk about the way the auto manufacturer’s ruined their business. They don’t mention that Congress screwed up the lending infrastructure and scared the s—t out the U.S. public.
Auto manufacturers are not responsible for the 45% drop in sales. Folks aren’t that unhappy with their cars. Folks are just scared to death to take on new debt. Fix Congress and our economy will get back on track by itself.
The big 3 have nothing to fear. Bush is the bailout czar. He will make a way to bail them out with or without the consent of the people, the Constitution, or congress.
This 1 month shut-down is a strategy to get the bailout money. Nothing more. Besides, if Chrysler can’t survive without taxpayer welfare, then it should shut down permanently.
Chrysler is whining that they can sell, but they can’t get the loans approved. Then maybe Chrysler has relied too heavily on sub-prime lending schemes to push it’s product, and not enough time on the quality of their product.
It’s a fact. People with good credit can still get a car loan...no problem. It’s the sub-prime folks, those with a history of not re-paying loans, who are having trouble getting car loans. So the sub-prime bubble bursts. And Chrysler didn’t know it was destined for failure? Please.
Here’s the deal. Sub-prime lending has the potential for huge profits. How so? Interest rates on the loan are the highest allowed by law, and the price of the vehicle is maximized with all the trimmings at the highest possible price. Then the typical sub-prime buyer will be sold the entire bill of goods included with the loan. ie extended warranties sold at the highest possible price, and credit life and A&H. WHAMMO! Everybody makes big money (on paper).
WHOA! Hold the presses. An enormous amount of defaults are liquidating all the profits. Well no duh. Just how long did Chrysler believe it could get away with this scam? Of course Chrysler is not the only car manufacturer involved in this sub-prime lending scheme.
In the next step in the scheme, the product (sub-prime portfolios) were sold at a discount to Wall Street investors expecting huge profits. And here we are.
I’m telling ya, you just can’t make this stuff up.
you have my vehicles!! bring them back...
Seriously.. wife has the pt/gt conv, great lil car, and I have the Ram. 6 years old and still moving along nicely.
“Just file Chapter 11 and be done with it.”
I’d have more faith in buying a Chrysler if they did that, because they would probably lose the union and have a chance at success.
I handle Chrysler products at a Tier 1. I wonder if I'm even going to have a job in the morning or much longer. :-(
If the govt. gives them a bailout, I believe they’ll need another bailout in a few months, and then another, and so on.
They need to restructure and get rid of the unions if they are to ever start making a profit again.
Here’s an interesting take:
“What’s Good for GM/Chrysler is a Chapter 11 Filing”
What is the significance of this picture? I don’t get it. Is this some type of an inside joke?
My first thought. It is probably a good time to get some bull work done in the yard or around the home. There will be some (notice I did not say “a lot”) of hands looking to keep busy and earn a few bucks under the table for a month.
I will tell you how bad it is in the auto supplier business, we shutdown the whole corporate HQ last Friday and it is going to be shutdown till the 5th of Jan. We even put the IT and maintenance guys on holiday. Also, inventories were run dry and no January orders were filled at all.
This is an interesting idea. Why should the working class support the grossly overpaid elite UAW workers who are Democratic Party loyalists?
Let them buy their own cars! Never buy a car from people who make more money than you do!!!
Point well taken. I wonder how many cars were bought over the last few years with money from home equity or refinance deals (or combinations thereof). It’s gonna take a long time — if it happens — for us to learn to live within our means.
Are they marking down their vehicles?
Prayers for your job situation. That’s a tough place to be. Hang in there.
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