By on November 12, 2009

(courtesy: weblogs.baltimoresun.com)

“I don’t see anyone bleeding to death,” Sergio Marchionne told reporters and analysts a week ago, when asked what he thought of Chrysler’s current dealer body. He might be about to change his tune. The US Treasury will stop guaranteeing GMAC’s floorplan loans to Chrysler Group dealers on the 21st of this month, and the bailed-out lender has marked over 100 dealers to be cut off. According to the Detroit Free Press, these dealers had all survived Chrysler’s dealer consolidation efforts in bankruptcy, indicating that their sales business is relatively steady. But because of huge investments made with Chrysler Financial loans at the height of the real estate market, these dealers owe more than their dealerships are worth. Chrysler Financial is winding down its business, and it refuses to give up the first right to the property as collateral. Because GMAC is now a bank holding company and requires more collateral on loans than it previously did, it wants land and buildings put up as collateral that are already securing old Chrysler Financial loans. Of course those old loans were for renovations made as part of Chrysler’s “Project Genesis,” which dealers had little choice but to participate in. If those Chrysler-mandated investments meant certain dealers were not going to qualify for floorplanning, they should have been culled during bankruptcy. Which is why NADA is appealing to Chrysler CEO Sergio Marchionne on behalf of the threatened dealers. And maybe if Marchionne takes a look into this meatgrinder, he’ll see a few dealers stuck between giant, bailed-out businesses, bleeding to death.

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8 Comments on “Chrysler Dealers Appeal to Marchionne in GMAC Dispute...”


  • avatar
    rnc

    They must get rid of dealers….Those poor dealers…???

  • avatar
    chuckR

    While almost nobody likes dealers, the all-but-in name-only  mandated improvements to dealer stores gave them a justifiable basis to bitch. I wonder how many Hummer dealers were able to retire the $15mm debt incurred to build their bauhaus Quonset hut facilities?
    It didn’t used to be like that. My uncle – father’s brother in-law – had a Cadillac-Pontiac dealership in the Finger Lakes region for decades. He ran it out out of a gloomy old ex-factory. People were buying the cars, not the themed facilities. In the end, its the customer who pays for these artsy-fartsy ‘improvements’.

  • avatar
    folkdancer

    I live 2 blocks from a full line Chrysler dealer and see this operation every day. Very little activity is going on there and it appears the dealer is moving stock around to give the appearance of activity. Much less ground is covered with cars and the cars are spread out much farther than they were a year ago.

    I wish I could see their sales reports and their light bill. How much longer can this dealer hang on? This is a big operation and part of a very big network that includes dealerships for  almost every brand of car available in the U.S. Are their Toyota, Kia, Ford, etc dealers carrying this outlet?

    Chrysler may not have to cull dealers in a few months – there may not be any left.

  • avatar
    JG

    Chrysler is going like gangbusters here!  In Canada.  I think the Caravan is one of the best selling vehicles nationwide.  I see Caliber’s in traffic every day.  Hemi Rams.. huge!  Truck nutz sales.. up!

  • avatar
    folkdancer

    Because GMAC is now a bank holding company and requires more collateral on loans than it previously did, it wants land and buildings put up as collateral that are already securing old Chrysler Financial loans

    Unanticipated consequences.

    Thank you TTAC. When I was a kid I always wanted the cereals with toys inside now overweight I have to eat sensibly and get my kicks reading financial news with surprises.

  • avatar
    folkdancer

    Chrysler is going like gangbusters here!  In Canada.  I think the Caravan is one of the best selling vehicles nationwide.  I see Caliber’s in traffic every day.  Hemi Rams.. huge!  Truck nutz sales.. up!

    Mini vans make sense but are you admitting there are Canadians as dumb as our pick up truck driving pretend cowboys here in Arizona?

  • avatar
    Mr Carpenter

    Chrysler products have always historically been more popular in Canada than in the United States.

    Canada, however, cannot carry Chrysler on it’s back with US sales going into the black hole (and dealers, too). 

    I give Chrysler six months.  Or less. 

    Wonder if Mitsubishi and Suzuki will out-live Chrysler in the United States?  

  • avatar
    mtymsi

    The problem is with GMAC requiring additional collateral for  floorplan. Must be the same scenario for GM dealers using GMAC for floorplan too. That’s  the result of GM stupidly selling 51% of GMAC to Cerberus. That scenario puts GM and Chryco dealers at a distinct floorplan disadvantage especially with commercial money markets still frozen so there aren’t the normal bank alternatives. Banks never used to require additional collateral for floorplan but that apparently is now the case. This situation also allows further culling of dealers without large factory buyouts.


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