Chrysler Floorplan Hike Pits Factory Against Finance

Robert Farago
by Robert Farago

Thanks to epic leasing losses, bad loans and Chrysler’s declining market share, Chrysler Financial has been taking a beating on the Street, with a capital B. A month ago, ChryCo Financial struggled to re-new its loans on Wall Street, only managing to raise $24b of the $30b it wanted to stay in business. It now appears that the conditions of the re-fi include the end of the leasing (done) and new terms for Chrysler dealers. Automotive News reports that the lender has told dealers it will jack-up their floorplan interest rates by an unspecified amount and force them to pay off older, unsold vehicles. More specifically, “Dealers will be required to pay monthly fees on new-car inventory 180 days old and older. The fees start at $10 per unit, go to $15 at 270 days and $25 at 360 days. 2008 and older units more than 360 days old must be paid off at 10 percent a month. All used cars more than 180 days old must be paid off.” This is bad news for Chryco dealers; they won’t be able to get alternative wholesale financing elsewhere on better terms. It also means they’re going to be very careful on inventory. And that’s bad news for Chrysler’s factories (i.e. Chrysler). Other captive floorplan lenders, like GMAC, may soon follow suit. All of which means its hardly likely sales have “bottomed out,” although it’s for sure that dealers will have to do something to get rid of old inventory. As in price cuts.

Robert Farago
Robert Farago

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  • Kevin Kluttz Kevin Kluttz on Sep 09, 2008

    I don't know where or how happy endings came up with that, but it is hilarious!!! Maybe GM should appoint a 1972 Vega as CEO. That car did about as good a job as Lutz is doing now!!

  • Mel23 Mel23 on Sep 09, 2008

    Depending on how the bailout is structured, e.g. how soon are the goodies available and are they transferable to a buyer, the value of Chrysler will soon be at its max. I expect the Cerberus bunch to be flogging the hell out of it.

  • Gardiner Westbound Gardiner Westbound on Sep 09, 2008
    Gardiner Westbound…maybe I am a bit sluggish today, but could you elaborate a bit further? I don’t understand the significance of what you are saying. - NickR Car sales at every level are a shell game. Chrysler's latest scheme cannot be assessed without knowing what is happening with other dealer incentives. I doubt it can gut them without violating franchise laws and contracts. A fuller discussion of dealer holdback, one of numerous incentives and bonuses to dealers, is available here.
  • Accs Accs on Sep 14, 2008

    Hmmm... Replacing a 1/8th decent Liberty (depending on generation) with a Jeep GC HEMI (in name only) says ya need to prove to SOMEONE that your JEEP is worth buying! It wasnt worth buying 5yrs ago when all they had was the GC and the Cherokee and the Wrangler. NOW!... Ya got 3 entry level vehicles (Liberty, Compass, Patriot). 2 top level vehicles (the Commander and ANCIENT GC) with the Wrangler gaining weight, size and losing efficiency! But when you compare all of the vehicles.. what is the actual difference.. in any one of them?! Chrysler.. needs to gut the jeep brand and or the majority of what it sells.. like a HOUSE IN KATRINAS PATH! I hate to say it.. But Chrysler was better.....6+YRS AGO! They didnt have such obnoxious OVERLAP but the never upgraded their vehicles.