Germany's Captive Lenders To Government: "Co-sign Our Notes"

The financing arms of Germany’s automakers are way ahead of GMAC. Germany’s industry rag Autohaus heard of a little sit-down of BMW, Daimler and VW. All present cheerfully agreed to ask Frau Merkel for a little help. Not to prop up their equity, no need. They’ve got enough. BMW actually went on record and said: “Our bank is right as rain.” (Or German words to that effect.) So why are they holding out their hands for a hand-out to the tune of a few billion Euros? Germany’s captives would like the government to co-sign their notes, which would give them access to cheaper money, which would make their profits even higher, which would give their parents more leeway in giving low interest loans for even higher sales, which would be good for the economy, jobs, the social structure of Deutschland. Dietmar Kupisch, spokesman of VeeDub Germany’s Financial Services said it simpler to the Braunschweiger Zeitung: “It would mean cheaper liquidity for us.” Mercedes doesn’t need any help. Surprising reaction from Opel: “Thanks, but no thanks. We are taken care of by GMAC.” Haven’t they gotten the memo? Nobody even bothered to ask Porsche. Anyway…

The VDA, der Verband der Deutschen Automobilindustrie (the snotty club of German auto makers), thinks it’s a swell idea; it would shield their members from the “dislocations in the international financial markets.” A worthy goal.

Why are Germany’s captives to snug and flush? One reason is that they saddle their dealers with the residual value risk of a lease. (When reminded that U.S. captives take that burden off their dealers’ backs, German auto bankers privately say: “Idioten.”) Scores of German dealers die each year because of that. Which is viewed as welcome Darwinism by Germany’s makers of money and automobiles. (French) Renault at least has a little mercy with their pained dealers. They’ll hand our €5.5m to at least partially recompense their dealers for losses in leasing. Instead, they’ll shoulder their customers with the risk. Guaranteed buy-back? “Mais non.”