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

Bertel Schmitt
by Bertel Schmitt
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.”

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  • Boston Boston on Nov 11, 2008

    Your statement regarding residual losses is only partly true. Most risk is with the caütives. Like TireGuy said, this is just a liquidity issue and a much better solution than in the US.

  • Bertel Schmitt Bertel Schmitt on Nov 12, 2008

    @Boston. Party true, I agree. In Germany, it differs from maker to maker. Mercedes assumes the whole risk. Volkswagen none.

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