Chrysler Requests $753 Million For Incentives-Based Dealer Culling
After crying that bankrupt automakers can’t sell cars (as in, “there but for the grace of the taxpayers go we”), Chrysler is requesting $753 million to do what it said was impossible. And who minds profit-draining record incentives when taxpayers are picking up the tab? Automotive News [sub] breaks down Chrysler’s request for $4.6 billion of DIP financing, and reveals that incentives are no longer just about moving metal.
According to bankruptcy filings, Chrysler will “only pay incentives to those dealers that they believe have value to the acquiring company.” You know, the “ indirect wholly-owned subsidiary of Fiat S.p.A.” In other words, 25 percent of all good, honest, all-American Chrysler/Dodge/Jeep dealerships and the communities they support can go suck it. By AN‘s math, that makes 800 dealerships that have a new biggest problem: how to sell a Sebring without incentives. Sorry guys, but the New, New Carissa, er, Chrysler has sailed without you. You were “Bad Chrysler.” Goodbye.
Meanwhile, if you are considering an automobile purchase and just don’t trust the firms that aren’t failing, Chrysler is making it easy on you. The Pentastar will blow $477 million on incentives for the first four weeks of its bankruptcy, peaking at $147 million for the week of May 25 alone. That’s the week to buy a Chrysler, you crazy person.
For the taxpayers out there (feel the pride!) we have a little more info on how (besides putting cash on hoods) your money will be spent during Chrysler’s bankruptcy. $1.49 billion will go to suppliers for about 45 days worth of already delivered parts. For many suppliers this will be the kiss goodbye since production is at a standstill. $69 million will be spent on marketing. That’s about half of Chrysler’s usual expenditure over the same period, and promises to produce some entertaining copy. $266 million will be spent on warranty claims. Most of these numbers were “arrived at in consultation with the Treasury,” according to ChryCo spokesfolks.
More by Edward Niedermeyer
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I use to have a poster just like this picture of the foundering ship in my office. Underneath the picture was a caption that read,"Could this mean that the only purpose of your life is to serve as a warning to others?" More appropriate now, in Chrysler's case, than I ever realized.....
Do I have this right: the government is putting money into Chrysler to save a private business, and the government is also putting money into Chrysler so it can do away with many private businesses? I wonder if it has occurred to GM that it can cull its dealership ranks by raising car prices $5,000 and simultaneously putting $5,000 rebates on the hoods of cars sold by favored stores.