Something that seems to be underneath EVERYONE'S radar...
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From: Sarasota FL
Something that seems to be underneath EVERYONE'S radar...
So, yeah, Chrysler wants to weed out some dealers in bankruptcy court. Its going to be a lot easier than a lot of people think.
See, when Team Obama came out with their revised plan for Chrysler, which involves GMAC taking over all floorplanning and captive financing from Chrysler Financial and essentially folds CFC into GMAC, they left out one small part of this plan....
Every single dealer in North America right now that has a CFC floorplan has a frozen floorplan
That's right. What does that mean? For someone like me, that depends on a floorplan to purchase used cars, take cars in on trade, create working capital by flooring trades I have cash in? You get the idea....
Watch for a WIDESPREAD closing of Chrysler dealers in the next 30 days...seriously. GMAC has given us zero word on when we can expect a replacement GMAC line. All dealers can do with their current CFC line is pay down the balance when we sell cars...not add to it. And what bank is going to take on a Chrysler dealer as a new floorplan customer these days???
Many of us may be royally screwed. Amazing how this flew under the radar in the press, eh? I think this is just another weed-out tactic to get rid of weak dealers. The problem for Chrysler is, how many STRONG Chrysler dealers are realistically left???? Not too many!
See, when Team Obama came out with their revised plan for Chrysler, which involves GMAC taking over all floorplanning and captive financing from Chrysler Financial and essentially folds CFC into GMAC, they left out one small part of this plan....
Every single dealer in North America right now that has a CFC floorplan has a frozen floorplan
That's right. What does that mean? For someone like me, that depends on a floorplan to purchase used cars, take cars in on trade, create working capital by flooring trades I have cash in? You get the idea....
Watch for a WIDESPREAD closing of Chrysler dealers in the next 30 days...seriously. GMAC has given us zero word on when we can expect a replacement GMAC line. All dealers can do with their current CFC line is pay down the balance when we sell cars...not add to it. And what bank is going to take on a Chrysler dealer as a new floorplan customer these days???
Many of us may be royally screwed. Amazing how this flew under the radar in the press, eh? I think this is just another weed-out tactic to get rid of weak dealers. The problem for Chrysler is, how many STRONG Chrysler dealers are realistically left???? Not too many!
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Joined: Nov 2001
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So, yeah, Chrysler wants to weed out some dealers in bankruptcy court. Its going to be a lot easier than a lot of people think.
See, when Team Obama came out with their revised plan for Chrysler, which involves GMAC taking over all floorplanning and captive financing from Chrysler Financial and essentially folds CFC into GMAC, they left out one small part of this plan....
Every single dealer in North America right now that has a CFC floorplan has a frozen floorplan
That's right. What does that mean? For someone like me, that depends on a floorplan to purchase used cars, take cars in on trade, create working capital by flooring trades I have cash in? You get the idea....
Watch for a WIDESPREAD closing of Chrysler dealers in the next 30 days...seriously. GMAC has given us zero word on when we can expect a replacement GMAC line. All dealers can do with their current CFC line is pay down the balance when we sell cars...not add to it. And what bank is going to take on a Chrysler dealer as a new floorplan customer these days???
Many of us may be royally screwed. Amazing how this flew under the radar in the press, eh? I think this is just another weed-out tactic to get rid of weak dealers. The problem for Chrysler is, how many STRONG Chrysler dealers are realistically left???? Not too many!
See, when Team Obama came out with their revised plan for Chrysler, which involves GMAC taking over all floorplanning and captive financing from Chrysler Financial and essentially folds CFC into GMAC, they left out one small part of this plan....
Every single dealer in North America right now that has a CFC floorplan has a frozen floorplan
That's right. What does that mean? For someone like me, that depends on a floorplan to purchase used cars, take cars in on trade, create working capital by flooring trades I have cash in? You get the idea....
Watch for a WIDESPREAD closing of Chrysler dealers in the next 30 days...seriously. GMAC has given us zero word on when we can expect a replacement GMAC line. All dealers can do with their current CFC line is pay down the balance when we sell cars...not add to it. And what bank is going to take on a Chrysler dealer as a new floorplan customer these days???
Many of us may be royally screwed. Amazing how this flew under the radar in the press, eh? I think this is just another weed-out tactic to get rid of weak dealers. The problem for Chrysler is, how many STRONG Chrysler dealers are realistically left???? Not too many!
Unless it creates panic or is detrimental to the big 3, they're not interested in it.
For the media to take up your story would mean that they were actually dedicated to helping the community and standing behind a cause. We all know that counterproductive to making profits.
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From: Sarasota FL
2) No used inventory for dealers for the same reason. We survive on used cars, especially right now. If I can't buy more used cars, what will I have to sell?
3) No way of doing dealer swaps with other dealers. You know how a lot of dealers will go to Timbuktu to find you a car? Not anymore, unless you're willing to sign up for it 100% sight unseen, because that dealer has cash tied up in it now.
4) No easy way of getting additional working capital for dealers. Some of my used cars are on my line of credit...some have cash tied up in them. Its easy to throw a car on the line and get cash to pay bills...impossible if your line is frozen.
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From: Oakland, California
Interesting. Then I guess the idea of packaging Saturn with Opel makes more sense now. Fiat keeps Chrysler's NA manufacturing operations, loses the Chrysler dealer network, uses the Saturn dealer network to sell Fiats, Opels and Chryslers in NA. Etc. 
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SO if I'm reading you right and I really hope I'm not. Chrysler/GMAC is basically cutting the funding to all the dealers as almost to see who survives before installing a new financing plan from them?
And then for those that fail your only recourse is going to bankruptcy court against them.
I'm quite curious how they planned to cut dealers. Because they are independent businesses and aren’t exactly subject nor guilty of the same business issues that the manufacturers are.
I remember this was a big issue for GM when they phased out Oldsmobile and one of the main reasons that GM hasn't cut more brands because of how costly and difficult it was to get out of their obligations with Olds dealers.
But I guess that was before money is just paper and numbers on a computer screen and the Gov't fixes everything.
And then for those that fail your only recourse is going to bankruptcy court against them.
I'm quite curious how they planned to cut dealers. Because they are independent businesses and aren’t exactly subject nor guilty of the same business issues that the manufacturers are.
I remember this was a big issue for GM when they phased out Oldsmobile and one of the main reasons that GM hasn't cut more brands because of how costly and difficult it was to get out of their obligations with Olds dealers.
But I guess that was before money is just paper and numbers on a computer screen and the Gov't fixes everything.
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Joined: Oct 2008
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From: San Diego, CA
1) No new inventory for dealers, above and beyond what's already in stock. Can't get new cars from the factory if you have to pay cash up front to get them.
2) No used inventory for dealers for the same reason. We survive on used cars, especially right now. If I can't buy more used cars, what will I have to sell?
3) No way of doing dealer swaps with other dealers. You know how a lot of dealers will go to Timbuktu to find you a car? Not anymore, unless you're willing to sign up for it 100% sight unseen, because that dealer has cash tied up in it now.
4) No easy way of getting additional working capital for dealers. Some of my used cars are on my line of credit...some have cash tied up in them. Its easy to throw a car on the line and get cash to pay bills...impossible if your line is frozen.
2) No used inventory for dealers for the same reason. We survive on used cars, especially right now. If I can't buy more used cars, what will I have to sell?
3) No way of doing dealer swaps with other dealers. You know how a lot of dealers will go to Timbuktu to find you a car? Not anymore, unless you're willing to sign up for it 100% sight unseen, because that dealer has cash tied up in it now.
4) No easy way of getting additional working capital for dealers. Some of my used cars are on my line of credit...some have cash tied up in them. Its easy to throw a car on the line and get cash to pay bills...impossible if your line is frozen.
No new or used inventory means people won't buy cars. That's the last thing any auto company needs right now.
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Joined: Mar 2001
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From: Sarasota FL
SO if I'm reading you right and I really hope I'm not. Chrysler/GMAC is basically cutting the funding to all the dealers as almost to see who survives before installing a new financing plan from them?
And then for those that fail your only recourse is going to bankruptcy court against them.
And then for those that fail your only recourse is going to bankruptcy court against them.
monstertodd,
What DOES make sense anymore? Shortly, when Chrysler starts production again, your FRESH new-car inventory will be placed on a supplemental line provided to you by GMAC....
If you're still in business 60-90 days from now...
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From: USA
Do any other banks finance floorplans. I know that is a stupid question because if I owned a bank I would not loan money to a Chrysler dealer.
While they will trumpet all the union jobs they saved, no one wants to talk about job losses at the supplier and dealer level.
While they will trumpet all the union jobs they saved, no one wants to talk about job losses at the supplier and dealer level.
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Posts: 3,698
From: USA
Pouring a little more salt in the wound.
http://www.gminsidenews.com/forums/f...4/#post1727208
http://www.gminsidenews.com/forums/f...4/#post1727208
NEW YORK -- Chrysler LLC is asking for court permission to pay up to $753 million in dealer incentives during its 60-day bankruptcy period.
The company also said in U.S. Bankruptcy Court here it won't make incentive payments to all of its dealers. In filings today, Chrysler said it will "only pay incentives to those dealers that they believe have value to the acquiring company," to be controlled by Italy's Fiat S.p.A. Chrysler hasn't said how it will measure that value.
Chrysler representatives were in court today to lay out a budget for the 60-day bankruptcy period. In its filing, the company also asked that its suppliers be paid $1.49 billion in debtor-in-possession financing for parts already received.
The filings came on the second day of motions before Judge Arthur Gonzalez. Chrysler's strategy under Chapter 11, Section 363, of the bankruptcy code is to separate good assets from bad as quickly as possible to set up a financially healthy new company. That includes shutting down eight factories and closing unprofitable dealers.
In supporting documents, Chrysler said its post-bankruptcy budget assumes that 25 percent of its dealers won't get the incentive payments "as the company looks to reorganize its dealer network." Kathy Graham, a Chrysler spokeswoman, said she could not immediately clarify what that means.
The company also said in U.S. Bankruptcy Court here it won't make incentive payments to all of its dealers. In filings today, Chrysler said it will "only pay incentives to those dealers that they believe have value to the acquiring company," to be controlled by Italy's Fiat S.p.A. Chrysler hasn't said how it will measure that value.
Chrysler representatives were in court today to lay out a budget for the 60-day bankruptcy period. In its filing, the company also asked that its suppliers be paid $1.49 billion in debtor-in-possession financing for parts already received.
The filings came on the second day of motions before Judge Arthur Gonzalez. Chrysler's strategy under Chapter 11, Section 363, of the bankruptcy code is to separate good assets from bad as quickly as possible to set up a financially healthy new company. That includes shutting down eight factories and closing unprofitable dealers.
In supporting documents, Chrysler said its post-bankruptcy budget assumes that 25 percent of its dealers won't get the incentive payments "as the company looks to reorganize its dealer network." Kathy Graham, a Chrysler spokeswoman, said she could not immediately clarify what that means.
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Do any other banks finance floorplans. I know that is a stupid question because if I owned a bank I would not loan money to a Chrysler dealer.
While they will trumpet all the union jobs they saved, no one wants to talk about job losses at the supplier and dealer level.
While they will trumpet all the union jobs they saved, no one wants to talk about job losses at the supplier and dealer level.
All the while, dealers have their franchise agreements torn up in bankruptcy, get starved out of existence, and the ones that do remain won't even collect 100% of the rebates they've paid to dealers!! That's right! Chrysler wants to only make 75% dealer payments in May, and 50% in June!! So now, I'm guaranteed to lose money on every new sale, as if I was making anything to begin with!
It's getting thicker every day...
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Joined: Jul 2004
Posts: 1,496
From: Roseville, MI, USA
Good thread, Jason and thanks for bringing it to attention. Here's something you're interested in just announced by GMAC.
http://www.freep.com/article/2009050...rysler+dealers
http://www.freep.com/article/2009050...rysler+dealers
Chrysler, Jeep and Dodge dealers who want to survive Chrysler LLC’s bankruptcy must pass a credit assessment that GMAC will conduct over the next six months.
“GMAC will promptly conduct dealer credit assessments over the next 180 days to determine which dealers are eligible for a longer-term credit line,” said Michael Keegan, Chrysler vice president for volume planning and sales operations, in a bankruptcy court filing.
Keegan said those who fail the assessment will be told quickly enough so they can seek loans elsewhere.
“GMAC will promptly conduct dealer credit assessments over the next 180 days to determine which dealers are eligible for a longer-term credit line,” said Michael Keegan, Chrysler vice president for volume planning and sales operations, in a bankruptcy court filing.
Keegan said those who fail the assessment will be told quickly enough so they can seek loans elsewhere.
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On the bright side, when this is over..it will be much better for the dealers that do survive.
No, they don't. The unions got their guarantees, and now they get equity in the whole company. Meanwhile, their retirees still get phenomenal health care.
All the while, dealers have their franchise agreements torn up in bankruptcy, get starved out of existence, and the ones that do remain won't even collect 100% of the rebates they've paid to dealers!! That's right! Chrysler wants to only make 75% dealer payments in May, and 50% in June!! So now, I'm guaranteed to lose money on every new sale, as if I was making anything to begin with!
It's getting thicker every day...
All the while, dealers have their franchise agreements torn up in bankruptcy, get starved out of existence, and the ones that do remain won't even collect 100% of the rebates they've paid to dealers!! That's right! Chrysler wants to only make 75% dealer payments in May, and 50% in June!! So now, I'm guaranteed to lose money on every new sale, as if I was making anything to begin with!
It's getting thicker every day...
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From: Chicagoland IL
I expect that the government has similar plans for GM.
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Jason, I know you've been hard at work for your business. It really is admirable.
I can't say I'm surprised at the current dealer situation, though--Chrysler is going bankrupt. I think the existing dealers are lucky that this is going to be a relatively quick revamping. It's probably better than a lot of other scenarios out there. You could be a Pontiac dealer.
You've got a strong will. I've been watching the sun set on Chrysler for a long time. I think I would have lost my comfort zone right around the time with the mess with Cerebrus and I'd have been out of there. But you stayed in.
For what it's worth, I hope things pick up and that the concessions for dealers only get better in the uncertain days to come.
I can't say I'm surprised at the current dealer situation, though--Chrysler is going bankrupt. I think the existing dealers are lucky that this is going to be a relatively quick revamping. It's probably better than a lot of other scenarios out there. You could be a Pontiac dealer.
You've got a strong will. I've been watching the sun set on Chrysler for a long time. I think I would have lost my comfort zone right around the time with the mess with Cerebrus and I'd have been out of there. But you stayed in.
For what it's worth, I hope things pick up and that the concessions for dealers only get better in the uncertain days to come.