Chrysler Financial turns the screws on dealers
It's not getting any easier to be a Chrysler-Dodge-Jeep dealer. Last month, when Chrysler Financial asked banks and investors to renew their $30 billion line of credit, they came up about $6 billion short. To make matters worse, the investors forced the automaker to follow much tighter financial guidelines (including a requirement to get out of leasing). Now, the cash shortfall is forcing the financial division to significantly turn up the heat on their retailers. Over the next few months, the financial arm will jack up dealer floorplan interest rates, and levy hefty fees for vehicles that sit unsold on dealer lots. With sales way down (in August, Chrysler's sales fell a sickening 34.5 percent -- the steepest decline of any major manufacturer), cash-strapped dealers are obviously unhappy with the news. Many fear this may signal the start of a new retailer initiative to limit vehicle inventory, hurting sales even further. As expected in this industry, bad news for retailers often means good news for consumers. With the new fees on the horizon, dealers will be offering significant incentives to dump inventory over the next few months.
[Source: Automotive News, subs. req'd]
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Reader Comments (Page 1 of 1)
iSpec 6:37PM (9/08/2008)
Not a good day to be a Chrysler owner or dealer. Eventually, all the trouble has a way of trickling down.
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GENERALMOTORSMAN4LIFE 6:49PM (9/08/2008)
Hmmmmm, Where theres smoke, there is fire! Where there is Bob Nardelli, there is ___________! You fill in the blanks.
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Purifoy 7:09PM (9/08/2008)
Talk about pain and suffering! I suspect some dealerships might be forced to throw in the towel and just call it quits.
On the other hand, like the story says, if you're in the market for a new 300, Charger or Wrangler, now's the time to jump in and strike while the iron is hot.
Some might even say this is poetic justice for the consumer when you think about all the John and Jane Doe's who have gotten raked over the coals by the dealers. Both in the showroom and later in the service department.
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No Welfare for GM 7:11PM (9/08/2008)
Poor dealers, they have nothing to sell and yet they are the ones who take the hit.
What Chrysler needs to do it to IMMEDIATELY redesign Caliber, make that interior better, add great audio system, MP3, Blootooth for free, and a NAV that is very very affordable.
You got to make that interior look better, just copy what Honda does. Try to make this car more efficient, do as much as you can to squeez a few more MPGs, outfit the car with Run Flat tires, get rid of the spare tire. Offer very affordable Auto Tranny and offer lots of freebies, but go to the extreme with that, meaning free MyGig or Free NAV or Free Sun Roof or bigger wheels. Make people want the car.
This car is a carbon copy of Saturn Astra, looks good on the outside, inside is C R A P , not fuel efficient at all, with super cheap interior. Get this, Chrysler gives you a 2.0 Liter engine over 1.8L for just $150, but charges people $1,000 for Auto Tranny.
Cut the price of the automatic to $600. Undercut the competition because to be honest competition doesn't have much.
If Chrysler can improve this vehicle by the end of the year, they will have WHOLE of 2009 with GM and Ford offering no a single decent small vehicle. In 2010 GM will have Cruze, so NOW is time to act.
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BigWill 10:47PM (9/08/2008)
By the end of the year? Either you're joking or you're totally clueless about how much in resources - both time and money, neither of which Chrysler has a lot of - it takes to do an interior redesign.
BTW, Chrysler's new interior redesigns are trickling out. They look better but they're still crappily assembled.
Driver X 8:39PM (9/08/2008)
If you want a smaller dealer network and you don't have the cash to buy them out, force them out! It's the American way.
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the vegas style guy 12:58AM (9/09/2008)
We would like to thank for coming world premiere Cherysler Rising Eastward Facing Peasant For Great Leap Forward C.
Car made in Fujin in collaboration with our slaves, uh, workers at People's Glorious Plant no 5. Save weight by shoddier than even before workmanship and paying worker very low wage.
Chrysler 5yrs. Tops.
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Kumar 9:24AM (9/09/2008)
One thing is for sure: Chrysler needs to reduce the number of dealers as well as cars sitting on lots. Yeah, it sucks for those that own the dealerships, but they need fewer shops that in turn sell the entire lineup.
Also, what's so bad about waiting a few weeks for the car you want to be made or shipped instead of buying something that's been baking on a lot for weeks/months? The focus needs to turn more to service (customer and car) 7 days a week for the auto sales industry to survive.
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tanooki2003 9:45AM (9/09/2008)
It's already too late to do that. By the years end? Are you kidding? Do you know how much resources it will take for them to do that? They are "hopefully" allocating some of their design resources to their new Organic designs while trying to "also hopefully" play smart and are currently working with what they have in their existing line.
Remember it does not take months to fix issues and make cars look better, it usually takes many years in planning, unless you want another poorly laid out slapped together POS.
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tanooki2003 9:47AM (9/09/2008)
This comment was for "No Welfare for GM"
71cuda 10:15AM (9/09/2008)
For anyone not familiar with dealer workings, floorplan is a line of credit the dealer uses to cover the cost of their new and sometimes their used inventory. They pay interest on that balance, so it costs the dealer money to have a car sitting on the lot. There are independant banks who do the same thing, so I don't think Chrysler dealers are captive to Chrysler Financial. It sounds to me like Chrysler wants dealers to switch floorplan to free up those millions of $.
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Steven Levin 11:27AM (9/09/2008)
What Chrysler is trying to do is change the dealer dynamic to favor selling more cars at less profit per car. When "flooring" (that is, having the car on the lot) costs are low, dealers have incentive to sell 10 cars for $1,000 profit each rather than hassle selling 20 cars for $500 profit each (which is tougher on dealers -- there just aren't as many customers out there). Chrysler, though, makes basically the same amount of money per car sold, so they obviously want the dealer to sell 20.
When the factories are operating near optimal capacity, the "old" plan is fine -- everyone benefits -- but now, with production numbers low, Chrysler has to prod the dealers.
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Skip 8:26PM (11/12/2008)
I currently own a 2007 PT Cruiser-Touring. I previously had a 2002. The fit and finish for the most part is pretty good. Have had no major problems with the car and would recommend it. I would like to see if they could improve the mpg. My drive to work is about 75 miles a day round trip. It's a combination of local and highway. Avg mpg is about 26 mpg. with a 5 speed.
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