posted
after all our congress thought up this grand idea.
you sure it wasn't Dubya?
GM has been moving to China in abig way for years. and the Bush's are right in the middle of opening the Chinese cheap labor market. I'd love to know what their cut is...
Lock, if like me you named yourself after your work? you are going to lose paying customers faster than ever.
all Americans shuold be interested a strong middle class.
that co-pilot that wrecked the plane in Buffalo? making 16 grand?
it's a crime. that's less than most school bus drivers make. part time.
paying people well is not bad business. paying people well allows them to BUY more stuff from those of us that supply them.
letting GM go BK and laying of fth ewhole work force of them adn Chryslkre all at once would have put US in an economic death spiral.
we would have had to invade Mexico and Canada to get our economy going again.
i don't like thebailouts, but anybody who thinks they weren't needed isn't thinking very far outside the realm of limbuggers utopian wet dreams.
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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Looks like all the people who talk crap on japanese autos have no more room to talk anymore.
Where are the unions on this? The UAW who loves Obama and donated to numerous Democratic campaigns? Now our tax dollars bail them out only to buy and sell for China?
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so.
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GM, Chrysler to cut up to 3,000 dealers: sources Wed May 13, 2009 6:05pm EDT By Soyoung Kim and John Crawley
DETROIT/WASHINGTON (Reuters) - General Motors Corp and Chrysler aim to drop as many as 3,000 U.S. dealers and are expected to begin sending notifications as early as Thursday, three people briefed on the still developing plans said.
GM, facing a U.S. government-imposed deadline of June 1 to restructure or file for bankruptcy, is expected to send termination notices to up to 2,000 dealers -- a third of its roughly 6,000 U.S. dealers, the sources told Reuters.
Chrysler, which filed for bankruptcy on April 30, will also tell up to 1,000 of its 3,189 U.S. dealers it is terminating their franchise agreements, according to the sources who asked not to be identified because the controversial closure plans have not been yet announced.
The moves to shut down auto dealerships underscores how the economic pain caused by the downward spiral of both automakers -- now operating under U.S. government oversight -- is spreading beyond their home base in Detroit.
The development comes as dealer representatives have stepped up lobbying in Washington to try to slow down closures they estimate would cost 200,000 dealership jobs.
The involuntary terminations are also widely expected to prompt a legal challenge from dealers who are independent retail networks protected by state franchise laws.
Chrysler spokeswoman Kathy Graham said the automaker had not announced its dealership closure plans.
"We have not announced anything at this point," she said. "We are not done with our process at this point."
A GM spokesman was not immediately available for comment.
More than 100 members from the National Automobile Dealers Association, a group representing the country's 20,000 new car dealers, met members of the House of Representatives and Senate in Washington on Wednesday, asking them to intervene with the Obama administration's autos task force on planned reductions.
"A rapid cut of dealers is a bad idea," NADA Chairman John McEleney said in a statement.
McEleney said his organization does not oppose dealer consolidation, but believes the administration and the companies are moving too fast.
NADA leaders are scheduled to meet the U.S. auto task force on Thursday.
The task force, headed by former investment banker Steve Rattner, is driving the restructuring of both companies, which are planning to close plants, cut jobs and restructure dealer lineups to establish viability.
PLANS BEING FINALIZED
GM, which is operating with $15.4 billion of U.S. government loans, has to cut debt and operating costs and present a new restructuring plan to officials by June 1 to avoid a government-controlled bankruptcy.
Both GM and Chrysler have faced pressure to cut struggling dealerships to bring their large sales networks line with those run by more successful rivals led by Toyota Motor Corp. Toyota, No. 2 in U.S. sales behind GM, has about 1,200 dealerships in the country.
Chrysler is using the bankruptcy process to move faster toward that goal, while GM plans to tell its dealerships they are being dropped for not meeting standards for capitalization and profitability.
GM wants to cut its dealer network to 3,605 from over 6,246 at the end of 2008. But it has not specified how it would achieve that and how many dealerships would be involuntarily terminated and how many it expected to go bankrupt or shut down on their own.
Chrysler's plan has remained under wraps.
GM Chief Executive Friz Henderson said on Monday the automaker was completing its plans for dealership consolidation this week.
Chrysler Chief Executive Bob Nardelli said in a memo to staff on Tuesday, a copy of which was obtained by Reuters, that the automaker would determine how to organize its dealer networks during the rest of the week.
Carroll Smith of Monument Chevrolet in Houston, one of the 100 new car dealers who lobbied lawmakers in Washington, warned that a rapid wind down of outlets could lead to a flood of new vehicles hitting the market simultaneously at much lower prices, further undercutting hard-hit dealers.
"Dealers are not cost. What we are retail and distribution," Smith added.
-------------------- Wise men learn more from fools than fools from the wise.
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As far as GM selling Chinese cars you are 100% right glass nobody just woke up yesturday and said we will put them in our show rooms. They had to be planned and built for the American market and that takes a few years. Welcome to the leadership of capitalism do what is right for GM and screw the rest of the country.
This is just as slimy as the oil grab in the mid east.
-------------------- Wise men learn more from fools than fools from the wise.
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"General Motors currently imports the Chevrolet Aveo and Pontiac G3 from South Korea, and several other models from Canada, Mexico and Europe. The United Auto Workers union has been critical of any plans to move more production overseas."
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Where are the unions on this? The UAW who loves Obama and donated to numerous Democratic campaigns? Now our tax dollars bail them out only to buy and sell for China?
I'll tell you where the unions are on this...FURIOUS and deadset against it...
quote:Originally posted by glassman: after all our congress thought up this grand idea.
you sure it wasn't Dubya?
GM has been moving to China in abig way for years. and the Bush's are right in the middle of opening the Chinese cheap labor market. I'd love to know what their cut is...
Lock, if like me you named yourself after your work? you are going to lose paying customers faster than ever.
all Americans shuold be interested a strong middle class.
that co-pilot that wrecked the plane in Buffalo? making 16 grand?
it's a crime. that's less than most school bus drivers make. part time.
paying people well is not bad business. paying people well allows them to BUY more stuff from those of us that supply them.
letting GM go BK and laying of fth ewhole work force of them adn Chryslkre all at once would have put US in an economic death spiral.
we would have had to invade Mexico and Canada to get our economy going again.
i don't like thebailouts, but anybody who thinks they weren't needed isn't thinking very far outside the realm of limbuggers utopian wet dreams.
Glass their going B/k anyway, going B/K in our system is a way of reorganizing. If the government hadnot gotten into the auto business we'd be a lot farther down towards a solution. Don't you see they just delayed the envitable and now have started to decide who wins and who loses. I think this government is changing the rules of business daily and it's now going to take a lot longer to recover...if we ever do.
As far as Bush causing this, I agree he had a part but Bush could only suggest we involve the government in private companies. Our congress is the power behind the money.
-------------------- Let's Go METS!!!
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If the government hadnot gotten into the auto business we'd be a lot farther down towards a solution.
uh, do you have ANY clue why people aren't buying cars? cuz that's why the y are going BK
this is gettin old repeating over and over that we are avoidinga total depression AFTER our sytem ALREADY collpsed under George Dubya and Cheney's frigged up policies.
do you understand why they can't allow all thoise peple go jobless a the same time?
or why we had to bailout the banks to keep from having to pay the FDIC insurane?
or that he GOP is the ones that DID THIS?
it's unreal how much denial there is out there.
if we end up Socialist? it will be because Dubya was standing up there telling everybody how fundamentally sound our economy was while it was collapsing.
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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it's now going to take a lot longer to recover
same crap the "conservatives" handed out in the Great Depression. said "conservatives" also caused the Great Depression.
Bernanke learned the mistakes and is avoiding the Greater Depression right now.
it's so damn convenient to have somebody to blame NOW after the damage was already done by the biggest criminal organisation ever. the GOP under Cheney (yeah the biggest ever)
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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Oshawa truck plant shuts down. Final GMC Sierra pickup drives off the line
May 14, 2009 Comments on this story (27) Tony Van Alphen
Business Reporter
OSHAWA–Workers put the finishing touches on a black GMC Sierra pickup late this morning and drove it off the line, ending a 44-year prodction run in this embattled auto city.
In an emotional scene, Bob Nesbitt, who has worked at GM for 45 years, drove the last truck off the main line as hundreds of employees and retirees crowded around it.
GM, which is fighting for survival, announced the closure and the shutdown of three other truck plants in North America in the spring of last year after gasoline prices spiked and the sale of large pickups collapsed.
The plant hit its peak in 2000 when annual output hit 323,034 on three shifts.
However, the award winning plant, which had employed about 3,500 at one time, has sputtered in the last few years as fuel prices climbed and the truck market sagged.
Until today, the plant had been operating on one shift and about1,000 workers since the beginning of the year.
The closure will have a devastating effect on the regional economy which is heavily dependant on the auto sector.
Auto analyst Bill Pochiluk said the closure will mean the loss of about 12,000 jobs including the parts sector and service providers.
"It will be extremely painful for a long time in the Oshawa area," he said.
GM still operates a large car assembly plant near the truck operation. It also has parts operations in St. Catharines and Windsor. However the Windsor plant, which builds transmissions, will also close next year.
GM is currently seeking billions of dollars in public loans from the federal, Ontario and U.S. governments.
I knew the ratio of supplier employees to autoworkers was 7 - 1, but I never knew it was as high as 12 - 1 for a whole plant.
That plant had a very good reputation for high productivity and quality. Not a good day.
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Sad story for sad times. It is going to get a lot tuffer I am afraid and at my age I don't think I will ever see an economy roar for a long time.
I hope Obama's plans for solid slow growth will work out.
-------------------- Wise men learn more from fools than fools from the wise.
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quote:Originally posted by raybond: Sad story for sad times. It is going to get a lot tuffer I am afraid and at my age I don't think I will ever see an economy roar for a long time.
I hope Obama's plans for solid slow growth will work out.
I hope it works out too.
I know people don't like him but he has a lot more functioning brain cells than the last guy.
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GM says it could sell assets to new co. GM says it could sell most assets to new company, liquidate rest, if it enters bankruptcy On Thursday May 14, 2009, 7:32 pm EDT
DETROIT (AP) -- General Motors Corp. says it likely would sell most of its assets to a new company and liquidate the rest if it has to seek bankruptcy protection.
The company made the disclosure Thursday in a filing with the Securities and Exchange Commission. It has said bankruptcy is possible if it doesn't get enough takers on an offer to swap $27 billion in bond debt for stock.
The automaker also says it could seek court approval of its reorganization plan even if creditors vote against it.
GM offered last month to give bondholders 225 shares for every $1,000 worth of bonds. The company would issue 62 billion new shares and then do a 100-for-1 reverse stock split.
Bondholders would end up with 10 percent of the company's shares under the offer, which expires May 26. But a committee representing the bondholders has counteroffered seeking a 58 percent ownership stake.
GM has received $15.4 billion in U.S. government loans and faces a June 1 deadline to finish restructuring or head into bankruptcy reorganization.
Under a capital structure proposed by GM but still under negotiation, the U.S. government would get 50 percent of the company for its loans. GM has said it will need another $2.6 billion in May and $9 billion more for the remainder of the year.
A UAW-run trust that will take over retiree health care costs starting next year would get 39 percent of the stock, in exchange for half of the $20 billion that the company owes the trust. Existing shareholders would get roughly 1 percent of the stock.
A key issue for GM is getting 90 percent of its bondholders to accept a debt-exchange offer.
CEO Fritz Henderson essentially rejected the counteroffer, saying GM can't do it because it has been told by the Treasury Department that it can't give more than 10 percent equity to the bondholders.
The Detroit automaker lost $30.9 billion last year. To finish restructuring it must cut its bond debt, reduce labor costs and thin itself down to a point at which the government believes it can be competitive.
-------------------- Wise men learn more from fools than fools from the wise.
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Where are the unions on this? The UAW who loves Obama and donated to numerous Democratic campaigns? Now our tax dollars bail them out only to buy and sell for China?
I'll tell you where the unions are on this...FURIOUS and deadset against it...
So where is big unions voice on this AGAINST Obama?
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...and I have very little faith in the Dems either...
It's the Dems that stopped the economy from free falling further and saved alot of auto workers jobs...
How? Where is proof that the Democrats stopped the economy from free falling and SAVED auto workers jobs? Id like to see how auto worker jobs were saved when they are going to Mexico and China.
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so.
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...and I have very little faith in the Dems either...
It's the Dems that stopped the economy from free falling further and saved alot of auto workers jobs...
How? Where is proof that the Democrats stopped the economy from free falling and SAVED auto workers jobs? Id like to see how auto worker jobs were saved when they are going to Mexico and China.
the "proof" is you're still posting...
I assume that means your electricity is on, your water is still being delivered, etc...
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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quote:Originally posted by CashCowMoo: How? Where is proof that the Democrats stopped the economy from free falling and SAVED auto workers jobs? Id like to see how auto worker jobs were saved when they are going to Mexico and China.
What Tex said and the fact that the majority of auto workers still have their jobs... there are job losses but the whole industry is not out of work...
-------------------- Let the world change you... And you can change the world.
posted
I am sure that if there was anyway besides a bk Obama's would have taken it and saved the auto manufactuers a lot of griefe and the tax payers a lot of money.
All one has to do is look at the way they came to the government and it was in the state of bankruptcy already the money they got was used just to live on. If they did not get there first money from bush they would have been bankrupt in the next 30 days. Now there is a chance of saving at least 2/3 of the work force and making new and better co's out of GM and Chrysler.
-------------------- Wise men learn more from fools than fools from the wise.
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quote:Originally posted by glassman: If the government hadnot gotten into the auto business we'd be a lot farther down towards a solution.
uh, do you have ANY clue why people aren't buying cars? cuz that's why the y are going BK
this is gettin old repeating over and over that we are avoidinga total depression AFTER our sytem ALREADY collpsed under George Dubya and Cheney's frigged up policies.
do you understand why they can't allow all thoise peple go jobless a the same time?
or why we had to bailout the banks to keep from having to pay the FDIC insurane?
or that he GOP is the ones that DID THIS?
it's unreal how much denial there is out there.
if we end up Socialist? it will be because Dubya was standing up there telling everybody how fundamentally sound our economy was while it was collapsing.
Glass did someone in here say that Bush was not at fault? That the GOP wasn't on their game? Just because the former administration screwed the public does not mean we can't question the present administration on how we go forward.
The way the system works is if you screw up your business you lose it to someone else.
So far I haven't seen any intention by this administration to build America back up by supporting business. All they've done is lead us down a path towards more and more government reliance.
Raising taxes on everything that moves might help in the short term but eventually theirs noone to pay them cause their all on government assistance.
The money in the stimulas package that was given to the States is being used to keep government workers in their jobs. Where is the money for the small business owner? It's not available.
-------------------- Let's Go METS!!!
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The way the system works is if you screw up your business you lose it to someone else
lock, that's way over-simplified.
first off?
the car co's didn't screw their business up. the bankers screwed everybody.
i keep trying to point out that "conservative" principles are not supposed to be ANARCHY.
i keep hearing the trickle down form the limbuggers propaganda factory. the fact is that economics are never balck and white like some want to make them
BK court is an activist judge deciding who gets what, but activist judges are teh devil when it comes to gay rights, civil rights and abortions
get my drift here? in court? there are no firm rules either.
suppose all of the car co's hit BK court at once?
there would be people buying the assets up for NOTHING cuz the market would be flooded.
AIG is being propped up so that the valuble assets they have can be sold off in an orderly market
the idea that our Tax $ have been wasted cuz any of the bailed out co's goes BK is not on target.
the thing that's going on here is an ORDERLY dissolution of the failed businesses and equitable solutions for everybody including the taxpayers are more likely, note that i don't expect anything to be perfect, but we are not entering ANARCHY only because of the bailouts.
we can't afford to have to pay 20 million workers unemployment and pay out he FDIC insurance all at the same time. we would have folded like a cheap lawnchair.
futhermore? i clearly see evidence that somebody cleaned out the bank vault. we have been robbed and it was not random.
GM has been building in China for years now. this appears to me to be part of a larger plan to strip the US of it's ability to be financially viable.
the US headed to a very stratified class system.
our society could become very unstable if we do. you think this is bad?
if the banks had been run on? they would have had no choice but to close all the banks, limit withdrawals and socialism would have been enacted.
we saved Capitalism with the bailouts, it survives only because of them not in spite of them.
our system actually died while Bush was still in office. this is life support and we are lucky to have as mcu of it intact as we do.
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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More auto cuts: GM will eliminate 1,100 US dealers General Motors to eliminate 1,100 dealers nationwide on top of hundreds of cuts by Chrysler Dan Strumpf and Tom Krisher, AP Auto Writers On Friday May 15, 2009, 9:41 pm EDT
NEW YORK (AP) -- General Motors on Friday told about 1,100 of its dealers -- one in five -- that they would be dropped by late next year, adding to the economic pain radiating from the beleaguered Detroit automakers to cities and towns across the country.
Including Chrysler's decision a day earlier to eliminate a quarter of its own, about 1,900 dealerships -- many pillars of their communities and heavy advertisers for local media -- learned in a matter of 48 hours that they would be forced either to sell fewer brands or close altogether.
The GM dealerships will be eliminated when their contracts end late next year.
"We're 98 years old. We're two years from a hundred, and I don't want to go out at 99 years," said Alan Bigelow, whose family runs a Cleveland-area Chevrolet dealer that learned it was on GM's hit list.
While GM doesn't own the dealers, the company says its network is too big, causing dealers to compete with each other and giving shoppers too much leverage to talk down prices and hurt future sales.
Several hundred of the GM dealers knew already they were headed for closure, but most of them learned for the first time Friday. The National Automobile Dealers Association, an industry group, says the GM and Chrysler cuts combined could wipe out 100,000 jobs.
Both GM and Chrysler are scrambling to reorganize and stay alive in a severe recession that has pummeled car and truck sales for U.S. automakers, which had already been losing market share to foreign companies for decades.
Chrysler LLC is already in bankruptcy protection, and industry analysts say General Motors Corp. is making its cuts now in preparation for a bankruptcy filing June 1. The company says it would prefer to restructure out of court.
GM declined to reveal which dealers will be eliminated. Many dealers vowed to fight, first through a 30-day company appeal process, then possibly in court.
GM's dealers are protected by state franchise laws, and the company concedes it would be easier to cut them if it were operating under federal bankruptcy protection. GM says it's trying to restructure outside of bankruptcy because of the stigma of Chapter 11.
Chrysler dealers have fewer options because the company has already filed for bankruptcy protection, and federal bankruptcy judges generally trump state law. And Chrysler said on Thursday that its cuts were final.
GM outlined a plan to cut about 40 percent of its 6,000-dealer network by the end of 2010 in hopes of getting the company back on its feet. Besides the 1,110 dealership cuts, the company will shed about 500 dealerships that market the Saturn, Hummer and Saab brands, which GM plans to phase out or sell.
And when the surviving dealers' contracts are up in late 2010, GM will cut still more by not offering renewals to about 10 percent of the dealers who are left. Dealers could stay open selling used cars or other brands, but GM and Chrysler cuts will still leave cities across the U.S. with empty buildings, vacant lots and perhaps hundreds of thousands of dollars in lost tax revenues.
FedEx letters bearing the bad news began arriving Friday morning at GM franchises around the country. The letter states that dealers had been judged on sales, customer service scores, location, condition of facilities and other criteria.
While the targeted dealers represent about 20 percent of GM's total, they make only 7 percent of its sales, the company said.
The cuts will allow the surviving dealers to expand the size of their markets, so they have a better chance of staying healthy and attracting private investment, said Mark LaNeve, GM's North American vice president of sales and marketing.
"Over time, they just can't afford to invest in their business to the degree the competition has," LaNeve said.
Toyota, for example, generally has larger and newer showrooms and service departments than GM and Chrysler dealers -- making those dealerships more attractive to potential buyers.
The Obama administration's auto task force, which is overseeing the GM and Chrysler restructuring because both have received billions of dollars from the government, was aware GM would cut dealers, LaNeve said. But he stressed the company made the decision on how many and where.
Chrysler is aiming to close its nearly 800 dealers by June 9, and those outlets may try deep discounts to clear out their remaining inventory. But in the long run, prices for cars and trucks will probably rise for customers as dealerships disappear.
"No longer will people be able to shop between three or four dealers within 15 minutes of each other for the best cutthroat price," said Aaron Bragman, an automotive industry analyst with the consulting firm IHS Global Insight.
As GM and Chrysler lost market share to Japanese and other overseas brands, they ended up with too many dealers. So did Ford Motor Co., which has managed to stay healthier than either of its Detroit siblings.
In the 1980s, GM, Chrysler and Ford accounted for more than 75 percent of U.S. sales, but that dropped to 48 percent last year. GM alone held nearly 51 percent of the market in 1962, but only 22 percent last year.
Bigelow was stunned to get his termination letter. He said he believed the dealership was meeting all of GM's criteria to stay in business. He said sales had dropped in the recession -- but he didn't know of many dealers who were doing better.
Many of the dealership's 45 employees have been there for 30 years or more. He said they pledged to stay and fight the closing "until there's no more fight left."
AP Auto Writer Tom Krisher reported from Detroit. Associated Press writer Ken Thomas in Washington contributed to this report.
-------------------- Wise men learn more from fools than fools from the wise.
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...and I have very little faith in the Dems either...
It's the Dems that stopped the economy from free falling further and saved alot of auto workers jobs...
How? Where is proof that the Democrats stopped the economy from free falling and SAVED auto workers jobs? Id like to see how auto worker jobs were saved when they are going to Mexico and China.
the "proof" is you're still posting...
I assume that means your electricity is on, your water is still being delivered, etc...
So because of the Democrats force feeding an 800 Billion plus pork laden spending bill along with Republican earmarks my electricity is still on? Give me a break thats weak Tex.
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i'm not really sure i understand what you mean by proof.
the people who had to take the money didn't want the govt involved in their business.
Bush and Cheney basically went against everything they stated that hey believe in.
in any case? having to do the bailout was living proof that the US economic system and it's policies failed under thier watch.
just like 911 (the worst terror attack in the US) happened under their watch.
in other words? they are either totally incompetent or total liars or both.
that should be proof enough.
here's the "thing" that gets me. we haven't had anything like a "freemarket" economy since prohibition.
the no-bid contracts were an abomination of freemarketism, and they went straight to Cheney's old co.
my suggestion to people that beleive in something is to first live strictly by that code themselves, cuz i'll have no part of the sort of hypocrisy that is avoidable.
as humans we are flawed i don't pretend that i could hold up under hard torture, and i would torture someone in minute if it was needed in MY opinion, but i would expect to be taking my chances with the legal system and for a pardon, not to be protected by Cheneys apron.
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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These cars have got to go: Dealer cuts mean deals Shunned Chrysler dealers have only weeks to sell vehicles, setting up bargains for consumers Tom Krisher, AP Auto Writer On Monday May 18, 2009, 12:45 am EDT
DETROIT (AP) -- At 789 Chrysler lots across America sit 44,000 potential bargains, cars and trucks that are stuck between shellshocked dealers and a troubled company that no longer wants their services.
The dealers have just a few weeks to sell the Chryslers, Dodges and Jeeps or risk losing thousands of dollars on them, giving people who want a car on the cheap a serious chance for a deal.
"You've got some very good negotiating power," said Dave Champion, director of automobile testing for Consumer Reports magazine. "(Dealers are) really looking to shift this inventory. It's just stacking up all around them."
On Thursday, Chrysler LLC asked a New York bankruptcy court to end its franchise agreements with the dealers, casting them aside so the automaker can move forward as a new company with a leaner network of about 2,400 showrooms.
General Motors Corp. took a similar step on Friday, giving notices to 1,100 dealers that it no longer wants them. On their lots sit 65,000 Chevrolets, Buicks, GMCs, Pontiacs and Cadillacs, but at GM, the dealers' situation isn't as dire.
GM isn't in bankruptcy -- at least not yet -- so its dealers have more options to fight the move, which the company doesn't plan to implement until October of 2010. They also have more time to sell the vehicles, plus GM's dealer agreements also require the company to buy back cars and trucks that meet certain requirements on age and mileage.
Both automakers say they have too many dealers for too few sales. For years they have wanted to get rid of underperforming showrooms to expand the market area of healthier dealers. The moves would give the stronger dealers higher profits and more money to spend on marketing, facilities and personnel, making them more competitive with Japanese automakers.
But inside the 789 Chrysler showrooms to be cast aside, fear is starting to set in as dealers try to figure out what to do with expensive inventories that weren't selling well even before the Auburn Hills, Mich., automaker entered bankruptcy protection last month.
"They've told us that the inventory is our problem," said Keith Hollern, one of the owners of a Dodge dealer in Windber, Pa. "Want to buy one? We're having a fire sale."
Dealers borrow money to buy their inventories, then repay the loans and make a profit when the vehicles are sold. But Chrysler sales were down 46 percent the first four months of the year, so many dealers have been paying interest for months. Even if the vehicles are sold at cost, dealers still lose thousands in interest payments.
Chrysler doesn't have the money to buy back the vehicles, said company spokeswoman Kathy Graham, but it also doesn't want to leave dealers in a bind or see the inventory flood the market at bargain prices.
So it has signed a deal with GMAC Financial Services, Chrysler's new finance company, to float loans to remaining dealers that Chrysler plans to keep so they can take on the 789 dealers' unsold inventory. The deal, though, doesn't include about 4,000 2008 models still on the lots.
Remaining dealers likely will need to take the cars and trucks because all of Chrysler's manufacturing plants have been shut down since it entered bankruptcy on April 30, Graham said. Sales in May have been stronger than anticipated, so dealers will need to replenish inventories, she said.
"They're not building anything right now, so they're kind of creating a little bit of a product shortage," Hollern said. "So, surprisingly, a lot of the dealers who have gotten new contracts to go on with the new Chrysler will be looking for new inventory."
Graham said dealers to be cut from the company will get Chrysler warranty reimbursement and sales incentives such as rebates and low-interest financing until June 9. But after that, they won't be reimbursed for either.
That means the dealers have a big reason to get rid of the cars before their franchise agreements end. Incentives on some vehicles can run $6,000 or more, and without them, dealers who have been cut won't be competitive with remaining dealers who can still offer the discounts.
"They're not giving us a lot of time," said Michael Wolf, a Plymouth, Wis., Chrysler dealer whose franchise was among those that won't be renewed. "They're neglecting their liability of taking new inventory. They're not taking anything back."
Erich Merkle, an independent auto industry analyst in Grand Rapids, Mich., said he doubts that remaining Chrysler dealers will need more cars and trucks before June 9, so they'll be reluctant to take on more metal.
He said the resale value of Chrysler vehicles has dropped, evidence that it's losing the power to keep new car prices stable.
"What'll end up happening, if a dealer wants to stay in business, they'll probably end up just selling it below cost just to get rid of it," Merkle said. "You'll probably be able to find Chrysler vehicles perhaps at under the dealer cost."
Dale Horn, owner of a Chrysler-Dodge-Jeep dealership in Malvern, Ark., whose franchise was cut, isn't counting on any help from the company to unload his inventory of 34 vehicles.
"Right now, I don't have much confidence that they will do what they say. Nobody's called me yet saying they're going to try to help me," Horn said.
Still, he's determined to sell the cars and trucks before June 9, and he's not ruling out selling at a loss.
"It's not a matter of 'if.' We will sell them all," Horn said.
Champion said that before walking into a dealership, it's important to find out about incentives and holdbacks, which are payments the dealer gets when it sells a car.
"It's not a bad idea to go in there with a lowball price," he said.
Waiting until the closure deadline might give shoppers even greater power. But Champion noted that supply is drying up. So waiting too long could mean not getting the ideal color or features.
"The longer you wait, the less options you'll have," Champion said.
Associated Press Writer Ron Todt in Philadelphia and AP Business Writers Adrian Sainz in Miami and Candice Choi in New York contributed to this report.
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MAY 19, 2009, 11:27 A.M. ET Daimler Buys Stake in Electric-Vehicle Company Tesla Article Comments more in Europe »Email Printer Friendly Share: Yahoo Buzz ↓ More facebook MySpace LinkedIn Digg del.icio.us NewsVine StumbleUpon Mixx Save This ↓ More Text By CHRISTOPH RAUWALD Daimler AG said it will buy a 10% stake in Silicon Valley electric-vehicle start-up Tesla Motors Inc., underscoring the German auto maker's effort to strengthen its efforts in the field of alternative drive systems.
Speaking at a press conference in Stuttgart, Thomas Weber, Daimler's research and development chief, said the auto maker will get one seat on Tesla's supervisory board in order to "help us to intensify the cooperation."
Daimler didn't disclose how much it was paying for the stake, but Mr. Weber put the figure in the double-digit million euros. He declined to elaborate.
The two companies are already joining forces to integrate Tesla's lithium-ion battery packs and charging electronics into the first 1,000 electric versions of Daimler's tiny Smart car.
As part of the latest deal, Daimler and Tesla will collaborate more closely on the development of battery systems, electric-drive systems and individual vehicle projects.
"Our strategic partnership is an important step to accelerate the commercialization of electric drives globally," Mr. Weber said.
Tesla Chief Executive Elon Musk said the tie-up with Daimler has primarily industrial reasons rather than financial.
"We could have gotten a higher share price from a financial investor," Mr. Musk said, adding he expects the strategic alliance to develop into a "mutually beneficial... and very productive partnership."
"We are looking forward to a strategic cooperation in a number of areas including leveraging Daimler's engineering, production and supply chain expertise. This will accelerate bringing our Tesla Model S to production," Mr. Musk said.
The move is part of a wider initiative by Daimler to foster lithium-ion technology.
In March, Daimler founded Deutsche Accumotive GmbH, a joint venture with Evonik Industries AG, making it the first vehicle manufacturer that develops, produces and markets batteries for automotive applications.
Later this year, the Smart brand is expected to start production of as many as 1,000 vehicles with electric drives, which will mainly be used for urban mobility projects.
Write to Christoph Rauwald at christoph.rauwald*dowjones.com
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for solid slow growth will work out.
