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My understanding, from an article in the LC Sun News, is that Chrysler will not be taking the cars back, but may facilitate selling the inventory to other dealers. Chrysler will also not buy back parts inventory carried by all dealers (Sandoval has abour $400,000 in parts inventory), and these dealers will not be able to perform warranty work on any Chrysler vehicles. The dealers are getting hosed on this.
No surprise. If Chrysler did take them back, they'd be able to play the game I
mentioned, but they're better off if they can avoid doing so altogether.
The car ownership varies from state to state, depending on franchise laws. Automakers want to book a delivered car as "sold", so the paperwork technically transfers ownership, but in many states this is nothing more than a paper transaction. Like selling your house to someone for no money down and agreeing not to be paid for it until that someone, in turn, sells it. The bankruptcy changes this a bit...and the poor dealers are certainly going to get hosed in the short run, though they can easily sell the cars and the parts. A number of dealers will turn to other franchises or to used iron, so everyone won't lose their jobs..they'll just change jobs in some way.
This paragraph from a recent news article makes it pretty clear why the dealerships had to go. If fewer dealerships meant fewer sales, then Toyota wouldn't be eating Chrysler's lunch. Toyota dealers are very profitable and, thus, can provide better service and facilities and can work on a thinner profit margin.
"To show the drag of dealerships, Chrysler said in a bankruptcy filing that Toyota, with about 1,400 U.S. dealers, sold an average of 1,292 cars and trucks per showroom last year while Chrysler, with about 3,280 dealers, sold 303 vehicles per showroom."
I just bought my third Caravan in January, knowing the bankruptcy was coming, so I'm a loyal Chrysler customer. It's been a great car, as had the previous two, and I paid 2 grand less for it brand new (19 miles) than the used one (18k) I bought in 2002.
Forgot to include in my previous post, above, that dealerships DO pay interest on the cars that are on their lot, but they don't pay for the CAR until it's sold.
I have a comment about that quote. Everytime I've bought a car from a dealer, I've felt like I was the one being hosed after the sale, the shoe is on the other foot now, but, I will say this, I wouldn't have wanted things to turn out the way they have, it is bad for American Workers and for our economy.
It may be true that the finance company still owns the vehilce, but the dealer is paying interest on those shiny new vehicles every month. What happens to the local students that have always come to these dealerships for donations? Things will be tighter for everyone. Local charties, homeless, school activities, littleleague, ect,ect
It may be true that the finance company still owns the vehilce, but the dealer is paying interest on those shiny new vehicles every month. What happens to the local students that have always come to these dealerships for donations? Things will be tighter for everyone. Local charties, homeless, school activities, littleleague, ect,ect
You're completely right, danny. All the folks who hit up the Chrysler and GM dealerships for sponsorship& donations, depended on jobs for friends and family, and for dealership money (wages, purchases, etc.) that found it's way into their own businesses should have been thinking about this before they bought that nice new Hyundai, Toyota or Beemer.
Everybody says "buy American" but one look at a Walmart parking lot will tell you that talk, like the Chinese goods that fill the shelves, is cheap.
After careful consideration, I must agree that we don't need 2.5x as many Chrysler dealers as Toyota dealers.
This is especially true when you consider how many Toyotas are made in the U.S., and how many Chryslers are made overseas.
Funny how we're supposed to be loyal to companies that weren't loyal to us when it came to setting up overseas plants.
These dealers will be fine, most of them. Those new chinese automakers, Geely, Chery, etc. are going to need dealers of their own when they start selling their econoboxes stateside.
Everybody says "buy American" but one look at a Walmart parking lot will tell you that talk, like the Chinese goods that fill the shelves, is cheap.
Yeah, but first Chrysler, et al have to build products people really want. If
they had, they'd be in no worse shape right now than Toyota, Honda, VW,
Mercedes, BMW, Mitsubishi, etc., many of which are actually made in the
US while things like the Ford Focus being marketed as "US" are largely a Ford
Europe car assembled here and generating more jobs and revenue in Europe
than the US.
What you are saying is very true for some industries such as clothing and
electronics, but not for the US auto industry.
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Dealers Getting Hosed
