Chrysler Warns Dealers About Loans to Fund Inventories
Chrysler LLC’s financing arm has warned dealers it may have to temporarily stop loans that dealers use to pay for stocking vehicles on their lots as a result of a recent wave of withdrawals from a fund used to pay off those loans.
In a letter dated Dec. 12, Chrysler Financial Chief Executive Tom Gilman said dealers have been withdrawing up to $60 million a day from the fund, according to a copy of the letter that was reviewed by The Wall Street Journal.
Dealers familiar with the matter said they started pulling money from the “cash management account” because of fears that Chrysler’s auto operations could be forced to file for bankruptcy. “Everybody is concerned about that,” said one dealer who did not want to be named.
Chrysler Financial allows dealers to put money into the cash management account and pays them 2% interest. The money is then used to make payments on the loans dealers take out to buy new cars.
In the letter, Mr. Gilman said more than $1.5 billion has been withdrawn from the CMA fund since July.
Chrysler Warns Dealers About Loans to Fund Car Inventories - wsj.com
December 17th, 2008 at 1:38 pm
I cleaned my c.m.a. account out months ago
December 17th, 2008 at 4:11 pm
Well Mr. Gilman…It looks like you don’t have anything to worry about because you will not have to finance any wholesale for at least a month. Automotive News just reported that Chrysler is halting production at all of its North American plants.
FWIW - I’m with Lido and a lot of other guys I know…pull your money out of CMA immediately. Do not wait or you will be sorry. No matter what Mr. Gilman says about “standing together” and “reaping benefits”. He personally, CMC, and CFC could give two shits about what happens to you.
How about this Mr. Gilman, as a sign of good faith and standing together, why don’t you tear up the personal guarantees dealers and their wives had to sign to get floorplan in the first place, you know a quid pro quo of sorts. Mr. Dealer will leave his money on deposit, but you eliminate the PG. Fair?
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December 17th, 2008 at 5:27 pm
CFC has put a record number of huge chain/autogroup/metro dealers on financial hold this week .
December 17th, 2008 at 5:42 pm
http://www.autonews.com/article/20081217/ANA01/812171563/1176
Chrysler to shutter plants for a month
Automotive News
Dec. 17, 2008
FormerDealerNY referenced this Automotive News article in his post above.
Its last paragraph deserves special attention.
December 17th, 2008 at 6:29 pm
How does anyone explain all the bonuses CFC employee have been getting all these years….. they just received a $10K bonus????
December 17th, 2008 at 9:28 pm
THE OWNERS OF CHRYSLER-it is NOT a public company-are sitting on 24 billion dollars and they want my tax money? Looks like another Boston Tea Party. This time on the Potomac and senators and congressmen shold be thrown in the water in stead of tea!
December 17th, 2008 at 10:08 pm
Cerberus will no longer invest in Chrysler. Chrysler plants are no longer producing product - at least for the next month. Why should US taxpayers (creditors) lend money to Chrysler when Cerberus (stockholders) are no longer willing to invest in a company they own.
Now that is nuts.
December 17th, 2008 at 10:22 pm
* * * Breaking News * * *
According to recent news reports, Cerberus may make concessions to give away some of its principals’ stakes in Chrysler as part of a broader restructuring plan. They may even be willing to give a future government auto czar discretion to distribute Cerberus’ ownership to the United Auto Workers or even to GM. Well, I hope they keep GM out of it - completely. GM will only devour Chrysler. Chrysler must remain an independent company and would remain as such if the company was given, in part, to the UAW and allowed to go public again with the US taxpayers as creditors. Pray for our country, pray for her people, pray for world peace.
December 17th, 2008 at 10:31 pm
Diamler and Cerberus simply raped Chrysler and threw her out as if she were a piece of low life trash. They used her, they raped her, they abused her and made her feel dirty. Chrysler helped the USA win WWII when the nation was in the fight of her life. Now, Chrysler needs the help of this great nation and the Congress as she’s down, but not out.
Cerberus, if you love her, set her free! Private equity is no place for the auto industry.
December 18th, 2008 at 8:30 am
Never got as much as a hand shake for saving Daimler’s fading Mercedes line either.
Daimler switched Chrysler back to rear wheel drive only because of the parts not selling on the E class and its platform.
December 20th, 2008 at 1:36 pm
The money is already flowing. Now boys, let’s all get out there and sell those new Dodges, Jeeps, and Chryslers on our lots. Thataway we’ll be ordering new ones, which will get those production plants open way sooner. Let’s prove all the naysayers worng. Let’ make this monent just another chapter in Chrysler’s history where we prove them all wrong one more time.
December 30th, 2008 at 9:03 pm
I heard where Cerbus is no longer the majority owner of GMAC on account of the big government auto bailout. Is that true? Does anyone know if Cerbus is going to sell off most of Chrysler Financial to? I think that would be a good thing because I think they have a conflict of interest with doing both.