Chrysler's 'hit list' targets GOP donors

[ImWithStupid]

Gee, who would have thought this would get politicized?

 

 

OBAMANOMICS

 

Chrysler's 'hit list' targets GOP donors

 

Dealers who give to Republicans much more likely to be shuttered

 

By Chelsea Schilling

? 2009 WorldNetDaily

 

As part of its Chapter 11 bankruptcy, Chrysler is terminating one-fourth of its franchises ? but some say its catalog of doomed dealerships looks more like a hit list that specifically seeks to put Republican donors out of business.

 

Chrysler will now be eligible for up to $8 billion in taxpayer-funded federal aid. The federal government has already provided $8.58 billion to Chrysler and Chrysler Holding between the months of January and May of this year. The Treasury also loaned $1.5 billion to the automaker's lending arm in January.

 

President Obama has said the bankruptcy will give the company "a new lease on life," after his administration spearheaded a plan requiring the company sell to Italian automaker Fiat. Chrysler's stronger operations will be owned by Fiat, labor and the U.S. and Canadian governments. The sale could close as early as this Friday.

Obama said the bankruptcy would be a "quick" and "efficient" step toward Chrysler's "survival."

 

"The necessary steps have been taken to give one of America's most storied automakers, Chrysler, a new lease on life," Obama said. "This is not a sign of weakness."

 

But WND reviewed the list of 789 closing franchises and databases of political donors and found that of dealership majority owners making contributions in the November 2008 election, less than 10 percent gifted to Democrats while 90 percent gave substantial sums to Republican candidates.

 

The listed franchise owners contributed at least $450,000 to Republican presidential candidates and the GOP, while only $7,970 was donated to Sen. Hillary Clinton's campaign and $2,200 was given to Sen. John Edwards' campaign.

 

Obama received a combined total of only $450 in donations ? $250 from dealer Jane Baldock in Wenatchee, Wash., and $200 from Waco, Texas, dealer Jeffrey Hunter.

Chrysler's 'hit list' targets GOP donors

[mercury]

To make this real political, they should compare donations of the dealers that are getting to keep their franchises.

 

Might just blow the slant... but who knows?

[Old Salt]

I don't really understand closing the dealerships. The vast majority are privately owned and are absolutely no cost to Chrysler (and probably soon to be GM, if they follow suit). Why is Chrysler closing the outlets they use to sell their product?

[mercury]

Yeah, closing these stores makes no sense in terms of profitability. In fact, the majority of them that are not owned outright are probably also financed through a Chrysler holding co, so could perhaps create additional losses on the notes that will never be re-paid.

 

My guess is the goal is to make a select few dealers much more profitable.

 

After looking through the list and seeing the dealers from Michigan, I found that 2 of them are really (I mean REALLY) big dealers that probably move several thousand cars a year. If those thousands of cars were sold through other, smaller dealers, well.... that could really up the bottom line. (The average dealer only moves about 20-100 new cars a month, if figures are still similar to when I was in the biz.)

[eddo]

They say the cost savings will come in less competetion between same city dealers, and less stock that will need to be provided to dealerships in the same cities.

 

 

Oversaturation is part of what is killing the American auto industry. This should help that part of it.

[Old Salt]

They say the cost savings will come in less competetion between same city dealers, and less stock that will need to be provided to dealerships in the same cities.

 

 

Oversaturation is part of what is killing the American auto industry. This should help that part of it.

Chrysler gets their money from providing cars to dealerships, not actually selling cars. If the dealers take an occasional loss selling a car due to dealer competition, it's no skin off Chrysler's nose - they get there money and the consumer wins.

 

It does seem that several of the dealerships closed were in small markets with no competion from other Chrysler dealers.

 

But that's just my opinion.

[mercury]

Stock really shouldn't be an issue. They build what they can build. They send them out. Dealers trade amongst themselves for the product their customer is seeking:

"We need a blue automatic! You got a blue? How about we bring you a red 5 speed for the blue automatic?" Checks and MSOs exchange hands. (an MSO is a pre-sale title)

 

Chrysler makes thier money providing the vehicle and financing it to the dealer who will keep it on his lot until it sells.

 

Dealers make their money (mainly) thorough kick backs on finance contracts, and selling credit/life insurance on those finance contracts. Profit on the vehicle itself is getting to be more and more rare - almost anyone can get an employee discount (which has very little profit built in, certainly not enough to carry the business)

[eddo]

oohhhhhhhhhhhhhhh, good stuff to know.

[mercury]

Thinking about it more... Chrylser probably pulls their profit in a couple of ways.

 

I'm going to use GM as I explain, just becasue I'm more familiar with using the right sub-organizations with them:

 

Chevy sends 8 new cars to Dealer. GMAC pays off Chevy and adds new vehicles to line of credit to dealer. Dealer makes payments on financing, similar to making a car payment, but a lot bigger (). Dealer sells 1 of those cars and pays off GMAC. Deal closed.

 

Then....

If GMAC was used as the buyers financing, depending on interest rate, finance terms, and loan amount, Dealer receives a commission check from GMAC. GMAC is also a GM owned company, so they are making money financing the dealer, then from financing the buyer.

 

Dealers also make a huge amount from selling after market treatments: undercoating, paint protection, sound deadening treatments, scotch guard for the interior, extended warranties, and of course the Credit/Life/Accident/Health policies. As far as the undercoating/scotch guard, etc goes- it costs them mere pennies and they sell the packages for hundreds, sometimes thousands, depending ont he sucker. Selling one car a week with 1/2 of that sh!t included would make a sales person's month. Maker receives nothing from that profit... unless of course, it's all rolled into the finance contract, then they have a bigger note to charge interest on.

 

Service/Parts departments can also be profitable, but usually are not. They mostly only exist as a support team for Sales.

[Old Salt]

Thank you, Merc. It's nice to see someone explain the process in a logical and emotionless manner. It makes it much easier (at least for me) to understand the process.

 

It also points out (again, at least to me) that by closing dealerships, the major car companies will actually be losing money.

[RoyalOrleans]

Folks, do you want a sure-fire plan for salvaging Chrysler? It?s not hard. If this plan were implemented tomorrow, I would go out and buy $100,000 worth of Chrysler stock in a heart beat.

 

#1: Cancel their contract with UAW

 

#2: Tell Chrysler to build whatever it wants to build to meet customer demand. In other words: no caf? standards. Build your jeeps. Build your Dodge Ram pickup trucks and Dodge Charger automobiles. Build them and sell them. The caf? standards do not apply to you. If Americans want to buy jeeps and muscle cars and pickups then you make jeeps and muscle cars and pick ups. You sell them, and you are going to do this without being under the thumb of the United Auto Workers. Go for it.

 

Very quickly, Chrysler would become one of the world?s leading auto makers. Instead the Obama plan for our auto industry is to let government own 50% of GM. The unions will own 39% and that will leave 11% for God-knows who. We?re going to let the unions own 55% of Chrysler, and then we ? the imperial federal government ? are going to tell them what they can build and what they can?t build.

 

Now, does anybody out there want to buy GM or Chrysler stock with the unions in charge? I see absolutely no hope for GM or Chrysler as long as the unions and the government have a powerful voice in these organizations. Sorry to say it... try Toyota or Honda. (I made the switch in '97.).

[mercury]

I think it will inevitably cost them. People want convenience. They aren't going to want to travel 3 cities over to have warranty services provided. Servicing a car is a big enough hassle when you can drop it off on your way to work. They'll buy as local as possible in this situation.

 

Over saturation could be a true problem, but this would show in less profitability to the dealers, not the maker. And oversaturation wouldn't even have to be considered if they had abided by the original rules that said there needed to be a certain population requirement and a minimum mileage distance between dealers, that they started abandoning about 25 years ago.

 

I also think that pushing leases, over sales, has hurt the new car market. Why buy new when there are so many quality 2 year old vehicles to choose from at 1/2 the price?

[eddo]

excellent points by all.