Chrysler dealers across North America still have reasons to worry. Faced with a challenging economic situation and a promising though still precarious corporate outlook, GMAC Financial Services, owned by Cerberus (Chrysler’s former owner), have put an end to all inventory financing deals.
Basically, the company said that it’s terminating deals which previously allowed dealers to finance vehicles in their possession. GMAC is reportedly willing to renew the deals on an individual basis… provided that dealers can prove their solvency.
According to Daniel Labre, Director of Communications at Chrysler Canada, there is nothing exceptional about the situation. "It’s perfectly normal that some issues are revisited as we move to restart our operations," he says. "These financing agreements are private contracts in which Chrysler does not intervene. Every single case is unique; in fact, some dealers are doing business with other firms than GMAC. Sure enough, though, the present situation demands particular measures."
Mr. Labre did not, however, deny the possibility that some dealers will be forced to close doors at the end of the process for lack of a solid agreement. "Any closings would be rare exceptions where things aren’t running up to par," he claims.
No forced closings
Chrysler has already announced that it won’t forcibly close dealerships in Canada like GM does. GMAC’s latest decision to terminate financing deals might do it for them, though.
The automaker says it faced a Catch-22. As the Director of Communications puts it: "I can’t speak for GM, but I do know that the contracts with our own dealers were quite different. The only way for us to close dealerships was to file for protection under Chapter 11 of the U.S. Bankruptcy Code."
At General Motors, the terms of the contracts stipulated that, one year prior to renewing the deals, the company could choose not to extend them. That’s not the case of Chrysler.
"We don’t want to lose any dealerships anywhere in Canada, but at the same time, we can’t do anything against the laws of economics. One thing’s for sure: we’re planning based on the number of current dealers," adds Mr. Labre.
Basically, the company said that it’s terminating deals which previously allowed dealers to finance vehicles in their possession. GMAC is reportedly willing to renew the deals on an individual basis… provided that dealers can prove their solvency.
According to Daniel Labre, Director of Communications at Chrysler Canada, there is nothing exceptional about the situation. "It’s perfectly normal that some issues are revisited as we move to restart our operations," he says. "These financing agreements are private contracts in which Chrysler does not intervene. Every single case is unique; in fact, some dealers are doing business with other firms than GMAC. Sure enough, though, the present situation demands particular measures."
Mr. Labre did not, however, deny the possibility that some dealers will be forced to close doors at the end of the process for lack of a solid agreement. "Any closings would be rare exceptions where things aren’t running up to par," he claims.
No forced closings
Chrysler has already announced that it won’t forcibly close dealerships in Canada like GM does. GMAC’s latest decision to terminate financing deals might do it for them, though.
The automaker says it faced a Catch-22. As the Director of Communications puts it: "I can’t speak for GM, but I do know that the contracts with our own dealers were quite different. The only way for us to close dealerships was to file for protection under Chapter 11 of the U.S. Bankruptcy Code."
At General Motors, the terms of the contracts stipulated that, one year prior to renewing the deals, the company could choose not to extend them. That’s not the case of Chrysler.
"We don’t want to lose any dealerships anywhere in Canada, but at the same time, we can’t do anything against the laws of economics. One thing’s for sure: we’re planning based on the number of current dealers," adds Mr. Labre.