Tag Archive | "Chrysler"

Every GM Vehicle Sold Costs Taxpayers $12,200

ALEXANDRIA, Va. – According to a report by the National Taxpayers Union, American taxpayers have paid $12,200 for every General Motors vehicle sold through the beginning of 2011, and $7,600 for every Chrysler vehicle sold.

The Auto Bailout—A Taxpayer Quagmire,” a book written by Thomas Hopkins, professor of economics at Rochester Institute of Technology, analyzes what the government bailout of the auto industry has actually cost American taxpayers. This includes how much each taxpayer has contributed to the auto industry since December 2008 and how much each vehicle is costing the public. It also looks at the impact of the bailout on the domestic business environment and the overall economy.

“Every time someone in your neighborhood drives home in a shiny new Chevy Silverado, remember that it cost American taxpayers more than $12,000,” notes Pete Sepp, vice president for policy and communications for the National Taxpayers Union, a nonprofit citizens group founded in 1969. “Between this and GM’s plan to payback their bailout debt with other taxpayer funds, I wonder if all those Americans without work right now could think of any better ways to spend that money.”

The study found that the average American taxpaying family has invested roughly $800 in the auto bailouts so far. Moreover, government support for General Motors, Chrysler and GMAC—the financing subsidiary that supports sales at both—now stands at $78.9 billion with no clear plan for how the American public will ultimately be reimbursed.

The report is based on a November study released by the Government Accountability Office as well as statements and reports released from the U.S. Treasury.

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Marchionne: Fiat Cannot Match Chrysler Margins

MILAN – Fiat SpA will not be able to reach an operating margin of 7 percent to 7.7 percent targeted by sister carmaker Chrysler because Europe has not cut capacity, CEO Sergio Marchionne told Automotive News.

Marchionne, who leads Fiat and Chrysler, expects the two carmakers to reach 5.5 million car sales a year “certainly before 2014,” with half from Chrysler, in which Fiat currently has a 20 percent stake.

He said the Chrysler brand and Fiat’s Lancia marque will function as one brand in the future.

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GM, Chrysler Agree to Reconsider Dealer Closings

DETROIT – General Motors and Chrysler will reconsider decisions to close thousands of dealerships as part of a compromise meant to stave off federal legislation that would require them to keep showrooms open, the Associated Press reported.

The decision by the two automakers raises the prospect of new life for some of the more than 3,000 dealerships that were slated to close. The shutdowns are part of a broad industry restructuring.

The plans call for face-to-face reviews with dealerships and offer binding arbitration with those who face closure of their showrooms. The largest U.S. automaker also said it would be more transparent about how it picked the dealers that will close. It will also speed up payments to assist those targeted for shutdown.

As part of its deep restructuring this year, GM has said it will cut 2,400 dealers from its 6,000-dealer network by next fall. Chrysler announced similar plans, slashing 789 dealers as part of its bankruptcy proceedings this summer. Both automakers say the cuts are needed to better align their dealer network with much lower demand for cars and trucks.

But dealers accused the automakers of closing lots that were still profitable, and said the auto companies weren’t forthcoming about the criteria they used to decide who will close and who stay open.

The House passed legislation in July that would force the companies to reverse their closure plans, though the Senate has not taken it up. The Obama administration opposes the measure.

Lawmakers have warned that if an agreement isn’t reached, legislation would move forward to deal with the closures. Most of the Senate Commerce Committee wrote a letter two weeks ago to Chrysler and GM seeking more information about the talks and warning that dealers should be treated fairly.

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GMAC Will Fuel Chrysler’s Comeback

Chrysler Group LLC officials made it clear last Wednesday that securing the financing needs of its dealers will be key to realizing its $500 million, five-year plan. GMAC Financial Services responded the following day by saying that it’s quickly ramping up efforts to becoming the preferred financing source of Chrysler dealers and customers.

According to GMAC’s Nov. 5 statement, the company expects more than 90 percent of the original 1,474 Chrysler dealers which originally applied for wholesale financing to be approved in the near future. GMAC currently provides wholesale financing for 67 percent of Chrysler’s U.S. dealers and 85 percent (1,247 dealers) of Chrysler’s inventory in Canada.

Officials added that 84 Chrysler dealers are in final negotiations for wholesale financing. Fifty-eight dealers have already received conditional approval, including 41 dealerships that had problematic real-estate and working capital loans under Chrysler Financial. Eighty-five dealerships, or less than 6 percent, were notified in June that they were not approved for wholesale financing, a majority of which were previously on “finance hold” with Chrysler financial.

When GMAC was tapped to become Chrysler Group’s preferred lender in April, the company said it would enter a six-month process to vet Chrysler’s dealers for wholesale credit lines. And as of Sept. 30, GMAC’s outstanding balance of wholesale financing of Chrysler dealers was approximately $3.3 billion.

Additionally, GMAC said it helped originate $720 million Chrysler retail loans in October, or 24 percent of Chrysler’s U.S. retail sales.

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Chrysler Reveals 5-Year Business Plan

Auburn Hills, Mich. – Chrysler rolled out its new five-year business plan Wednesday, saying it intends to become “a great public company once again,” reported the Los Angeles Times.

Now managed by and partly owned by Fiat, the Italian automaker, Chrysler desperately needs new cars to build its laggard sales, according to a number of analysts. So far this year, its sales are down nearly 40 percent.

The U.S. government has pumped $12.5 billion into Chrysler over the last year and now owns 10 percent of the company. A United Auto Workers health trust owns 55 percent of Chrysler, and Fiat owns a 20 percent stake, which could grow to 35 percent if management reaches performance objectives.

The United States has also won a promise that at least some of Chrysler’s success, if it happens, would benefit U.S. workers.

Under the financing agreement, Chrysler must either manufacture 40 percent of its U.S. sales volume in the United States, or its domestic production must be at least 90 percent of its 2008 U.S. production volume.

The new Fiat management faces daunting challenges to its hopes of reviving Chrysler. Chrysler’s business situation over the last year has been dire.

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Lawmaker, NADA to GMAC: Floorplanning at Crossroads

WASHINGTON — U.S. Congresswoman Candice Miller (R-Mich.) and National Automobile Dealers Association (NADA) chairman John McEleney have undertaken separate campaigns to extend a program designed to provide floorplanning credit to Chrysler dealerships.

Up to 140 dealerships will be adversely affected when the initial six-month term ends on Nov. 15. The program began after GMAC became Chrysler’s captive lender in the wake of the OEM’s May bankruptcy filing. The facilitation of interim floorplan financing was part of an agreement between the two companies, the Obama administration and Chrysler Financial, which will cease operations in 2011.

Miller has been working to gather more signatures for her letter, which will be mailed to GMAC and Chrysler Financial as early as today.

NADA’s McEleney wrote to Chrysler Group CEO Sergio Marchionne, warning that the automaker is at risk of losing “a substantial portion of its retail network” — namely, those dealerships that were turned down for floorplanning by GMAC or don’t expect to be approved by the Nov. 15 deadline.

McEleney urged Marchionne to broker an intercreditor agreement between the two lenders and extend the program by 12 months. The full text of his letter can be found at NADA.org.

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