Thousands of Auto Dealers could close without Treasury help

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An article in the Detroit News confirmed what we already know - thousands of auto dealers across the country may be forced to close due to curtailments.

Although the article doesn't specifically reference curtailments it indicates:

A big problem is that many dealers are saddled with 2007 and 2008 model year vehicles they can't sell. "Unfortunately, many dealers have been forced to exhaust precious working capital in order to satisfy unprecedented demands by their floorplan lenders" for payments.

The NADA has made a request to the U.S. Treasury that they form a program to underwrite dealer inventories to ease the curtailment pressures.

The head of the California New Car Dealers Association stated that there are 131 new car dealers in California that fear they'll go out of business in the next six months if there's not some form of relief.

Here's a link to the news report: http://www.detnews.com/apps/pbcs.dll/article?AID=/20090224/AUTO01/902240434/1148/AUTO

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Here's a link to the letter the President of the California New Car Dealers Association sent to the U.S. Treasury Secretary: http://www.centralvalleybusinesstimes.com/links/CNCDA%20Letter.pdf

The letter is well written and targets GMAC and Chrysler Financial as the two lenders with the most "draconian" policies. The request is that companies that have received TARP or TALP funds be prohibited from enforcing their curtailment programs.

The letter indicates that 54 member dealerships have recently received floorplan termination notices and none of them have been able to find another flooring source. :(