CFC to increase Flooring Rates and charge fees for aged units
 

Chrysler Financial is informing dealers that it will be increasing their flooring rates and penalizing dealers with a monthly fee for aged units.

The fee, which is really a fine, charges dealers $10/month for each car that is over 180 days old, $15/month for 270+ days old and $25/month for each vehicle that is over 360 days old.

In addition, dealers will be forced to pay 10% of the flooring amount per month for each vehicle that is more than 360 days old.

The new policies will be enforced beginning January 1, 2009.

My prediction is that there will be a number of CFC dealers that have major cash flow issues once these new rules are enforced. It's not uncommon for a dealer (especially a CJD dealer) to have aged inventory that exceeds 360 days. A small dealer that may have four aged Ram 1500s may have to come up with $8,000 - $10,000 per month in cash to pay-off the units until they are sold.

Coming up with extra cash is not easy when so many CJD dealers are losing money already.

Will dealers drop CFC due to the new policy? Are other flooring sources willing to add CJD dealers?