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04-02-2019, 02:20 PM | #1 |
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Let the Trial Begin...
Let the Trial Begin... Well it's been almost a decade and the lawsuit by a select group of the 789 OLDCO Terminated Dealers against the U.S. Treasury will finally begin. I wanted to create this thread where our members could share their thoughts as the trial progresses and testimony is heard. I'll also share my thoughts on this case and welcome feedback from our members - whether you agree with my thoughts or reject them. |
04-02-2019, 03:07 PM | #2 |
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Personal Disclosure
Before I share my thoughts in this thread I wanted to make two important details clear:
First, I have no idea what the plaintiff's attorneys will be presenting as it relates to their case against the U.S. Treasury. I have no inside information. Second, I don't consider myself to be an "expert" as it relates to this case or anything else that involves a court proceeding - this is just an expression of my thoughts/opinions. |
04-02-2019, 03:25 PM | #3 |
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Looking back 10 years ago...
I think to fully understand what happened to the 789 it's necessary to revisit the "perfect storm" that brought Chrysler and GM to bankruptcy.
In my assessment there were essentially three storms that collided and brought the auto industry to a sales level that wasn't sustainable and resulted in a massive hemorrhage of cash. The first storm was the collapse of the U.S. Housing Market. After being fueled by years of easy lending "No-Doc" mortgages the market turned quickly as foreclosures started to drive down home values. In some markets the value of a recently sold home dropped by 50% or more and even people who could afford their mortgage were walking away from their negative equity. The impact to the auto industry was a massive decrease in personal wealth and an increased pool of customers who damaged their credit to the point they were no longer able to buy a new vehicle. The second storm was a rapid spike in fuel prices - gasoline at $4.00+ was common. The impact to the auto industry was less disposable income for their pool of customers and a drastic decrease in demand for trucks and SUVs. The third storm was a rapid decrease in available liquidity for banks and auto finance companies to write new auto loans. The debt markets were in crisis because it had become clear that bond ratings were worthless because many of those "No-Doc" mortgages were actually bundled with other mortgages and sold as AAA debt. The impact to the auto industry was a shortage of funds to write new loans and higher interest rates. |
04-02-2019, 03:36 PM | #4 |
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President Obama didn't create the problem, it happened before his watch...
While I'm no fan of President Obama I think it's only fair to acknowledge that both Chrysler and GM were in a deep state of crisis before he took office. President Bush essentially "kicked the can down the road" and supplied Chrysler and GM with enough bailout funds to keep them alive until President Obama took office.
That said, I think it's President Obama's heavy hand and predetermined set of winners and losers that will allow the plaintiffs to win their case. In my opinion the President felt he had the power to do whatever he wanted and he was going to protect the people who supported his presidency and political party. The UAW would win, Cerberus and the bond holders would lose and 789 dealers would be slaughtered just to demonstrate that all factions of Chrysler had felt some pain. |
04-02-2019, 03:46 PM | #5 |
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200 years of bankruptcy law tossed out the door...
As evidence of my theory that President Obama had predetermined who would win and who would lose at it related to Chrysler's bankruptcy, I look to the fate of the Chrysler bond holders.
In U.S. Bankruptcy law it's been held for 200+ years that bond holders have a senior position when it comes to the remaining assets of a bankrupt company. Despite their senior position the Chrysler bond holders were pressured into taking losses. In theory the UAW should have lost everything before the bond holders lost their first penny but that wasn't the case with Chrysler's bankruptcy. Essentially, 200+ years of bankruptcy law was tossed out the door and the U.S. Government was operating like a "Banana Republic" where the rules to game were being re-written every day. |
04-02-2019, 04:01 PM | #6 |
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It was Jim Press' fault...
When Cerberus first hired Jim Press from Toyota I was impressed - I thought it was a fantastic hire.
As time would pass, however, I increasingly saw Jim Press as an untrustworthy person who would say whatever he needed to say to get what he wanted. My theory is the President wanted to bailout the UAW and didn't care about anything else. That said, he knew he needed a believable story on why the U.S. Government should bailout Chrysler. How would the NEWCO version of Chrysler survive if the OLDCO version died? At some point I remember reading or hearing that the fate of the 789 was essentially Jim Press' fault. Press apparently made some comment that Toyota had fewer dealers than Chrysler did and the Auto Task Force picked up on that as being part of their NEWCO solution. The Auto Task Force would try to convince the public that NEWCO was a more viable company because it had fewer dealers just like Toyota. In my opinion, Chrysler's management didn't care what they had to do to get the Government bailout money and agreed to do whatever the Auto Task Force deemed necessary. If Chrysler needed to slaughter 789 dealers to get the bailout money then that's what they'd do. |
04-02-2019, 04:13 PM | #7 |
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Only the uninformed would think that dealers cost an OEM money...
In my opinion, perhaps the most compelling example that the 789 were terminated due to a demand from the Auto Task Force/U.S. Treasury lies in the fact that only the uniformed would think that dealers cost an OEM money.
Anyone who has spent even a little time in the OEM/Dealer environment knows that dealers don't cost an OEM much money, by contrast they're a source of revenue and to a large degree the more the better. Chrysler charges their dealers for sales and management training, sales and marketing materials, special tools, signage and branding, DealerConnect access, etc. Killing off dealers, especially rural dealers, would be illogical and there's no way Chrysler's management would have killed off the 789 unless they were forced to do so. |
04-02-2019, 04:22 PM | #8 |
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AutoNation's Mike Jackson drops a Truth Bomb...
I remember an interview where AutoNation's Mike Jackson commented he was surprised that Chrysler killed off so many rural dealers because those dealers were a strategic asset. There were countless rural markets where Chrysler and the other domestic OEMs had a very high market share and the reason could be attributed to the strength of the local dealer, not the strength of the brand of vehicle.
I also recall that Lee Iacocca commented in one of his books that the rural dealers were key to Chrysler's survival because they tended to be more stable/resourceful during economic downturns when OEM most needed support from their dealers. |
04-03-2019, 08:29 AM | #9 |
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Great thread starter and welcome back. I am on both sides of this, kept my Chrysler franchises (one very rural) and lost my GM franchises (also very rural). looking forward to the drama unfolding. Lost lots of good friends in the 789
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04-03-2019, 11:38 AM | #10 |
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Yes welcome back! You have been missed.
This is going to be very interesting. I will say I'm surprised this has come to pass. Hard to believe a decade anniversary will pass during the trial if it lasts as long as they think. Go back in "The Forum" archives and read some of the posts. It's painful but a great reminder of what was happening. Maybe Xman can put a link to some of them. I'm not smart enough to know how. I also look forward to comments as this plays out. |
04-03-2019, 09:10 PM | #11 | |
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Quote:
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04-07-2019, 11:51 AM | #12 |
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There was so much fraud and theft that took place. The initial list was larger than 789. CFC intervened because they could not afford or did not want the losses. That's why you had stores such as Ken Zangara and White CJD who were already bankrupt not be part of the cuts. Similarly, Krebs Dodge was on the list but miraculously were allowed to remained open. Worse, CFC went to their floorplanned stores that were cut and demanded a walk away extortion amount of money for future charge backs and losses. They forged assignment of assets forms and would not release UCC liens unless you paid them. It made getting floorplans near impossible after you were cut. They were mining data from DMS and CRMs too and calling customers to tell them their dealer had closed even when they did not. Also, look who got terminated points. Look who eventually was given a top spot at McClarty Sanders. It was a gigantic fraud. I am forthright that many of those people at Chrysler and the Treasury deserve to die agonizing and painful deaths. Unfortunately I don't see much justice out of the case. The government can be found guilty here but that doesn't mean money for anyone. Look at the AIG case. Also if you look at Chrysler and GM dealer network in the 10 years after the bks you can see it fully contradicts Urban Sciences testimony and reports. I pray for everyone that at least discovery on this trial will be made public. These were rotten human beings
Last edited by The StraightShooter; 04-07-2019 at 12:02 PM. |
04-09-2019, 06:49 PM | #13 |
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Long time coming
The above comments really hit the nail on the head. Let's hope the judge see's it that way. I don't trust the justice dept. lawyers at all. I remain hopeful that some form of justice will finally surface.
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04-12-2019, 06:53 AM | #14 |
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As I watch the trial progress, I am amazed at the automotive knowledge of the dealers that have testified so far. I should't be. Old car guys that understand the business and are survivors of many ups and downs in the business.
Only a day and a half into the videos. I think I know what I'll be doing this weekend. Stay tuned! |
04-13-2019, 05:51 AM | #15 |
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All the comments are spot on, and I fully understand, and feel the pain. At this point, today, I don't know if I'm even ready to live thru all the lies and corruption again. But, I'm pretty sure I'll get geared up as it goes along!
By the way, I'm still waiting for my call, or visit, with Jim Press. |
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