Will CFC's debt restructuring cause dealers problems?

[dodgeboy]

CFC'c recent debt restructuring has already brought the "aged inventory" program to the field. What we're hearing is that new aged inventory will have to be removed from the new car floor after a certain length of time. I'm guessing that with a capital reduction you could buy some more time with a unit on the used floor line. This will suck some much needed cash out of a store and make it less attractive to floor as many units. Units that are slow movers will be especially difficult to justify ordering. It will also make it more difficult to floor genuine used units due to using up your used floor line of credit. Has anybody else heard this? It seems like CFC has been especially difficult to deal with lately anyway. They're not buying very deeply and are just generally a little cranky.

[ssdd]

we are just paying for Chrysler's mistakes

[XDCX]

Wow, your sources were correct - I just read the story in Automotive News about CFC's plans to increase flooring rates and charge dealers a fee for aged units.

It also sounds like they're going to start to enforce the rule that mandates that the dealership must pay-off units that are more than one year old. With tight cash flows this could drive a number of dealers out of business.

[XDCX]

Originally Posted by ssdd

we are just paying for Chrysler's mistakes

That's so true.....

I remember in the old days that the "fence units" for the West Business Center had a unique VON Number - they all started with letters instead of numbers.

There was nothing worse that to have a dealer run an aged inventory report and see that the vast majority of the units were the ones the Factory asked him to take.

It kind of goes in the "No good deed goes unpunished" category.

[ssdd]

Originally Posted by XDCX

That's so true.....

I remember in the old days that the "fence units" for the West Business Center had a unique VON Number - they all started with letters instead of numbers.

There was nothing worse that to have a dealer run an aged inventory report and see that the vast majority of the units were the ones the Factory asked him to take.

It kind of goes in the "No good deed goes unpunished" category.

amen brotha, My rep came in and went up 1% on new floor and 2% on used it added 6500.00 a month to my nut....

[lgoering]

Now we have Chrysler Motors and Chrysler Financial putting opposite pressures on the dealers. Chrysler is forcing the hand of the dealers to order unwanted inventory in order to qualify for the 4th Qtr stair step incentive program, while CFC is forcing dealers to keep their inventories in check to avoid additional fees and payoffs of aged inventory and making it harder to move the additional inventory by tightening the credit standards.

[XDCX]

Originally Posted by lgoering

Now we have Chrysler Motors and Chrysler Financial putting opposite pressures on the dealers. Chrysler is forcing the hand of the dealers to order unwanted inventory in order to qualify for the 4th Qtr stair step incentive program, while CFC is forcing dealers to keep their inventories in check to avoid additional fees and payoffs of aged inventory and making it harder to move the additional inventory by tightening the credit standards.

lgoering - Great post - Welcome to DealershipForum.com

In the "old days" a dealer might stock a slow moving vehicle just to help support the Factory and to have a full-line of vehicles to display.

But in today's environment you get penalized by CFC on a monthly basis if those slow moving vehicles don't sell. Given the new set of "rules" why would a dealer want to stock an Avenger Sedan or a Sebring Convertible? If you really needed one you could always get it as a Dealer Trade.

The two divisions of Chrysler are pulling their dealers in opposite directions.