Latest Chrysler News

[ccbatson]

Don't be so sure...if they are standing on solid legal grounds, the process could easily be derailed. Fortunately, the system does not allow for criminal seizure of someone's property as spelled out in contractual agreements...no matter if it is 1%, or 99%.

[MoparDan]

If it happens, it happens, but I wouldn't hold my breath. Even if they bring the whole shooting match down, they'd be lucky to recoup a fraction even after a liquidation. I realize it's the "principle"...I can't recall how many times I've seen that stance fail against what's practical or feasible.
We'll just have to see how this plays out.

[mjs]

Don't be so sure...if they are standing on solid legal grounds, the process could easily be derailed. Fortunately, the system does not allow for criminal seizure of someone's property as spelled out in contractual agreements...no matter if it is 1%, or 99%.

Which criminal statute are you referring to? You do know that violating a contract is not a criminal activity and that bankruptcy courts routinely cancel contracts. If everyone got what was in their contract, bankruptcy wouldn't be very effective, now would it?

[jiminnm]

Which criminal statute are you referring to? You do know that violating a contract is not a criminal activity and that bankruptcy courts routinely cancel contracts. If everyone got what was in their contract, bankruptcy wouldn't be very effective, now would it?

Bankruptcy courts do cancel and modify contracts, but well established law gives properly recorded security liens precedence over unsecured debt in bankruptcy [[and much of chrysler's debt is secured). That frequently means secured creditors in bankruptcy get the property that secures their debt. If this court decides otherwise, I expect those secured creditors to appeal and delay finalization.

[oladub]

I told my wife about this article and her comment was that its probably just that more Republicans own car dealerships than Democrats. Something to watch anyway.

Furor grows over partisan car dealer closings

"Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Repubicans."

However, even one person quoted in the article agrees with my wife. "My hypothesis is that Chrysler dealers, being small businessmen, are more likely to donate to Republicans than Democrats, for predictable reasons. Like any small businessmen, car dealers want lower taxes, a lower minimum wage, fewer regulations, etc."

[ccbatson]

Bankruptcy courts modify contracts...yes, in a controlled fashion determined by precedent and established legal pecking orders as to who is first in line and etc. Obama is trying to circumvent this process...in other words to circumvent the rule of law.

[MoparDan]

http://finance.yahoo.com/news/Judge-...2&asset=&ccode=

Judge OKs sale of most Chrysler assets to Fiat
NEW YORK [[AP) -- A federal bankruptcy judge late Sunday approved the sale of most of Chrysler's assets to Italy's Fiat, moving the American automaker a step closer to its goal of a quick exit from court protection.

Judge Arthur Gonzalez said in his ruling that a speedy sale -- the centerpiece of a restructuring plan backed by President Barack Obama's automotive task force -- was needed to keep the value of Chrysler from deteriorating and would provide a better return for the company's stakeholders than if it had chosen to liquidate.
"Any material delay would result in substantial costs in several areas, including the amounts required to restart the operations, loss of skilled workers, loss of suppliers and dealers who could be forced to go out of business in the interim, and the erosion of consumer confidence," Gonzalez wrote in his opinion.
"In addition, delay may vitiate several vital agreements negotiated amongst the debtors and various constituents."
As a result, the proposed sale must be approved in order to preserve the value of Chrysler's business and what is ultimately left for its stakeholders, Gonzalez said.
Chrysler has maintained that selling the bulk of its assets to Fiat Group SpA is the only way it can avoid selling itself off piece by piece. If a deal does not close by June 15, the Italian automaker has the option of pulling out.
But a trio of Indiana state pension and constructions funds, which own $42.5 million of Chrysler's $6.9 billion in secured debt, aggressively objected to the sale, saying that it does not provide a big enough return for secured debt holders, while paying off unsecured stakeholders, such as the United Auto Workers union.
The Indiana funds bought their debt in July 2008 for 43 cents on the dollar. Their attorneys have said they would appeal the decision to U.S. District Court if Gonzalez approved the sale.
As part of Chrysler's government-backed restructuring plan, a UAW trust that will provide health care for hourly Chrysler retirees will receive a 55 percent stake in the new company, while Fiat will get a 20 percent stake that can ultimately grow to 35 percent. The remaining 10 percent of the company will be owned by the U.S. and Canadian governments.
In the days leading up to Chrysler's Chapter 11 filing, the automaker struck a deal with the majority of secured lenders to give them $2 billion in cash, or 29 cents on the dollar, to erase the $6.9 billion in debt. But some of the debtholders balked and the automaker was forced to file for bankruptcy protection on April 30.
Besides the Indiana funds, a group of over 300 Chrysler dealers slated to lose their franchises under the company's restructuring also objected to the sale. A separate hearing to address Chrysler motion to terminate 789 franchises is scheduled for Wednesday.
Objections were also filed by the automaker's suppliers, former employees and people with product-related claims against the company.

[MoparDan]

http://www.allpar.com/news/index.php...ning-imminent/

Windsor, Brampton re-opening imminent

June 2nd, 2009
by DaveAdmin
The Windsor Star reported that the minivan plant could be open within two weeks, with Brampton opening later, to refresh the stock of minivans in Canada. CAW Local 444 leader Rick Laporte said management is considering a three-shift operation due to supply constraints, which would avoid a Saturday shift premium and postpone payments to laid-off employees.

Laporte also said that Fiat officials were taking advantage of the break in production to inspect and measure plant equipment.

Leon Rideout, leader of CAW Local 1285, said that supplier issues, including the bankruptcy of the floor pan supplier, could hold up re-opening of the plant, which makes the Challenger, Charger, and 300.

[MoparDan]

http://www.allpar.com/news/index.php...y-by-thursday/

Update: Chrysler to exit bankruptcy on Friday

June 2nd, 2009
by Bill Cawthon
Chrysler has asked Judge Arthur Gonzalez to waive an automatic ten-day waiting period to allow the sale of its assets to NewCarCo Acquistions to proceed as quickly as possible and allow the new Fiat-led Chrysler Group LLC to commence operations.

“We are filing a request this afternoon to close the sale as early as Thursday afternoon,� said Chrysler spokeswoman Shawn Morgan. She added the company hopes to get a hearing “between now and Wednesday.�

Judge Gonzalez approved the sale on Sunday and there would normally be a statutory ten-day period between the approval and the actual sale. The waiver was granted on June 2 and Chrysler will exit bankruptcy on Friday.

[MoparDan]

I told my wife about this article and her comment was that its probably just that more Republicans own car dealerships than Democrats. Something to watch anyway.

Furor grows over partisan car dealer closings

"Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Repubicans."

However, even one person quoted in the article agrees with my wife. "My hypothesis is that Chrysler dealers, being small businessmen, are more likely to donate to Republicans than Democrats, for predictable reasons. Like any small businessmen, car dealers want lower taxes, a lower minimum wage, fewer regulations, etc."

She was spot on. In addition, here is an article from AllPar with some interesting statistics.
http://www.allpar.com/news/index.php...ues-to-spread/

"The 25% of dealers being dropped accounted for 14% of Chrysler’s overall sales; but sales are not the entire story, because many of the dealers are competing directly with other Chrysler [[e.g. a Dodge dealer literally across the street from a Chrysler dealer). Much of this is a legacy of the days when Chrysler-Plymouth, Dodge, and, in particular, AMC/Jeep sold largely unique product lines."

[ccbatson]

Wouldn't surprise me for a Statist like Obama to target the opposition party.

[MoparDan]

And now, back to the news.
This from AllPar.
http://www.allpar.com/news/index.php...-drops-planes/

Dealers get another day to prepare; Chrysler drops planes

June 3rd, 2009
by DaveAdmin
Judge Arthur Gonzalez has delayed a hearing on Chrysler’s request to terminate 789 of its dealers until Thursday, to give dealers more preparation time; the Senate Commerce Committee is questioning Jim Press and Fritz Henderson about Chrysler and GM’s dealer-dropping plans today. While Chrysler plans to terminate 789 dealers’ franchise agreements, GM is planning to drop around 2,000 dealers in upcoming years.
Judge Gonzalez granted Chrysler’s request to cancel its leases on two Gulfstream aircraft, which are based near Auburn Hills. The leases were signed in 2007.

[ccbatson]

That's nice of the State....having second thoughts on the last election yet libs?

[MoparDan]

More on the dealership situation from Yahoo.
http://finance.yahoo.com/news/GM-Chr...3&asset=&ccode=

GM, Chrysler say slashing dealerships necessary

Chiefs of GM, Chrysler say they regret wholesale closing of dealerships, but had no choice

• Ken Thomas and Tom Raum, Associated Press Writers
• On Wednesday June 3, 2009, 8:52 pm EDT

WASHINGTON [[AP) -- Partners no more, bankrupt automakers and small-town car dealers who are being stripped of their livelihood brought the anguish of their sinking fortunes into the halls of Congress on Wednesday and sparred over the companies' plans to slash franchises nationwide.

"This is our last chance to get it right," General Motors Corp. President Fritz Henderson warned testy lawmakers. Countering GM and Chrysler LLC executives in a Senate hearing room, two dealers who are soon to have their franchises wrenched away appealed for help.
"I am the face of GM and Chrysler in my town," said Peter Lopez, a Spencer, W.Va., dealer unlucky enough to be selling the brands of both fallen automakers.
Russell Whatley, a Chrysler-Dodge-Jeep dealer in Mineral Wells, Texas, said his grandfather opened the business in 1919. "A 90-year investment is just gone," he said. He called Chrysler's actions "wasteful and devastating."
Lawmakers expressed sympathy for the dealers and some impatience with the automakers. But retrenchment is inevitable as taxpayer-supported GM and Chrysler fight to stay afloat once they emerge from bankruptcy protection.
Chrysler President James Press told the hearing of the Senate Commerce Committee his company was "working hard to achieve a soft landing" for dealers. But if underperforming dealers aren't selling cars, the company can't return to profitability, he said.
"I think `soft landing' is wishful thinking," Sen. Frank Lautenberg, D-N.J., said as committee members channeled a multitude of complaints from homestate dealers spurned by GM and Chrysler.
Committee Chairman Jay Rockefeller, D-W.Va., suggested both companies were abandoning customers and dealers.
"I don't believe that companies should be allowed to take taxpayer funds for a bailout and then leave local dealers and their customers to fend for themselves with no real plan, no real notice and no real help," Rockefeller told the automakers. "That is just plain wrong."
Those dealers "are looking into a black hole right now," while companies seem to be implying "that the dealers themselves are responsible for the companies' problems," Rockefeller said.
Henderson told the committee that 500 dealers had appealed GM's decision to sever ties. As of now, GM has reversed itself on 11 of them, he said. More than 2,700 dealerships are in line to lose their franchises.
"It's unbelievable how we have been treated." Lopez said. He said he had met every financial obligation put forth by Chrysler and GM but still "they want to shut me down."
The auto executives said there are too many dealers, with many representing the same company often competing with each other for sales. Many dealerships date to the 1940s and 1950s, when motorists lived farther apart and Detroit automakers led the world in sales, they said.
After hemorrhaging customers for decades and losing market share to foreign competitors, the two automakers said their companies need to scale back all their operations to become leaner and return to profitability.
Chrysler is expected to emerge from bankruptcy protection within the next few days. GM filed for Chapter 11 protection on Monday and its officials said they hope to be able to emerge as a new company in 60-90 days.
To save money, GM, perennially one of the biggest spenders in Washington on lobbying, said it has terminated contracts with a dozen lobbying firms it has used to help make its case in Washington. The company reported spending $2.8 million on lobbying for the first three months of 2009, $500,000 of which went to outside lobbying firms, according to the nonpartisan Center for Responsive Politics.
GM spokesman Kerry Christopher said the company would retain its in-house lobbyists, who work on health care, tax, trade, safety, environmental and other issues.
A GM statement also said the company's political committee stopped making campaign contributions to federal candidates in January and plans to continue the freeze all year.
Lawmakers argued that the dealership closings will put thousands of people out of work and offer few savings to GM or Chrysler, which have received billions of dollars in federal aid. The industry, in response, says taxpayers' investment is best protected by shedding unprofitable operations and strengthening the bottom line as fast as possible.
"It's not our place to change your decision," Sen. Kay Bailey Hutchison, R-Texas, told the auto executives. "But it is our place ... to make sure that everyone is treated as well as can be in these circumstances."
Chrysler has identified 789 dealerships it plans to close next week, about a quarter of the company's dealership network. Dealers received only three weeks' notice.
General Motors told 1,100 dealerships it does not plan to renew their franchise agreements in late 2010 and expects to shed an additional 900 dealerships through attrition and by selling or discontinuing its Hummer, Pontiac, Saab and Saturn brands.
Chrysler says its departing dealerships have resold or redistributed about 90 percent of their inventory and parts through a company program. But dealers being let go want the Obama administration to give them more time.
"We have an eight-month supply of vehicles and only three weeks to clear them out," Whatley told the committee.
GM said the dealers it's not renewing are being given until October 2010 to close.
Meanwhile, a group of Republicans distressed by the Obama administration's temporary nationalization of GM is proposing that congressional approval be required before money from the Troubled Asset Relief Program is used to buy a stake in a company.
The lawmakers complained that Congress had no opportunity to review the Obama administration's decision to take a 60 percent ownership of GM.
"General Motors needed a real bankruptcy, not a political bankruptcy," said Sen. Jim DeMint, R-S.C.
"We end up owning 60 percent of the stock and not a single vote was cast on that plan," said Sen. Mike Johanns, R-Neb. Johanns said the amendment, which they hope to consider Thursday, would apply to any money provided after May 29.
The third Detroit automaker, Ford Motor Corp., has not filed for bankruptcy protection and has not taken any federal bailout money. It has also not announced widespread dealership closings.
Car dealers are a potent political force, contributing more than $9 million to federal candidates for the 2008 elections.
Associated Press writers Jim Kuhnhenn and Alan Fram contributed to this report.

[ccbatson]

Why is the automaker so involved in the dealership operation. Aren't they privately owned franchises?

[MoparDan]

http://news.yahoo.com/s/ap/us_chrysler_bankruptcy

Judge: Chrysler has good case for franchise cuts

[mjs]

Why is the automaker so involved in the dealership operation. Aren't they privately owned franchises?

I asked somone in the industry that question. Where's the savings to the manufacturer? Its because the manufacturer needs to service the dealerships. Twice as many dealerships means more people in billing, more people confirming warranty claims, more people settling dealer disputes, and more people assisting the dealership with repairs. I assume the decisions regarding who will be cut will depend heavily on volume, how well they get along with the manufacturer, and location.

[lilpup]

Dealerships are the local public face of the manufacturer. If the dealership provides poor customer service or is shady or underperforming it hurts the manufacturer.

[mjs]

Exactly. Its why they put so much into the dealer support and why they are looking for a way to reduce what they spend on it without reducing the value of the service. If a manufacturer has to show each shop how to fix a warranty issue, it will take half as many reps if there's half as many shops. They can also eliminate the bad reps and the shops that struggle with doing what the reps tell them to do.

[MoparDan]

Dealerships are the local public face of the manufacturer. If the dealership provides poor customer service or is shady or underperforming it hurts the manufacturer.

I want to say my source was from an article on AllPar:
It basically stated that "too many dealerships competing for the same customers usually leads to the high pressure approach by sales personnel."

My own take is I can see where it would; at the same time, most people I know who are in sales of any sort usually have an "in-your-face" attitude on everything.
And quoting from a message I posted yesterday:
"The 25% of dealers being dropped accounted for 14% of Chrysler’s overall sales; but sales are not the entire story, because many of the dealers are competing directly with other Chrysler [[e.g. a Dodge dealer literally across the street from a Chrysler dealer). Much of this is a legacy of the days when Chrysler-Plymouth, Dodge, and, in particular, AMC/Jeep sold largely unique product lines."

We're going to see a lot of politicans & idealogues trying to play both sides of the fence on this:
They're going to complain that both GM & Chrysler need to trim down in order to be competitive; then they're going to complain when both of the companies actually do it. They'll wet their panties with glee when union workers take a hit but have a rash when non-union workers do.

There is no real cut & dried approach to this situation. And I hate to say a lot of good people are going to be out of jobs.

[ccbatson]

Competition done right results in better service at lower costs, not the opposite

[4real]

breaking news, sale blocked
Supreme Court makes the right decision to hold off on sale to Fiat
The country hasn't totally turned into socialism yet. A win for investors

[MoparDan]

http://online.wsj.com/article/BT-CO-...08-708555.html

Chrysler: Indiana Funds Will Lose Only $5M If Fiat Deal Approved


DETROIT [[Dow Jones)--The Indiana pension funds objecting to Chrysler LLC's acquisition by Fiat SpA [[FIATY) would lose about $5 million if the deal is completed.
The funds, which stalled the deal after appealing to the U.S. Supreme Court, would receive $12.2 million once the merger takes place, Chrysler disclosed in a filing. The funds spent $17 million to buy the auto maker's distressed debt.
Chrysler wants the Supreme Court to reject an emergency motion from the pension fund group to stop Chrysler from transferring its assets to a new company operated by Fiat.
The auto maker said it would be forced to liquidate if the deal is delayed beyond June 15.
Currently, the merger is on hold until 4 p.m. EDT to give the Supreme Court an opportunity to review the case. The court could issue a decision before then or let the deadline pass without a ruling. In that instance, the appeals court stay would expire and the sale could close late Monday.
================================================== ========

Chances are, if Chrysler is liquidated, they'll get nothing in the end. Then they'll want to sue someone. It's the American Way.

[MoparDan]

http://finance.yahoo.com/news/High-c...n&asset=&ccode=

High court blocks Chrysler sale to Fiat
Justice Ginsburg delays Chrysler sale to Fiat

WASHINGTON [[AP) -- Supreme Court Justice Ruth Bader Ginsburg has temporarily delayed Chrysler's sale to Fiat.

Ginsburg says in an order Monday that the sale is "stayed pending further order."
The action indicates that the delay may only be temporary.
Chrysler has said a delay could scuttle the deal.
A federal appeals court in New York had earlier approved the sale, but gave opponents some time to file an appeal with the Supreme Court.
================================================== ======
Note the statement, "The action indicates that the delay may only be temporary." This is window dressing as the sale will go through. Feasibility & practicality will win the day.

[ccbatson]

Pesky rule of law...it will take Obama and his cronies some time to break them and get away with it.