I watched a TV news story about the
dealers being terminated by Chrysler.
In it, they said;
Chrysler would NOT buy back the inventory of spare parts.
I can't imagine how a dealer can dispose of spare parts.
Chrysler would NOT buy back any new vehicles in stock.
I didn't realize that the Dealer owned the new cars on the lot.
Is this arrangement true of all dealers ?
If any dealers have a significant stock of parts it would surprise me.
All makes of dealers have basically kept a minimal stock of parts and
order anything they need from a large distribution center, usually
they got one on each coast.
Dealers usually have special service equipment for the makes they sell,
so some may keep service departments running. In some cases, the
service department is what keeps them going through tough times
Though some dealers have huge car inventories, these are usually
financed, not owned by the dealers. My guess is that some lending
institutions will get hosed and end up selling the cars for a big
discount, but I could be wrong.
Especially given the super high inventory levels. I can't remember the
specific article as it has been a few months now, but they predicted
deflationary pricing on autos by fall of 2009. Mainly caused by an industry
wide glut of inventory, with GM & Chrysler topping the list.
And a real good chance you are right, at some point those vehicles will be
liquidated for a nice new low price. But it may take 2-3 months into
bankruptcy for this to occur. A new car buyer has nothing to loose to wait
right now as the pricing is going to drop substatially by late fall and next
Local dealer on the news said his cars will probably go to auction if not
sold. He expects they will go cheap. There has to be some ripple effect as
finance companies get stuck when the dealer can't pay, employees are laid
One Dodge dealer said he expect to continue in business selling used cars.
He said he sells five used to one new. Our local Buick dealer said he makes
more on used than new too.
The ripple effect is real, but media often overstates it big time. In fact
most statements are quite exagerated as GM isn't going to outright disapear.
And GM isn't the only car maker in the world or in Canada. Much of the
media and union rehtoric is based on GM just disappearing and nothing takes
GM parts manufacturers will still sell parts to existing road junk. Which
is a good chunk of the business. By GM going down, others like Ford, Honda
and Toyota will pick up the slack and thus have less layoffs themselves. If
GM were kept alive with subsidies, the layoffs would ooze towards others.
The market simple does not exist for current capacity.
And a company like Magna in Ontario, GM is just one of many customers. It's
whole CAW workforce isn't going next week. Nearby Honda, Ford and Toyota
still need parts. The real danger here is their labour rates are next as
part manufacturers need to get their costs in line with reality or they too
GM & Chrysler grossly mistepped here. This economic downturn isn't just big
auto, it is everything. GMers play victimized, but in fact are the issue.
And someone laid off in say Beaverton or LA gets another job at 50-60% of
the old salary is looking for ways to cut costs. And with the real income
threat of higher taxes due to bailouts and statism government waste, they
now in masses are questioning is a home and food or an auto more important?
Peoples wages are in a recession, and prices will follow.
There is a new price for vehicles coming. If you can't make a real nice
vehicle for $20,000, or budget for $15,000 or less retail, you might as well
close your doors. The government and auto don't yet get it, the people
can't afford any more. But with the debt bubble burst and sub-zero credit
ratings, it isn't going to change because a liberal pandering politician
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