Chrysler LLC, working on a viability plan to receive the remainder of its requested government loans, said it asked its network of 3,300 dealers to make concessions to help meet its restructuring plan, Bloomberg reported.
Chrysler told dealers it will take actions such as freezing an annual increase in payments to reimburse dealers for work they do for customers under warranty, said Steve Landry, head of North American sales. Chrysler will also ask dealers to buy about the same amount of vehicles in coming months as it did at the end of last year.
``The big ask for us today is for the dealers to order their wholesale requirement for February and March,'' Landry told reporters at the National Automobile Dealers Association convention in New Orleans. A viability plan Chrysler needs to be sent to the government March 31 ``will require their commitment.''
Dealers are struggling to shed inventory as vehicle sales plummeted 18 percent last year to the lowest rate since 1992. Landry said asking dealers to take on about the same amount of vehicles heading into the summer selling season as they did for the slower winter selling season is ``fair.''
Chrysler's top executives, including President James Press, will start meeting with dealers nationwide next week to discuss the plans. Chrysler has received $4 billion in low-interest loans from the U.S. government and may get an additional $3 billion after providing a restructuring plan to Congress March 31.
Landry said Chrysler is seeking about 78,000 U.S. retail sales in February, about a 12 percent drop compared to last year.
Chrysler will also make margin adjustments on the amount dealers will make per vehicle, Landry said. The margin adjustments could be up or down and will not be more than one-half of one percent, he said.
``Everyone's got to get their oars in the water,'' said Chuck Eddy, the owner of Bob & Chuck Eddy Chrysler, Dodge, and Jeep in Austintown, Ohio.
Eddy said an incentive plan to start tomorrow was a ``Hail Mary of all Hail Marys'' that will help Chrysler dealers sell vehicles. Chrysler said Jan. 22 it would offer no-interest loans, rebates of as much as $6,000 and price discounts normally given only to employees to help clear out unsold vehicles at its dealerships. The incentives start tomorrow with employee pricing offered on all models, the Auburn Hills, Michigan-based company said in a statement.
Dealers leaving a session with General Motors Corp. said they asked about the lack of financing and more expensive terms from GMAC LLC, the lender affiliated with GM.
``Lending is disproportionately less than it was in the past,'' said Larry Kull, president of Burns-Kull Automotive Group, based in Marlton, New Jersey.
Credit is constrained even after the federal government gave GMAC and Chrysler Financial, the credit arm of Chrysler LLC, $6 billion and $1.5 billion, respectively, in loans.