Letter from a Dodge Dealer

It's pretty funny to see the right wingers whine about this guy going down, ie. not getting bailed out, and at the same time rant about the great Obama Socialist Conspiracy.

Chrysler filed for Chap 11. The dealers are going to get screwed regardless of whatever else happens as part of bankruptcy, it's the way the contracts are written. It doesn't appear they have a lot of recourse. I guess we could bail him out, then you could bitch about that too. Pretty rich IMO, you guys would get to bitch either way.
 
Quote from Shreddog:

Chrysler filed for Chap 11. The dealers are going to get screwed regardless of whatever else happens as part of bankruptcy, it's the way the contracts are written. It doesn't appear they have a lot of recourse. I guess we could bail him out, then you could bitch about that too. Pretty rich IMO, you guys would get to bitch either way.
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This mess is not a bankruptcy, regardless of what Chrysler and the government is telling everyone.

In a real bankruptcy the senior debt holders come first, not the employees via their union.

In a real bankruptcy all of the dealers would take it on the chin instead of a select few.
 
Quote from jprad:


In a real bankruptcy all of the dealers would take it on the chin instead of a select few.
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Huh? Are you saying they should close all of the dealers? Because otherwise SOME of the dealers are going to close and they are going to get screwed. Which is exactly what is happening. The dealer network was going to shrink once Chapt 11 was filed, it was pretty obvious I'd say. Do you really think under a normal bankruptcy (ie liquidation, which was the alternative) any creditor was going to take back the inventory when there is no obligation to do so?
 
I hope they all get fucked in the ass. Whatever doesn't get shut down this time around, will get shut down when chrsyler returns to bankruptcy after the unions fuck it up. Hopefully this time we have a staunch republican president in office to tell these bankrupt companies to get lost so room can be made for successful auto builders.
 
Quote from bond_trad3r:

I hope they all get fucked in the ass. Whatever doesn't get shut down this time around, will get shut down when chrsyler returns to bankruptcy after the unions fuck it up. Hopefully this time we have a staunch republican president in office to tell these bankrupt companies to get lost so room can be made for successful auto builders.
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I agree it would be nice, but the last Republican made sure the bondholders of BSC, AIG, LEH, and MER were kept whole. I don't think this Republican politician exists, at least not by the time he becomes president.
 
Quote from Shreddog:

Do you really think under a normal bankruptcy (ie liquidation, which was the alternative) any creditor was going to take back the inventory when there is no obligation to do so?
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Uh, that's exactly my point. If the actual creditors were involved there would be a rational methodology of culling the weakest, non-profitable dealerships to maximize the chances of a successful reorganization.

Have you seen Chrysler publish their methodology on how they selected which dealerships are going to be closed?

No. All you've seen is their CFO yesterday saying all the dealerships would have to close if the Fiat merger doesn't go through.

That's not a plan, that's a threat.

If the government weren't involved and this was a "normal" bankruptcy the creditors would, after 120 days, have the option of filing their own reorganization plan or even opting to file a chapter 7 to liquidate the company.
 
Quote from jprad:

Uh, that's exactly my point. If the actual creditors were involved there would be a rational methodology of culling the weakest, non-profitable dealerships to maximize the chances of a successful reorganization.

Have you seen Chrysler publish their methodology on how they selected which dealerships are going to be closed?

No. All you've seen is their CFO yesterday saying all the dealerships would have to close if the Fiat merger doesn't go through.

That's not a plan, that's a threat.

If the government weren't involved and this was a "normal" bankruptcy the creditors would, after 120 days, have the option of filing their own reorganization plan or even opting to file a chapter 7 to liquidate the company.
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I like how you say there was no methodology in the closing of dealerships while complaining that the plan for closing dealerships wasn't published. So you don't know the methodology used, you don't know the details of any given dealership, therefore you don't like the plan you don't know anything about beyond that some dealers are complaining about how they were treated.

The creditors still had all the rights you described to force a liquidation, but opted out for the quick cash up front despite going on and on about how much better they'd have done under a liquidation. Could it be they were (gasp) bluffing? They thought they were going to be made whole just like every other bailout so far and they were wrong. They wanted the gov't to step in all along and they expected the same treatment Bush would have given them.

Do I personally think Chrysler should have been liquidated? Yes. But the reality is it wasn't going down, didn't matter who was president. No one wanted to risk the supplier chain going down with it and (arguably) the gov't was the only place to go for DIP financing for a prepackaged bankruptcy. The gov't was going to be involved. Only difference was who was going to get the shaft, the unions or the creditors. The dealers were getting it regardless.
 
Quote from Big Money:

I personally disagree with those who think the quality of Chrysler (and most domestics) are on par with the reliability of most imports. It just isn’t true. Of course I mean generally as there are always those who get the good one, or the few models they make that are good. Quality has improved over time for sure but on average, you are going to have less trouble with your Honda or Toyota on AVERAGE. If you don’t believe me, just check the resale values of all these cars. I know plenty of dealers and many wouldn’t own a Chrysler out of warranty for any reason. No matter how much things change, they still remain the same: you get what you pay for.

There is a reason why that Chrysler has lost 50% of its value in less than 2 years. If the quality was the same, the values would be the same. But they aren’t. Not even close. Talk to a dealer about the value of two comparable 2007 chrysler products compared to Honda or Toyotas. I have a friend (a dealer himself) who just bought a 2005 honda odyssey with almost 20k more miles on it than the comparable 2007 town & country/caravan with less miles (around 31k). We took the caravan on a fishing trip for a long weekend (the advantage of being a dealer) and there is no comparison. And the Honda cost 4k more for an older model with more miles. Money well spent IMHO. The disparity is probably going to get worse as the uncertainty over the domestic products is in question for the time being. And before you say the disparity is only occurring now because of this crisis, think again. The disparity has been like this for a very long time.

The bottom line is they make inferior products and it is time to pay the piper. If the quality were the same, I would have considered one in the past (I drive a BMW now). But they aren’t. I do feel for the guy on a personal level who was probably misled by Chrysler leading up to losing his franchise. But it should be survival of the fittest. There have been plenty of warning signs leading up to this. He ignored them just like many traders ignore the signs of change coming. That is how it works in every business, it is just more obvious trading.

Now the gun mint is suspending senior creditors rights and putting the union interests above more senior creditors and showing the world investing here has much higher risk premiums than previously accounted for is a huge negative precedent and how that is not obvious to the moronic gun mint is quite shocking to me. We are showing the world contracts and creditor rights can be changed at any time. But by doing this, I can guarantee I won’t support that business model by buying a car from whatever entity emerges on the other side of this, except with the spending of our tax dollars on this of which I have little control. The big picture they are focusing on is disgraceful and they will learn their lesson the hard way, as usual (I hope).

Good trading.

BM
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Excellent post

Kev
 
Quote from Big Money:

........Now the gun mint is suspending senior creditors rights and putting the union interests above more senior creditors and showing the world investing here has much higher risk premiums than previously accounted for is a huge negative precedent and how that is not obvious to the moronic gun mint is quite shocking to me. We are showing the world contracts and creditor rights can be changed at any time. But by doing this, I can guarantee I won’t support that business model by buying a car from whatever entity emerges on the other side of this, except with the spending of our tax dollars on this of which I have little control. The big picture they are focusing on is disgraceful and they will learn their lesson the hard way, as usual (I hope).

Good trading.

BM
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gun mint? Meaning GOverN-MiNT?

Wasting taxpayer dollars on a private entity is insane and immoral. But, the most alarming action the government is taking is suspending the law and taking rights away from senior debt holders and giving those rights to the unions. This is just unfathomable and is a knife in the back of our business legal structure. If allowed to stand, it will have a far reaching negative impact on our ability to conduct normal business. I am hopeful that the bankruptcy judge will stand up to Obama and do the right thing by applying the law instead of politics to the Chrysler bankruptcy.

Even Congress realized that allowing judges the ability to alter legal contracts was insane and defeated the legislation supported by Obama to do just that.

Obama has the mind of a child when it comes to reality.
 
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