Now could be a good time to get a deal on a Chrysler
DETROIT -- At 789 Chrysler lots across America sit 44,000 potential bargains, cars and trucks that are stuck between shellshocked dealers and a troubled company that no longer wants their services.
The dealers have just a few weeks to sell the Chryslers, Dodges and Jeeps or risk losing thousands of dollars on them, giving people who want a car on the cheap a chance for a deal.
"You've got some very good negotiating power," said Dave Champion, director of automobile testing for Consumer Reports magazine. "(Dealers are) really looking to shift this inventory. It's just stacking up all around them."
On Thursday, Chrysler asked a New York bankruptcy court to end its franchise agreements with the dealers, casting them aside so the automaker can move forward as a new company with a leaner network of about 2,400 showrooms.
Chrysler has signed a deal with GMAC Financial Services, Chrysler's new finance company, to float loans to those dealers that Chrysler plans to keep so they can take on the 789 dealers' unsold inventory. Chrysler spokesman Kathy Graham said dealers to be cut from the company will get Chrysler warranty reimbursement and sales incentives such as rebates and low-interest financing until June 9. But after that, they won't be reimbursed for either.
That means the dealers have a big reason to get rid of the cars before their franchise agreements end. Incentives on some vehicles can run $6,000 or more, and without them, dealers who have been cut won't be competitive with remaining dealers who can still offer the discounts.
"They're not giving us a lot of time," said Michael Wolf, a Plymouth, Wis., Chrysler dealer whose franchise was among those that won't be renewed.
Erich Merkle, an independent auto industry analyst in Grand Rapids, Mich., said he doubts that remaining Chrysler dealers will need more cars and trucks before June 9, so they'll be reluctant to take on more metal.
He said the resale value of Chrysler vehicles has dropped, evidence that it's losing the power to keep new car prices stable.
