TTAC commentator Xander Crews responded to this morning’s post about a $5k surcharge added to the sale of a new Camaro (at least in theory), and the negative remarks about car dealers made by some of our Best and Brightest.  

A few things, but first a disclaimer I’m a manager at a domestic dealership.

1. Just as it is considered okay and “fair” for a customer to shop 50 quotes and “beat up” a dealer until they sell a car at or below not only sticker but in alot of cases invoice it should be okay to charge over MSRP on any vehicle. Hell if a dealer wants to charge $5000 over sticker for a F150 XLT he can, just remember as the consumer you have the right to say “no I’m not going to pay that”. So long as it legally and properly displayed, there’s no problem with doing it. It is up to the individual store to weigh the consequences of their actions vs the potential benefits. If they piss off enough people with stuff like that they will lose customers.

(Read More…)

Well, the initial pleadings have been filed. Chrysler’s argument is essentially that it’s a “dead man walking.” In its opening memorandum of law in support of its motion to approve the sale, Chrysler argues that if the “sale” doesn’t close on the accelerated timetable proposed, it will wither on the vine, resulting in “a rapid and severe loss of value.” (Mem. at 10). Surprisingly, though, Chrysler’s opening memorandum doesn’t squarely address the issue laid bare in my previous post and in the preliminary objection of the dissident lenders; that is, why isn’t the proposed transaction a sub rosa plan of the kind prohibited under the law of the Second Circuit?

Fate may have posed the 1965 Chrysler in the graveyard. But now I now needed a Fiat as the redeemer to the crumbling Chrysler. I waited in the cemetery, but nothing walked (or drove) out of the mausoleum. Well, “fate is for those too weak to determine their own destiny”. That would explain how Fiat became Chrysler’s fate. I was determined to find one, but for a while, it appeared that I was too weak to make my date with Fiat.

So far today, the only motion filed: Chrysler debtors’ application to employ Schulte Roth & Zabel (SRZ) as “special counsel” (download pdf here).

11. During the twelve-month period prior to the Petition Date, SRZ received from the Debtors an aggregate of approximately $24,710,000 for professional services performed and expenses incurred for and on behalf of the Debtors. In addition, in April 2009, the Debtors received a retainer of $2,000,000. SRZ has applied the entire retainer to fees and expenses incurred on behalf of the Debtors and its current balance is $0.

12. The customary hourly rates of SRZ attorneys are as follows: (a) between $715 and $880 for partners, (b) between $645 and $670 for special counsel, (c) between $265 and $615 for associates, and (d) between $110 and $305 for legal assistants.

For all the “Inside Baseball” we play around here, we never forget that this is a car website. And the immediate reason Chrysler has gone under is because its products have been consistently sub-par for several cycles now. With that in mind, we can dissect the financial details of Chrysler’s alliance with Fiat all we like, but if it doesn’t produce products that sell, it goes nowhere. Car and Driver’s analysis of Chrysler’s plan (PDF) shows that Chrysler has nothing besides a tarted-up “new” 300C and EV vapor in its new-car pipeline. Which means Fiat’s going to have to step up, big style. But are Fiat’s products up to the challenge of overcoming Chrysler’s brand baggage? And will they translate into the US market success that Chrysler needs to pay off its taxpayer loans?

A Chrysler advisor has confirmed it: we’ll never see Chrysler’s government-provided $3.34 billion debtor-in-possession (DIP) financing again. Nor will Canada recoup any of the $1.16 billion they spent helping keep the zombie automaker alive through bankruptcy. Oh, and you can forget the $4 billion worth of US “loans” already bestowed upon Auburn Hills. As The Detroit News reports, all of it’s disappeared down the ChryCo-shaped rathole. “Ron Manzo, a senior financial advisor to Chrysler, said it is ‘highly likely’ the governments will recover nothing. He also noted that Chrysler isn’t required to pay interest on the $4.5 billion in debtor-in-possession financing . . . After Chrysler filed for bankruptcy Thursday, Obama administration officials refused to say how much the government might recover of the $4 billion that the Bush Administration loaned the company in January. A government official confirmed on Monday that the Treasury is unlikely to get any of the first $4 billion but declined to comment on whether the Treasury or Chrysler will be repaid all or part of the debtor in possession financing.” And you do know the feds have promised the new new Chrysler $6 billion in exit financing, right? And [an unspecified amount of] money for GMAC.

Earth2Tech, Earth2Tech. Come in, Tech. You may be wondering if green websites like Earth2Tech are anxious about the possibility that GM (and/or its new masters) will kill the electric/gas hybrid Chevrolet Volt. You may recall that the Presidential Task Force on Autos (PTFOA) tore the Volt a new exhaust pipe in its original GM viability slam down. And it seems like there’s a bit of a C11 thing happening over at RenCen. Anyway, to their credit, Earth2Tech’s Volt-related concerns are global. So they emailed GM for reassurance on the European Volt program. And, by jove, they got it! “The Ampera is being developed in the U.S., and GM remains firm on its plans to bring the Ampera to the EU,” blogger Josie Garthwaite reports. And now, from the horses mouth: “‘We don’t expect any disruptions to our plans,’ GM spokeswoman Natalie Johnson told us in an email today. Neither does the Opel team. Communications director Rene Kreis reiterated that Ampera production is on schedule to begin in late 2011.” Good to go is one thing. But no disruptions? Props for maximum chillaxitude. Alternatively, brickbats for the usual spinmeisterly BS. Your call.

I drove a Toyota Camry for 12 years and 239k miles. My two brothers also drove Camrys. My mother drove a Camry. Even my father drove a Lexus that was just a gussied-up Camry. All these Camrys were bought because there was a time when Toyota offered a car that truly few others could match. Quality, longevity, durability. They seemed to always be two clicks above the competition in virtually all respects. But now, it’s a very different story.

(Read More…)

Proponents of Chrysler’s current reinvention often refer to the exercise as a “surgical” bankruptcy. OK, who’s the surgeon? As far as I can tell, the people in charge of deciding how to cut-up Chrysler are Chrysler. “Physician heal thyself” is a nice sentiment, but it doesn’t normally involve a scalpel. Second, speed. When a patient is bleeding to death, time is of the essence. Chrysler is hemorrhaging red ink. It’s one thing to stop the bleeding (as Uncle Sam adds multi-billion dollar cash infusions). It’s another to attempt to cure the patient with a knife. And after the health care recipient leaves the theater, well, who expects an amputee to run a marathon? In other words, the operation may be a success, but the patient will still die.

A longtime member of our Best and Brightest is shopping for a new/used car. Yes, I know: shocking. But there you go. But ccd1 doesn’t know which way to jump. His query:

I am beginning to shop around for a car and have gotten the search down to two cars: RX-8 and a used Cayman.  The top of the line RX-8 (Grand Touring or R3) is about the same money as a two-year-old Cayman. The upside of the RX-8 is that it has a back seat big enough for at least one normal sized adult. First year depreciation, however, is ugly ($7-8k).  Depreciation would be better for the Cayman, but it lacks a back seat and maintenance on the Cayman would be far more costly than the Mazda. So the question is which one should I choose?

Toxicroach says he’s not a C11 guy by training; C7’s more his style. Still, it’s obvious that he shares our OCD. Which is not so good for him. But very good for the greater good. Thanks, bug man.

“Nuts & Bolts: The first day emergency motions were granted for the most part. Chrysler can continue on and doesn’t have to file a complete list of creditors or a complete petition until June. Some minor creditor action that I’m going to mostly ignore. We already covered the main objections, but Uzzi (counsel for Chrysler’s non-TARP engorged creditors) filed another objection to the use of DIP financing (download pdf here). This sums up their argument quite nicely:

(Read More…)

Saw that my local Chevy dealer had a nice, bright, Victory Red Camaro up on its terrace display today. I couldn’t resist the urge to have a look at it, even though I had just filled my car with cold dairy products and it was close to 100° out. Anyhoo, the car was nice enough. It was a V6 RS with no sunroof and auto. Not what I’d want, but it was nice. List was $27K+. Get this: the dealer added a $5000 “market adjustment.” But wait, there’s more! How about a $695 “Desert Protection Pkg.”? They also added . . . you’d better sit down . . . $999 for Nitro Tires. It was explained on another car’s sticker that it’s a lifetime supply of nitrogen for the tires. Wow, just wow. This at a dealer that’s got one foot in the grave, too. When the salesman came up to me, all excited and shit (I drove up in my BMW), he was all “Heeeeyyy, how can I get you in this baby today?” I calmly said, “I’ll write you a check now for dealer invoice + $500. Minus $1998 for having the nerve to charge $999 for that Nitrogen scheme.” His jaw dropped and he looked rather upset. He finally said, “Well, I’ll have to talk to my manager about that.” I said “Don’t bother, I wasn’t going to buy the car anyway. I am however going to report this scam to every local TV channel and the AG. Take care.”

“Insane like a fox,” you’re thinking. And yes, the Fiat CEO is set to receive “good Chrysler” with a taxpayer-funded bow on top. He also has his eyes on Opel, which the German government is desperate to find a good home for. But lightning still hasn’t actually struck once yet, and may we remind you once again that Fiat is in not-great shape financially. And yet Marchionne, mad with power, turns his eyes towards China. And South America. And Russia. In fact, according to the industry analysts Bloomberg talks to, Fiat is like communism in the 50s: everywhere, especially right behind you. You see, Marchionne “craves” 5 million annual global sales even though Fiat sold only 2.15 million cars last year. Reportedly the Chrysler deal will bring the Fiat empire to 4m sales (lets wait for those chickens to hatch, shall we?) and adding any one of GM’s global divisions (Opel, Latin America, Asia/Pacific) would take it over the 5 million mark. For Marchionne the only challenge is figuring out which ones he can pick up for free.

(Read More…)

After crying that bankrupt automakers can’t sell cars (as in, “there but for the grace of the taxpayers go we”), Chrysler is requesting $753 million to do what it said was impossible. And who minds profit-draining record incentives when taxpayers are picking up the tab? Automotive News [sub] breaks down Chrysler’s request for $4.6 billion of DIP financing, and reveals that incentives are no longer just about moving metal.

(Read More…)