DES MOINES, Iowa – If you’re looking for a new Chrysler, Dodge or Jeep, this just might be your weekend.

Chrysler dealers who will lose their right to sell new cars as early as Tuesday need to unload the remaining cars and trucks on their lot or face getting stuck with them.

Chrysler, which has filed for bankruptcy protection, has told 789 dealerships they’ll no longer have a contract to sell new cars after next week.

Those with cars still on the lot will not be able to take advantage of manufacturers incentives like rebates, which will make selling them uncompetitive with other dealers.

Car dealers in that position expect a very busy weekend as customers seek deep discounts, knowing that the dealers are in a bind.

“We’re obviously drastically discounting the vehicles,” said Jerry Lande, new car sales manager for Des Moines Chrysler. “We have lots of inventory and we expect a big weekend.”

Customers shouldn’t expect ridiculous deals, though.

Some dealers have reported customers calling expecting half off or $10,000 off. Lande said he has had a few such calls.

“Clearly we get some of that, but that’s not realistic,” he said.

The dealership, which sells only Chrysler models will sell only used cars after next week.

It had 140 Chryslers still on the lot on Friday after selling 70 in 12 days, the result of a liquidation sale announced when Chrysler said it was one of the dealers to be cut.

So, if you’re in the market for a Chrysler, what can you expect?

With the understanding that prices and incentives vary from market to market, here’s an example of a realistic deal you might be able to negotiate this weekend.

Say you were interested in a $30,000 Chrysler Town and Country minivan, a popular family vehicle these days. Buyers may be able to negotiate as much as $6,000 off the price, said Jeremy Anwyl, chief executive of Edmunds.com, a Web site that provides detailed auto information for consumers.

A manufacturer’s sticker price of around $30,000 would give you a minivan with a few nice options like a DVD player, running boards and flexible seats. It should be noted that you should rarely pay a manufacturer’s suggested price unless it’s a very popular or hard to get model.

In this example, the dealer invoice — the price the dealer pays the manufacturer for the car — would be about $28,000.

Incentives you could capture vary. Chrysler is offering buyers $1,500 cash back on the minivan.

Buyers can get another $1,000 if they currently own a Chrysler, a reward for brand loyalty. By financing through a credit union, you could get another $500 off and members of the military get another $500 credit.

Source: AP

Photo: Don Ryan

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 serious 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 LLC 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.

General Motors Corp. took a similar step on Friday, giving notices to 1,100 dealers that it no longer wants them. On their lots sit 65,000 Chevrolets, Buicks, GMCs, Pontiacs and Cadillacs, but at GM, the dealers’ situation isn’t as dire.

GM isn’t in bankruptcy — at least not yet — so its dealers have more options to fight the move, which the company doesn’t plan to implement until October of 2010. They also have more time to sell the vehicles, plus GM’s dealer agreements also require the company to buy back cars and trucks that meet certain requirements on age and mileage.

Both automakers say they have too many dealers for too few sales. For years they have wanted to get rid of underperforming showrooms to expand the market area of healthier dealers. The moves would give the stronger dealers higher profits and more money to spend on marketing, facilities and personnel, making them more competitive with Japanese automakers.

But inside the 789 Chrysler showrooms to be cast aside, fear is starting to set in as dealers try to figure out what to do with expensive inventories that weren’t selling well even before the Auburn Hills, Mich., automaker entered bankruptcy protection last month.

“They’ve told us that the inventory is our problem,” said Keith Hollern, one of the owners of a Dodge dealer in Windber, Pa. “Want to buy one? We’re having a fire sale.”

Dealers borrow money to buy their inventories, then repay the loans and make a profit when the vehicles are sold. But Chrysler sales were down 46 percent the first four months of the year, so many dealers have been paying interest for months. Even if the vehicles are sold at cost, dealers still lose thousands in interest payments.

Chrysler doesn’t have the money to buy back the vehicles, said company spokeswoman Kathy Graham, but it also doesn’t want to leave dealers in a bind or see the inventory flood the market at bargain prices.

So it has signed a deal with GMAC Financial Services, Chrysler’s new finance company, to float loans to dealers that Chrysler plans to keep can take on the 789 dealers’ unsold inventory. The deal, though, doesn’t include about 4,000 2008 models still on the lots.

Remaining dealers likely will need to take the cars and trucks because all of Chrysler’s manufacturing plants have been shut down since it entered bankruptcy on April 30, Graham said. Sales in May have been stronger than anticipated, so dealers will need to replenish inventories, she said.

“They’re not building anything right now, so they’re kind of creating a little bit of a product shortage,” Hollern said. “So, surprisingly, a lot of the dealers who have gotten new contracts to go on with the new Chrysler will be looking for new inventory.”

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.

ROME – Fiat Group SpA will be on the path to becoming a global automotive powerhouse if Chief Executive Sergio Marchionne has his way.

Marchionne is set to meet Monday in Berlin with German economic and foreign ministers to discuss Fiat’s offer for General Motors Europe’s German unit, Opel.

Fiat confirmed Sunday that it is in talks to buy most of General Motors Corp.’s European operations. It also said it is evaluating the possible spinoff of its auto business to form the core of a new company.

GM has been trying to find investors for its noncore and unprofitable assets to help stave off collapse. Germany is keen to safeguard the future of Adam Opel GmbH, a core part of GM’s European operations, which employs about 25,000 people at four plants in Germany.

Fiat Group Automobiles includes the Fiat, Alfa Romeo and Ferrari brands. In addition, Fiat is in the process of acquiring U.S. automaker Chrysler LLC without putting up any cash.

Marchionne was quoted in the Financial Times on Monday as saying of his company’s plan: “From an engineering and industrial point of view, this is a marriage made in heaven.”

The new auto company, which according to Fiat would have $105 billion in annual revenue, would put the Italian automaker in markets where it has little or no presence, including North America, traditionally the largest market in the world.

“They’re going to be a global powerhouse, I guess. Who would have thought?” asked Erich Merkle, an independent auto industry analyst in Grand Rapids, Mich. “They seem to be on a buying binge right now, looking for cheap and distressed assets like Chrysler and Opel.”

Fiat is not Opel’s only suitor, however. Last week, Canadian car parts maker Magna International Inc. presented German Economy Minister Karl-Theodor zu Guttenberg with what the minister called a “rough concept for a commitment with Opel.”

The German government has said it doesn’t foresee giving direct state aid but could help an Opel investor with loan guarantees.

The Chrysler deal, which must still be approved by a U.S. bankruptcy court, would be in exchange for giving Chrysler access to Fiat’s small-car and engine technology. Chrysler cars and trucks also would be sold by Fiat through its global distribution network.

The deals would make Fiat a big global player, but that might not be the best thing for the Italian automaker, which might be overreaching with the acquisitions, said Merkle.

“This is a lot to take on, quite honestly,” Merkle said. “When you start looking at Chrysler, it’ll make them a very large automaker, but we’ve seen that large isn’t necessarily indicative of success.”

It will take years, Merkle said, for Fiat to gain any synergies by globalizing design, engineering and manufacturing operations with Chrysler and the GM units.

GM Europe also includes the British company Vauxhall and the Swedish carmaker Saab. Saab may not be included in the deal, however. The company is being reorganized under Swedish law and is likely to be separated from the rest of GM’s European operations.

Saab declined to comment on whether Fiat was one of the roughly 10 bidders who have expressed serious interest in the Swedish brand.

Saab spokeswoman Gunilla Gustavs said the sales process is continuing according to plan and that a deal is expected to be signed before the end of June.

“We are now entering a process where we are narrowing down the number of interested bidders. There are around 10 who are more serious, with whom we have held deeper talks and shared more information,” she said.

GM also makes and sells small Chevrolet-badged cars in Europe that are designed in South Korea by the company’s Daewoo unit, and it’s unlikely to sell that because that would be GM’s only remaining foothold in Europe, Merkle said.

General Motors has been trying to find investors for its noncore and unprofitable assets as part of a restructuring in which it has received $15.4 billion in aid from the U.S. government to avert collapse.

Opel has said it needs $4.3 billion to get through the economic crisis. The German government has said it doesn’t foresee giving direct state aid. Chancellor Angela Merkel has suggested the government could help an Opel investor with loan guarantees.

Fiat said that over the next few weeks, Marchionne will be looking “to assess the viability of a merger of the activities of Fiat Group Automobiles (including the interest in Chrysler) and General Motors Europe into a new company.”

“As part of this process, the group would evaluate several corporate structures, including the potential spinoff of Fiat Group Automobiles and the subsequent listing of a new company which combines those activities with the activities of General Motors Europe.”

Courtesy: Associated Press

DETROIT – Chrysler LLC filed for bankruptcy protection Thursday and will form an alliance with the Italian carmaker Fiat Group SpA in an effort to revive the nation’s ailing third-largest automaker.

The Obama administration said it had long hoped to stave off bankruptcy for the nation’s third largest automaker, but it became clear that a holdout group of creditors wouldn’t budge on proposals to reduce Chrysler’s $6.9 billion in secured debt. Clearing those debts was a needed step for Chrysler to restructure by a government-imposed Thursday deadline.

“No one should be confused about what a bankruptcy process means,” President Barack Obama said in a midday announcement. “This is not a sign of weakness but rather one more step on a clearly chartered path to Chrysler’s revival.”

Chrysler filed for Chapter 11 bankruptcy protection in New York on Thursday with the hopes of emerging in as little as 60 days under the new partnership with Fiat. The government, which has already poured $4 billion in loans into Chrysler, would provide up to $8 billion more to carry the company through bankruptcy, said senior administration officials speaking on condition of anonymity. The government will also help appoint a new board of directors.

The deals give Chrysler “a new lease on life,” Obama said.

“This is not a sign of weakness,” he said. “I have every confidence that Chrysler will emerge from this process stronger and more competitive.”

Under bankruptcy, Chrysler would still sell cars and the government would back its auto warranties. But Chrysler said Thursday that it will idle its plants during the legal proceedings. The company’s chief executive, Robert Nardelli, said he will leave when the bankruptcy is complete.

When that occurs, the Auburn Hills, Mich.-based automaker would end up owned by the United Auto Workers union, the U.S. government and Fiat. The Canadian and Ontario governments, which are also contributing financing, would have small stakes.

But Fiat, which the Obama administration hopes can jump start Chrysler with its fuel-efficient and lower-emission technology, could end up the majority stakeholder. Fiat would initially get 20 percent, a share that could rise to 35 percent if certain benchmarks are met. Fiat said Thursday it could get an additional 16 percent by 2016 if Chrysler’s U.S. government loans are fully repaid.

Obama said Chrysler Financial, the arm of the company that makes loans to buyers and to dealers to finance their inventories, will be merged into GMAC Financial Services, once General Motors Corp.’s finance arm. The new GMAC will get government support. Chrysler’s base of dealers would also be pared down.

The Treasury Department’s auto task force has been racing in the past week to clear the major hurdles that prevented Chrysler from coming up with a viable plan to survive the economic crisis ravaging nation’s automakers.

Along with the Fiat deal, the UAW ratified a cost-cutting pact Wednesday night.

Treasury reached a deal earlier this week with four banks that hold the majority of Chrysler’s debt in return for $2 billion in cash.

But the administration said about 40 hedge funds that hold roughly 30 percent of that debt also needed to sign on for the deal to go through. Those creditors said the proposal was unfair and they were holding out for a better deal.

“I don’t stand with them,” Obama said.

A person briefed on Wednesday night’s events said the Treasury Department and the four banks tried to persuade the hedge funds to take a sweetened deal of $2.25 billion in cash. But in the end, this person said most thought they could recover more if Chrysler went into bankruptcy and some of its assets were sold to satisfy creditors. This person asked not to be identified because details of the negotiations have not been made public.

On Thursday, a group of funds identifying themselves as 20 of Chrysler’s “non-TARP lenders” released a statement saying they had been sidelined during negotiations between lenders and the government. The group, which said it holds $1 billion in Chrysler debt, complained that the four banks were “obviously conflicted” because they had accepted money from the government’s Troubled Asset Relief Program while they had not gotten TARP money.

The group said its offer to the Treasury Department to reduce its claim to 40 percent was “flatly rejected or ignored.”

Fiat is getting its stake in Chrysler for giving the company access to its fuel-efficient technology, a move toward cleaner cars that the Obama administration thinks is critical to Chrysler’s future survival. The company has committed to building Fiat cars in Chrysler factories, to be sold as Chryslers.

WASHINGTON – The chief executive of Fiat Group SpA told the Obama administration Thursday that the Italian automaker could revive Chrysler LLC and help it repay billions in government loans.

Fiat CEO Sergio Marchionne said the administration’s auto task force was receptive to a proposed partnership that would give Fiat a 35 percent stake in the struggling U.S. automaker in exchange for new technology but no cash.

“We can add value,” Marchionne told reporters after the 2 1/2-hour meeting with the auto panel at the Treasury Department. “That’s the real issue and it’s a necessary ingredient of the revival of Chrysler.”

Fiat made its presentation in advance of the panel’s meeting with bondholders of General Motors Corp. later Thursday. GM is holding negotiations with its bondholders to cut two-thirds of its $27 billion in unsecured debt under the terms of a loan agreement with the government.

General Motors and Chrysler have received $17.4 billion in federal loans and requested an additional $21.6 billion last month. The government is trying to revamp the companies by March 31 and has been meeting with stakeholders as it tries to find a way to resurrect the companies.

Chrysler contends the alliance with Fiat would help both auto manufacturers. Fiat could provide Chrysler with a broad array of fuel-efficient small and mid-size cars, something the Auburn Hills, Mich.-based company lacks, and give Chrysler access to foreign markets.

Fiat’s Marchionne has been seeking a U.S. partner to bring Fiat’s successful update of the 500 subcompact and its sporty Alfa Romeo brand to the United States.

Fiat met with Steve Rattner and Ron Bloom, top advisers to Treasury Secretary Timothy Geithner, and other government officials. Marchionne said the panel “wanted to know what the industrial alliance will look like and what it will look like after we’re finished.”

“I think they were intelligently critical of all things that were relevant … and rightly so. They’re looking at taxpayers’ funding,” he said. “They recognize the magnitude of the problem and there is an absolute determination to find a solution.”

Some members of Congress have questioned whether the government should save a company with a significant foreign stake in a major U.S. automaker. Marchionne said “nothing is going to be taken out of the U.S. and the main objective is to repay every single dollar of taxpayer funding before anyone gets anything.”

WASHINGTON – Top executives of Chrysler LLC took pleas for billions in new loans to members of the Obama administration’s auto task force Wednesday.

Chrysler Chairman and CEO Bob Nardelli, Vice Chairman Tom LaSorda and Chief Financial Officer Ron Kolka huddled behind closed doors with the administration panel, said a Chrysler official, who spoke on condition of anonymity because of the private nature of the talks.

Struggling to survive, Chrysler and General Motors Corp. have received $17.4 billion in federal loans. They are seeking an additional $21.6 billion to keep operating during a difficult recession and a major plunge in auto sales.

Auburn Hills, Mich.-based Chrysler has received $4 billion in loans and wants another $5 billion in federal aid and the approval of an alliance with Italian automaker Fiat SpA.

The company said in a Feb. 17 progress report that it needed the loans to stave off a liquidation of the company. The automaker lost $8 billion last year.

President Barack Obama’s auto task force is trying to restructure GM and Chrysler by March 31. If GM and Chrysler fail to make a convincing case, the administration could pull the loans and essentially force the companies into bankruptcy protection.

Obama, in his speech to Congress on Tuesday, said, “Years of bad decision-making and a global recession have pushed our automakers to the brink” and the U.S. should not “protect them from their own bad practices.”

But he said the administration was “committed to the goal of a retooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it.”

Members of the task force, led by Treasury Department advisers Steven Rattner and Ron Bloom, met with lawmakers and suppliers earlier in the week and are scheduled to meet with GM executives on Thursday.

General Motors has said it could run out of money by the end of March and needs $2 billion in March and another $2.6 billion in April to stay in business.

GM spokesman Tom Wilkinson said the executives will travel to Washington by commercial airline. After being skewered by lawmakers for flying in corporate jets to seek government loans last year, GM announced it would return its five leased jets to their leasing companies and disband its aviation operations.

Source: Associated Press

Since last week’s surprising news of the deal between Fiat and Chrysler, speculation has been brewing on the topic of which models would come to America.
Sources tell Tuned that a total of seven models will be brought over; 4 under the Chrysler badge and another three to be determined between Alfa Romeo and Fiat.
Fiat plans to build their North American lineup in the Toluca, Mexico assembly plant in order to fill in gaps in their vehicle lineup. The way of the future seems to be more compact and fuel friendly cars like the Fiat 500, which could hit shores as early as 2012.
Chrysler also is reported to gain exclusive rights to produce the compact 1.4 liter and 1.8 liter four cylinder engines equipped with direct injection and will all meet the new U.S. fuel economy standards which are set for introduction in 2011. In trade, Fiat would have access to Chrysler’s newest toy, the V6 Phoenix engine.

All things aside, this deal should solidify both manufacturers for the future and will give Fiat a 35% stake in Chrysler along with access to the U.S. market with the main tool being Chrysler, Dodge and Jeep dealers accross North America.

First off Happy Holidays from the Tuned.com staff and we hope everyone was safe and happy when all was said and done. We are looking forward to the New Years as we have a lot planned for everyone. Make sure you check out the Coming in 2009 section.

The holidays seemed to have gone very quickly this year, maybe it was the non stop action on the government front dealing with this financial crisis. In the last few days we saw GMAC finally take the relief they were looking for from the TARP fund. The $6B may seem small compared to other numbers you may have seen, but lets remember these funds are for only GMAC. The good news, or so it seems, is that GMAC managed a $21.2B debt swap that will help the pressure put on the company. This fix isn’t without its hitches either as the original numbers was looking for $38B in swap, but hey we are the American people we will take what we can get right?

There has also been some interesting development in the new car sector as well. Nissan has released pricing on the new 370Z starting the car at $30,000 which is a small bump over the last model. There will be some interesting packages available as well including the availability of 19-inch Rays Wheels. There is word is that Acura will show the scrapped NSX concept at Detroit, don’t expect any spotlights though, Acura is keeping the budget low and will have a show only booth. Fisker will be showing a new concept at Detroit as well, difference being that this may see production, the Fisker Sunset (Karma S) will be seen in its entirety for the first time. The car looks to be released as a hybrid convertible and be able to complete 50 miles on the battery alone along with a combined 100 miles to the gallon all with a 5.8 second 0-60.

This last bit of news doesn’t come as a shock as Chrysler is being criticized for spending over $300,000 on ads to thank America. The public sees this as a sign that these companies just don’t understand what it means to be frugal. Chrysler spent a reported $200,000 with “The Wall Street Journal” and $100,000 with “USA Today”. Does this really surprise us when we are talking about gentlemen who took their private jets to D.C. to ask the people for money, it can’t, but we can be disgusted and should hold the government responsible for their “terms and agreements” and start asking some serious questions. It is bad enough that the banks that have received relief have told the government they will not include details on how they spend their money because it is none of their business. I think we can all agree it is time cancel the handouts and see how the tune changes.

Nizzan 370Z Gallery
Images courtesy of Nissan Motor Corp.

Fisker Karma S Gallery
Images courtesy of Fisker Automotive

Courtesy of AP Photo

It is incredible how a government that has been so very challenged by this whole auto industry situation could come to terms so quickly but here is goes. The Bush Administration and the rest of the government have released a fact sheet for federal aide to the auto industry.

Fact Sheet: Financing Assistance to Facilitate the Restructuring of Automobile Manufacturers to Attain Financial Viability

Purpose: The terms and conditions of the financing provided by the Treasury Department will facilitate restructuring of our domestic auto industry, prevent disorderly bankruptcies during a time of economic difficulty, and protect the taxpayer by ensuring that only financially viable firms receive financing.

Amount: Auto manufacturers will be provided with $13.4 B in short-term financing from the TARP, with an additional $4 B available in February, contingent upon drawing down the second tranche of TARP funds.

Viability Requirement: The firms must use these funds to become financially viable. Taxpayers will not be asked to provide financing for firms that do not become viable. If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.

Definition of Viability: A firm will only be deemed viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan.
Binding Terms and Conditions: The binding terms and conditions established by the Treasury will mirror those that were voted favorably by a majority of both Houses of Congress, including:

• Firms must provide warrants for non-voting stock.
• Firms must accept limits on executive compensation and eliminate perks such as corporate jets.
• Debt owed to the government would be senior to other debts, to the extent permitted by law.
• Firms must allow the government to examine their books and records.
• Firms must report and the government has the power to block any large transactions greater than $100 million.
• Firms must comply with applicable Federal fuel efficiency and emissions requirements.
• Firms must not issue new dividends while they owe government debt.

Targets: The terms and conditions established by Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including:

• Reduce debts by 2/3 via a debt for equity exchange.
• Make one-half of VEBA payments in the form of stock.
• Eliminate the jobs bank.
• Work rules that are competitive with transplant auto manufacturers by 12/31/09.
• Wages that are competitive with those of transplant auto manufacturers by 12/31/09.

These terms and conditions would be non-binding in the sense that negotiations can deviate from the quantitative targets above, providing that the firm reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations.
In addition, the firm will be required to conclude new agreements with its other major stakeholders, including dealers and suppliers, by March 31, 2009.

There is of course the business of the left over $4B and depends on accessing the second half of the TARP fund. Bush says this position was pushed when he saw validity in the automakers statement that consumers would not buy from establishments in bankruptcy. Approving these funds has exhausted the initial $350B that congress approved and now the Administration will have to seek concession to assess the second half of the TARP fund. Only after the second half of the funds have been approved could the left over $4B come in affect. Chrysler has also announced additional cuts in budgets and has let go their head of marketing Deborah Wahl Meyer and Asia Chief Phil Murtaugh there will surely be more layoffs to follow. As usual Tuned will keep you updated.

Washington – This morning at 9AM President Bush announced federal aide for GM and Chrysler who have insisted they may not make it through the next few weeks without aide. GM and Chrysler originally approached congress for $14B in federal aide but were shut down by the Senate.  However, the three combined (Ford, GM, Chrysler) are looking for a total of $34B in aide. Ford has noted that they are not in the same state as the other automakers and would simply (?) like a line of credit if the downturn worsens. The Administration insisted that normally they would advise these companies to reform under federal bankruptcy law but apparently we are not in a normal economy.

Numbers for the automotive industry sales have dropped significantly and have not been this low since the 1980s.  Automakers will be shutting down for the holidays and extending those days as well. Porsche has decided to add one day to their holiday season while others including Chrysler have added additional days. In an effort to save money we will see a very slow holiday in the industry, however, concerns have risen about suppliers to these automakers, like Chrysler, and what kind of effects the extended closures will have on these business. These funds have been given the “go” out of the TARP fund and it looks like Chrysler and GM will be going for $17.4B in federal aide. Ford has said they do not need the support at the moment and is not included in the package. These funds will come in the form of low interest bridge loans, however these companies will have to be deemed “viable” by the government although terms of such are unclear. Updates will follow.