While all of Detroit is suffering through the latest automotive decline, Chrysler is arguably weathering the storm the worst. Chrysler’s sales were down more than 34 percent in August and its financial arm – Chrysler Financial – was forced to leave the leasing business earlier this year. Tough times call for tough measures and the Michigan automaker has announced higher fees for its network of dealers.
Chrysler Financial announced on Monday that it will be raising floorplan interest rates for all Chrysler, Dodge and Jeep dealerships.
Chrysler ’s previous floorplan agreement called for dealers to pay interest on unsold vehicles, but did not charge for aged vehicles. Under the new plan – effective October 1st – dealers will now have to pay fees on vehicles that have been on the lot for 180 days or more, according to Automotive News.
Moreover, dealers will have to pay Chrysler Financial 10 percent of the value of any vehicle that has been sitting on the lot for more than 360 days, resulting in a several thousand dollar fine every month.
Chrysler says that its new policies are a direct result of falling short of securing $30 billion in loans. Chrysler was only able to hit up Wall Street for $24 billion, which also included the stipulation that it exited the leasing business.
So while the move is intended to help Chrysler’s bottom line, it has understandably upset Chrysler dealers. And with sales down 34.5 percent last month, the new policy couldn’t have come at a worse time. Several Chrysler dealers have already indicated that they will be ordering fewer vehicles, with orders heavily skewed toward faster-selling models. With a lineup made up of 70 percent trucks and SUVs, Chrysler might have just shot itself in the foot.
