DETROIT — A month after its sudden withdrawal from the leasing business, Chrysler Financial has told dealers that it will jack up their floorplan interest rates and force them to pay off older, unsold vehicles.
In an Aug. 27 letter to dealers, Chrysler Financial CEO Thomas Gilman called the moves "unprecedented actions for unprecedented times." Gilman told dealers that the new charges are a result of "a significant increase in cost" that Chrysler Financial incurred when it renewed its package of loans on Wall Street on Aug. 1.
Under their previous floorplan agreement with Chrysler Financial, dealers paid interest on unsold vehicles. But the lender did not charge fees for aged inventory. While Chrysler Financial wanted dealers to pay off inventory more than a year old, the policy was not enforced. Now it will be.
Dealers aren't happy about the charges. Chrysler Financial will meet with dealers individually to outline its rate increases.
The latest moves heighten tensions between dealers and Chrysler's captive finance arm at a time when the carmaker's sales have been shaky. In August, Chrysler LLC's sales fell 34.5 percent, the steepest decline of any major manufacturer.