DETROIT -- Responding to pleas from worried dealers, Chrysler Financial has delayed by one month a deadline on a new policy of charging dealers fees on aging inventory on their lots.
In a memo sent today, Chrysler Financial also eliminated several vehicles from the fee list.
Chrysler Financial will now require dealers to pay off their floorplan loans at a rate of 10 percent per month on vehicles older than 360 days as of April 1 -- instead of Feb. 28, as originally planned. The fees, known as curtailment fees, have long been part of dealer franchise agreements but not enforced.
In the memo, Chrysler Financial CEO Tom Gilman said, Working with our dealer advisory council, we developed a new program that recognizes the realities of todays market and provides a solution that helps ease the financial burden on our dealers at this time.
Chrysler Financial announced it would begin imposing the fees last September after the captive failed to raise the $30 billion financial backing it sought on Wall Street. The same problem caused Chrysler Financial to exit consumer leasing in August.
The vehicles no longer subject to the curtailment fees are the Dodge 3500, 4500 and 5500 heavy-duty commercial trucks; Dodge Sprinter cargo van; and discontinued Dodge Magnum and Chrysler Crossfire cars and Chrysler Pacifica crossover.
The fees were potentially onerous for dealers who had stocked up on inventory before the credit crisis hit last summer and stalled auto sales. A dealer holding multiple older vehicles invoiced at $30,000 apiece must pay those loans off at a rate of $3,000 a month starting March 31. For dealers with many such vehicles, the costs would mount quickly.
The 30-day reprieve is a huge benefit for all the dealers around the country, said Jim Arrigo, co-chairman of the Chrysler Dodge Jeep National Dealer Council and owner of Arrigo Dodge-Chrysler-Jeep in West Palm Beach, Fla. You and I know those curtailments still need to be made, but this helps with the liquidity situation.