Auto Industry Update

Just so you know, I am aware how scummy the auto manufacturers are, case in point:

GM is expanding its Mexican plants as it is asking for a bailout from the US government.

It appears that the Republican Party Apparachicks who operate Cerberus have decided to shut down all Chrysler plants at least until January 19. Additionally, they are instituting draconian new fees to dealers on unsold inventory:

Starting Jan. 1, Chrysler's financing arm will impose large fees on dealers holding new cars and trucks that are unsold after more than 360 days, and will require the payment of all remaining balances on any used vehicles unsold after more than six months.

Some dealerships could incur charges totaling hundreds of thousands of dollars over the course of 2009 at a time when many are already losing money and battling to stay in business, according to dealers familiar with the plans.

The reason that they give is that:

Chrysler's financing arm recently has warned dealers it may have to temporarily stop providing loans for dealers to stock vehicles on their lots because of a wave of withdrawals from a fund used to pay off those loans.

In a letter dated Dec. 12, Chrysler Financial Chief Executive Tom Gilman said dealers have been withdrawing up to $60 million a day from the fund. A copy of the letter was reviewed by The Wall Street Journal.

Dealers put their own money into the fund and use it to pay off loans that they take out to stock their lots with new vehicles. But since July, dealers have pulled $1.5 billion from the account on worries that Chrysler could go bankrupt.

They are not worried that Chrysler could go bankrupt, they are worried that flip and flee artist Cerberus, LLC will steal their money and that they will be left holding the bag, because that is how flip and flee artists work.

Additionally, GM has the Chevy Volt engine plant in Flint, MI on hold to conserve cash.

On the brighter side, it appears that GMAC is getting closer to being able to qualify as a bank holding company, which will allow them to get the bailouts from the Fed.