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Old 06-29-2010, 11:44 AM   #1
XDCX
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Default Will GM buy Chrysler Financial?

As amazing as it sounds, it's possible that one day GM dealers will be using Chrysler Financial as their captive finance company while the Chrysler dealers will be using GMAC.

How is that possible? It's simple, GM wants a captive and since GMAC is no longer available Chrysler Financial is a logical choice. To be clear, I didn't come up with this theory, it was discussed in an article in the Financial Times - click here (I like the theory, I just don't want to take credit for it.)

Clearly if GM bought Chrysler Financial they'd change the name, but the fact remains the DNA would still come from Chrysler.

As evidence there may be some substance to this theory the report in the Financial Times noted that CF's equity is currently trading at around 45 cents on the dollar - up from a low of 10 cents last year. CF is currently servicing their $26 Billion loan portfolio and some analysts believe the value of CF's debt is under priced given the recent increase in used car prices.

Will GM buy Chrysler Financial? Who knows, but in light of everything that's happened over the past 18 months I'd say anything is possible.
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Old 06-29-2010, 12:21 PM   #2
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That makes such sense, that I'm surprised this Forum didn't think of it. This is usually Ground Zero for strange things that actually happen!
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Old 06-29-2010, 04:25 PM   #3
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CF Buyer Called the other day to do a survey about coming back as a Sub Prime player and instated of buyers it would be a call center environment. She wanted my feedback as a smaller dealer.

So something is going on in the Hills.
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Old 06-29-2010, 07:33 PM   #4
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Quote:
Originally Posted by possum View Post
That makes such sense, that I'm surprised this Forum didn't think of it. This is usually Ground Zero for strange things that actually happen!
That's true. I used to like it when our member dodgequality would point out how some of our predictions here ultimately proved to be true.

Concerning CF, it sure seems like it would be cheaper for GM to buy an existing company than to try to create one from scratch. I've always thought the Task Force's decision to kill CF was to inflict pain on Cerberus. To the extent Cerberus only owns 10 - 20% of CF's equity maybe that's no longer a deal-breaker. Time will tell.
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Old 06-29-2010, 07:41 PM   #5
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Quote:
Originally Posted by ohiobuckeyes View Post
CF Buyer Called the other day to do a survey about coming back as a Sub Prime player and instated of buyers it would be a call center environment. She wanted my feedback as a smaller dealer.

So something is going on in the Hills.
Thanks for the information - that's interesting.

My prediction, for what it's worth, is there's no way CF simply winds down their operations and fades away. They'll either be purchased by an OEM or they'll re-establish themselves as an independent finance firm.

Sub-prime would be interesting. Granted, sub-prime's a risky business but I also think the recession will ruin the credit of millions of Americans - just think of all the home foreclosures. When the economy bounces back many of those people with damaged credit are going to want cars - I think there will be a strong demand for a sub-prime lender.
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Old 06-30-2010, 06:58 AM   #6
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Maybe the FICO score, as we know it, will go away, the criteria will change or be replaced by a new system to better analyze a buyers situation and credit worth given the damage done by the banking industry over the last 18 months or so.
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Old 07-01-2010, 09:25 AM   #7
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Quote:
Originally Posted by 79LilRedExpress View Post
Maybe the FICO score, as we know it, will go away, the criteria will change or be replaced by a new system to better analyze a buyers situation and credit worth given the damage done by the banking industry over the last 18 months or so.
That's a good question and I bet you're right that the FICO scoring system as we know it will change.

I think the biggest fear the banks have right now is that some people who have the ability to pay their mortgages are letting their homes go into foreclosure. It's not that they've lost their job, they just have so much negative equity that they decide to walk away.
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Old 07-01-2010, 11:44 AM   #8
79LilRedExpress
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It sure would be a good opportunity for a lending institution to get into the car business by buying deals with logic, not book values and Fico scores.
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Old 07-01-2010, 04:57 PM   #9
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I know GM and GMAC have tried for years to buy CFC because CFC was ahead of the game with their systems and service. So, wouldn't surprise me
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Old 07-02-2010, 03:24 AM   #10
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the Region
Chrysler to shut Bucks unit, lay off 290
Chrysler Financial Services Americas L.L.C. will close its call center in Chalfont on Aug. 31, putting 290 people out of work, according to a mass layoff notice filed with Pennsylvania's Department of Labor and Industry. The notice said the work would be transferred to call centers in Dallas and Jacksonville, Fla., or to employees who work from home. But, said Kelly Mankin, vice president of marketing communications, there is not much work to transfer. "We have a dramatically declining portfolio," he said. The company handled $70 billion in accounts before the automotive-industry restructuring last year. Now, it services $26 billion in accounts, he said, adding: "We're continuing to liquidate our portfolio." - Jane M.

Read more: http://www.philly.com/philly/busines...#ixzz0sWFm2Vms
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Old 07-02-2010, 06:48 AM   #11
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This is a really interesting idea. Prior to the six months leading up to the BK, Chrysler Financial was our biggest ally. We had the best relationship imaginable. We had buyers we had known forever that worked hard for us, the field reps came by all the time and kept us in the loop and up to date, and they bought the paper, a ton of it. And then it all went to hell.

Ironically, when we were a GM dealer also, we couldn't get along with GMAC for anything. But now they treat us great as a Chrysler dealer, go figure?

On a side note, I am also an auctioneer, and I work at an auto auction every week and happen to work for Chrysler Financial at the present time. I think there are some things going on that we don't really know about or understand right now, but will become clear in the future as far as CFC is concerned. I see some very unusual decisions and trends every week on the lane.
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Old 07-14-2010, 10:20 AM   #12
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Smile GM and Chrysler were reading this thread at the same time.....

Quote:
Originally Posted by LJS View Post
On a side note, I am also an auctioneer, and I work at an auto auction every week and happen to work for Chrysler Financial at the present time. I think there are some things going on that we don't really know about or understand right now, but will become clear in the future as far as CFC is concerned. I see some very unusual decisions and trends every week on the lane.
I was checking IP Addresses this morning and noticed there was an IP from GM and another IP from Chrysler reading this thread at the same time. It makes me think your comment is 100% spot on.
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Old 07-14-2010, 11:26 AM   #13
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So this is second hand info...but one of our old CFC reps came into the dealership the other day and apparently is still employed by CFC. According to him they are changing there name (to Green...something), and will focus on FICO scores above 620. He said he would be out in a couple weeks to sign new dealer agreements. I'm not sure I need another finance source....
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Old 07-15-2010, 10:38 AM   #14
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Quote:
Originally Posted by SDCJ View Post
So this is second hand info...but one of our old CFC reps came into the dealership the other day and apparently is still employed by CFC. According to him they are changing there name (to Green...something), and will focus on FICO scores above 620. He said he would be out in a couple weeks to sign new dealer agreements. I'm not sure I need another finance source....
Thanks for the information. It would make sense that CF would want to change their name if they intend to continue as a lending institution.
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Old 07-19-2010, 01:12 AM   #15
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Default Automotive News covers the story

I noticed Automotive News ran a small blog story about the possibility of GM buying Chrysler Financial last week and they referenced the article in the Financial Times.

It's hard to know what's happening behind the scenes but I have noticed this thread gets a fair amount of visitor traffic. Most likely it's from Google - we're already of the first page of search results for "Chrysler Financial General Motors."
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