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GM, Chrysler to Cover CARS Cash for Dealers

Charles Krome
by Charles Krome
August 21, 2009

It's the kind of news that '” at first glance '” makes so much sense I almost can't believe the OEMs are doing it: Both General Motors and Chrysler (of all companies) are going to start loaning dealers money to cover their slow-in-coming Cash for Clunkers rebates.

CARS became a victim of its own success, with some 750,000 vehicles likely to be sold through the program before it ends on Monday evening, a number that has completely overwhelmed the government's ability to deal with dealer rebate requests '” not that it takes much of this kind of thing to completely overwhelm the government.

But the result was/is a growing PR problem that wasn't/isn't going to help anyone. Which is where the General and Chrysler came in. Now, there are two equally cynical ways to view their efforts here. One is that the payment problems became a great opportunity for the two manufacturers that had taken their own PR hits for cutting loose hundreds of dealers. I mean, it is awfully coincidental that it's GM and Chrysler that are taking the lead on this.

This could kind of fit in with the companies' new, more customer friendly approach to the business. After all, General Motors was quick to kill off the small Buick crossover it had just announced a week or so ago. Originally slated to fill a slot in the Saturn portfolio as the new VUE, the compact CUV would have been a way to further expand GM's plug-in hybrid technology. Unfortunately, according to those who saw it at the recent General Motors product preview, instead of being a baby Enclave it was more like a full-grown disaster of Aztek-ian proportions.

The cancellation was actually pretty important. The niche between an up-market Chevrolet and an entry-level Cadillac is mighty thin, and while Buick might be able to squeeze a four-cylinder version of its new LaCrosse in there, I don't think it could do the same with a slapped-together VUE knock-off.

Chrysler, for it's part, is responding to customers by adjusting it's lifetime powertrain warranty. While it used to extend to 100,000 miles/10 years, transferring coverage to a new owner wasn't exactly simple. Chrysler (Fiat?) believes drivers would prefer shorter coverage if the warranty were more easily transferrable, so the company is driving things in that direction. Plus, the Dodge Viper is now covered, as are the company's high-performance, SRT versions of vehicles like the Jeep Cherokee, Chrysler 300C and Dodge Caliber.

Of course, this does beg the question of why Chrysler had to halve its coverage to achieve the goal of easier transferability. And frankly, the shocking news about the Buick smacks of the kind of one-off decision I'll have to see more of to believe in.

So what else could be behind the whole "helping the dealers" thing? Well, I started to wonder if GM and Chrysler had something else in common that might push them to support dealers via CARS loans ... some factor that only they share and that other OEMs, like Ford and Toyota and the rest, which aren't floating Clunker loans, don't.

Nah, it couldn't be that GM and Chrysler, recipients of billions in bailout bucks from the government, are repaying the favor by trying to keep at least some dealers from being pissed off at the folks on Capitol Hill?


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