John Tanner, owner of Tanner Companies, which includes the Chrysler dealership in Brainerd, urged his employees to remain positive Thursday after Chrysler filed for bankruptcy protection.
"My belief is that it will be seamless for the customer. They are not going to see a change," Tanner said in terms of sales, maintenance and warranties. "The large (impact) will be on people Chrysler owes money to."
Tanner said he expects money will be frozen for a period of time.
"So whether you are a vendor or a dealer all of a sudden there is a bunch of cash tied up with the manufacturer at a period of time when there really isn't readily cash available. And those are the things we have to monitor."
Tanner said a major issue is the credit crunch. Buyers who would have been approved for loans just six months ago are now unable to qualify.
"It's been pathetic," Tanner said. "I think the No. 1 thing that's affected our sales and most dealer sales is the availability of credit for the consumer and the availability of credit for the dealer. It's pretty much nonexistent."
Dealers buy vehicle inventory by putting it on a credit line with a bank, Tanner said, adding there may be 20 percent to 30 percent of dealers who are in jeopardy or who have already lost their vehicles.
What the Chrysler bankruptcy protection will mean for Tanner's operation in Brainerd has yet to be seen. Tanner said it will depend on how it's structured.
"The amount of money Chrysler owes me is substantial and if that gets tied up it means we don't have the cash flow," he said.
Tanner hasn't taken a day off since October. Noting the General Motors news earlier this week that about 1,200 dealers will be cut or combined, Tanner said he expects Chrysler will do the same during the Chapter 11 reorganization. With Brainerd's hub city status, Tanner said he is not worried about being on the hit list.
"We're worried about funding and cash flow," Tanner said. "They cannot decide who they are going to pay until it goes into court."
With 39 years and one month in the business, Tanner said he's never experienced a situation like this or expected to. And Tanner said the local banks he's worked with for years have turned their backs on him now.
"None seem to be willing to help us," he said.
The stimulus money and Wall Street bailout didn't reach Main Street businesses, Tanner said. "If we can't get the adequate funding for the consumer and the dealers, there's going to be a lot of dealers going down."
Customers are coming in the door willing to buy vehicles, but getting financing is the problem, Tanner said.
"Probably we're getting one out of two financed," Tanner said. "And of the ones that didn't get financed 90 percent of them would have been financed six months ago. ... It's disheartening. They are good people with good credit. They want to buy a car, but the requirements for buying a car have changed so much - all of a sudden they want 20 percent down and they just don't have $6,000, $7,000, $8,000 lying around, but they can make the payments. That's what's changed."
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