Post-Bankruptcy: Are Chrysler And GM Vehicles Worth More?

Since the new Chrysler (or Chrysler Group) has emerged in partnership with Fiat, the American Leasing Guide, now says all three of the American brands (Chrysler, Dodge, Jeep) are now worth significantly more than they were before bankruptcy. This is good news to customers who are either trading in their vehicles or for the few who had plans on leasing a vehicle. For leases, higher residuals values typically result in lower car payments, which means less money coming out of your pocket in this tight economy.

For the months of July and August (post-bankruptcy), the 36-month residual values set by the American Leasing Guide are 32.5% for Chrysler, 34.8% for Dodge and 37.4% for Jeep. Jeep's value increased 5% from May and June (pre-bankruptcy), Chrysler’s rose 3.7% and Dodge’s rose 3.5%. While these residuals values are still lower than the industry average, the new Chrysler (or Chrysler Group) is making progress with aged products. The only newly designed vehicles in the companies portfolio are the Dodge Challenger and the Dodge Ram.

Like the Chrysler Group, now that GM is out of bankruptcy, they too, should benefit from increase residual values with their vehicles. Unlike the Chrysler Group, GM has a slew of newly designed products debuting over the next 12 months. Just maybe the government bailout wasn't a bad thing. If both GM and Chrysler pay back their loans, this should quiet all of the critics who were adamantly against the bailout.

D-Day: 10 Black Chrysler Dealers to Lose Stores, Consumers Win in the End

On June 9, Chrysler will have 10 fewer black dealers selling its vehicles. According to our reliable industry sources, 9 men and 1 woman will be officially out of business, leaving 37 in business after the dust settles: 2 females and 35 males. While Chrysler plans to eliminate 789 dealers over the next month, both the minority and black dealer population for the automaker will still maintain the same market share prior to the cuts, 5 percent and 1.5 percent respectively. Obviously Chrysler executives put a lot of thought into its dealer hit list before making the announcement - avoiding any potentional headaches with the civil rights community and other minority dealer advocates over having acceptable representation. Many critics were expecting Chrysler - since they're currently privately-owned - to slice more minority dealers.

For consumers, this restructuring means that the dealers on Chrysler's targeted list must clear out their new-car and parts inventory by the June 9 deadline in order to take advantage of any factory rebates and incentives. Thus, consumers should be able to work some good deals over the next few weeks as those dealers become desperate to eliminate their inventory.

After the deadline, the targeted dealers will no longer be apart of the Chrysler franchise system. What does this mean to you? It means any new vehicles remaining in inventory will not qualify for any factory incentives. Also unless you're paying cash for one of Chrysler's new vehicles, while the company is in bankruptcy, you may find you'll have to cough up a larger down-payment to secure financing from some of the major financial institutions - since the residual values have dropped and auto loan delinquencies are at an all-time high, according to the American Bankers Association. In fact, over 3.53 percent of new-car loans in the last quarter of 2008 were late 30 days or more, as compared to 1.35 percent of new-car loans in the last quarter of 2004.

And across the street at GM, the bankruptcy word continues to loom. Just like Chrysler, GM is also eliminating dealers - roughly 1,200 over the next 18 months. Unlike Chrysler's dealers, GM will have more time to wind down their business as long as the company can avoid bankruptcy. However, if GM is forced into bankruptcy like Chrysler, they will face a similar accelerated path of eliminating dealers. As of now, we haven't been able to determine how many minority dealers are on GM hit list.

Although we hate to see any dealer close shop, these tough economic times will cause the remaining dealers to increase their level of customer service in order to stay in the game. Thus, this means that consumers are back in the driver's seat again - getting good deals and improved customer service!

An Insider's Perspective: Why We Must Bailout the Auto Industy Now!

Lee Iaccoca (l), former CEO of Chrysler, is shaking hands with president Carter (r) after agreeing upon a bailout plan in the late seventies.

After watching the round of political talk shows today, I have decided to share my thoughts on this subject. To read my automotive commentary filled with historical facts, visit Tom Joyner's Web site - BlackAmericaWeb.com. After reading the commentary, my hope is that this will give you an insider's view of this complex industry. Feel free to leave your comments here or on Tom's site.