Will Closing Chrysler Dealers Have to Sell Below Cost?

I have been trying to make sense of the Chrysler dealer closings and how that will affect the price of a new Chrysler, Dodge or Jeep. One thing is for certain, as these dealers close and eliminate the units in their yards a tsunami like wave of bargain basements deals should descend.

In my opinion, these offers will not only come from those dealers set to close, but from Chrysler stores that will remain in business. I think this group will become concerned about potentially losing out on deals from dealers holding fire sales.

I know I would make the effort to travel many miles out of my way to buy a vehicle from a dealer going out of business. After I buy the vehicle I would just find the most convenient dealer to go to for service or warranty claims.

Currently, closing dealers have a June deadline to sell the new Chryslers, Dodges and Jeeps in their yards or face the dilemma of losing thousands of dollars on them. This will give buyers a plentiful feeding frenzy of phenomenal deals never before seen on new cars or trucks.

Chrysler dealers had to borrow money to buy their inventories. Now with the prospect of closing, they must repay these loans. They cannot return vehicles. With Chrysler sales suffering for months, many of the closing dealers are stuck with large amounts of inventory. Unfortunately for these businesses, even if the vehicles are sold at cost, dealers still will lose thousands in interest payments when they close their doors.
Obviously this is all great news for buyers. The question to figure out is when to buy. This should be a lot like holiday shopping. Do you buy early to make sure you get what you need, or do you wait until right before franchises close to get last minute super bargains?

One competitor on the prowl for new car deals could be other Chrysler dealers who avoided the pillage. With Chrysler shutting down operations for several months, many remaining dealers might want to look at purchasing some former competitor's inventories at low rates. This is probably not what will happen though, since one of the reasons Chrysler shut production is because their dealers have too much inventory overall.

The next few weeks should be interesting. Oh, by the way, with GM underperformers also getting ready to have a similar fate by October of 2010, look for a similar bargain basement scenario coming to a GM dealer near you soon.