How Will Chrysler's Bankruptcy Affect South Carolina Dealerships?

On April 30th, Chrysler announced it was going into bankruptcy, as the automaker was unable to get all of its creditors on board with a restructuring of its debt.    President Barack Obama said the bankruptcy process will be "quick and efficient," and reassured car buyers that the government will back any new car warranties. The Treasury will provide financing for the company while it is in bankruptcy and pave the way for the automaker to ree merge from the process as a smaller, leaner company with Italian automaker Fiat as a major shareholder.  The bankruptcy filing is the first in U.S. history by a major automaker. It will come after Chrysler in recent days had struck major deals for concessions from its unions and most of its bond holders, m ade up of large banks and hedge funds.  The sticking point on the day of the deadline for Chrysler to reach financial viability was a group of smaller banks and hedge funds that refused to take substantial writedowns, known as a "haircut" or "cramdown," on the value of their bonds.


When one hears this news you have to wonder how it will affect businesses, such as South Carolina dealerships and consumers alike.   Pat Watson is executive vice-president of the South Carolina Automobile Dealers Association says Chrysler isn?t going out of business.  "It was encouraging that things won't change and you still have the opportunity to purchase a Chrysler if you'd like to," said Watson.  It is likely that some of the Chrysler dealerships may stay afloat, but some, in all reality, will not.  South Carolina currently has 80 Chrysler dealerships. Another possible factor that would affect the South Carolina dealerships is that Chrysler will offer less makes and models.   The government also plans to merge the financing companies of Chrysler and General Motors. This will actually allow dealerships to offer more financing for new cars.  Many did not believe that the bankruptcy would happen, but as Chrysler turns a new page in conjunction with Fiat, there is great hope that the company will come out stronger and healthier than before.