SACRAMENTO – The California New Car Dealers Association (CNCDA) sent a letter to Treasury Secretary Geithner urging him to take action, as the reduction in floorplan financing threatens to close more new car dealerships in the state.
Floorplan lenders provide dealers with credit lines necessary to finance their vehicle inventory. The association said several floorplan lenders have instituted harsh new policies over the last several months that are draining dealers of much needed working capital and forcing a growing number of them to close.
These actions by floorplan lenders was the reason most often cited by the 137 California new-car dealers who closed their doors in 2008. So far this year, 23 more new-car dealers have gone out of business in the state and, according to a recent CNCDA survey, 131 additional dealers fear that they will be forced to close their doors within the next six months unless they obtain immediate floorplan financing relief.
“CNCDA has requested that Treasury Secretary Geithner take action on this important issue to prevent thousands of dealers nationwide from suffering a fate similar to California dealers,” said Peter Welch, CNCDA president. “Continued dealership closures in California and across the nation will cause our economy to fall further into recession, cost jobs to thousands of dealership employees and suppliers, and hurt local communities.”
View the complete letter to Secretary Geithner, here.