Chrysler 2013 Annual Report Download - page 224

223
Consolidated
Financial Statements
at 31 December 2013
As of 31 December 2013, the maximum potential amount of future payments required to be made to Ally under this guarantee was approximately
€167 million and was based on the aggregate repurchase value of eligible vehicles financed by Ally in Chrysler’s U.S. dealer stock. If vehicles
are required to be repurchased under this arrangement, the total exposure would be reduced to the extent the vehicles can be resold to another
dealer. The fair value of the guarantee was less than €0.1 million at 31 December 2013, which considers both the likelihood that the triggering
events will occur and the estimated payment that would be made net of the estimated value of inventory that would be reacquired upon the
occurrence of such events. The estimates are based on historical experience.
On 1 February 2013, the Canadian automotive finance business of Ally was acquired by the Royal Bank of Canada (“RBC”). Dealers with
financing through Ally were offered new lending agreements with RBC, as the Ally-financing arrangements did not transfer with the sale. As
such, Chrysler Group no longer has an obligation to repurchase dealer inventory in Canada that was acquired prior to 1 February 2013 and
was financed by Ally.
Other Repurchase Obligations
In accordance with the terms of other wholesale financing arrangements in Mexico, Chrysler is required to repurchase dealer inventory financed
under these arrangements, upon certain triggering events and with certain exceptions, including in the event of an actual or constructive
termination of a dealer’s franchise agreement. These obligations exclude certain vehicles including, but not limited to, vehicles that have been
damaged or altered, that are missing equipment or that have excessive mileage or an original invoice date that is more than one year prior to
the repurchase date.
As of 31 December 2013, the maximum potential amount of future payments required to be made in accordance with these other wholesale
financing arrangements was approximately €262 million and was based on the aggregate repurchase value of eligible vehicles financed
through such arrangements in the respective dealer’s stock. If vehicles are required to be repurchased through such arrangements, the total
exposure would be reduced to the extent the vehicles can be resold to another dealer. The fair value of the guarantee was less than €0.1
million at 31 December 2013, which considers both the likelihood that the triggering events will occur and the estimated payment that would
be made net of the estimated value of inventory that would be reacquired upon the occurrence of such events. These estimates are based on
historical experience.
Arrangements with Key Suppliers
From time to time, in the ordinary course of our business, Chrysler enter into various arrangements with key suppliers in order to establish
strategic and technological advantages. A limited number of these arrangements contain unconditional purchase obligations to purchase a
fixed or minimum quantity of goods and/or services with fixed and determinable price provisions. Purchases under these arrangements from
third parties were €167 million in 2013 (€340 million in 2012). Future minimum purchase obligations under these arrangements as of 31
December 2013 were as follows:
(in €million)
2014 197
2015 153
2016 109
2017 62
2018 9
2019 and thereafter 22