Chrysler 2014 Annual Report Download - page 248

246 2014 | ANNUAL REPORT
Consolidated
Financial Statements
Notes to the Consolidated
Financial Statements
Ally Auto Finance Operating Agreement and Repurchase Obligations
In April 2013, the Auto Finance Operating Agreement between FCA US and Ally Financial Inc. (“Ally”), referred as the
“Ally Agreement”, was terminated. Notwithstanding the termination of the Ally Agreement, Ally will continue to provide
wholesale and retail financing to FCA US’s dealers and retail customers in the U.S. in accordance with its usual and
customary lending standards. Dealers and retail customers also obtain funding from other financing sources.
In accordance with the terms of the Ally Agreement, FCA US remained obligated for one year to repurchase Ally-
financed U.S. dealer inventory that was acquired on or before April 30, 2013, upon certain triggering events and with
certain exceptions, in the event of an actual or constructive termination of a dealer’s franchise agreement, including
in certain circumstances when Ally forecloses on all assets of a dealer securing financing provided by Ally. These
obligations excluded vehicles that had been damaged or altered, that were missing equipment or that had excessive
mileage or an original invoice date that was more than one year prior to the repurchase date. As of May 1, 2014, FCA
US was no longer obligated to repurchase dealer inventory acquired and financed by Ally prior to April 30, 2013.
Other Repurchase Obligations
In accordance with the terms of other wholesale financing arrangements in Mexico, FCA US 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 December 31, 2014, the maximum potential amount of future payments required to be made in accordance
with these other wholesale financing arrangements was approximately €258 million (U.S$313 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 December 31, 2014, 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, the Group enters into various arrangements with key third
party 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. Future minimum purchase obligations under these arrangements as of
December 31, 2014 were as follows:
(€ million)
2015 355
2016 301
2017 222
2018 215
2019 84
2020 and thereafter 168