Chrysler seems to have found its way out of bankruptcy, but its dealers are facing another roadblock as GMAC Financial has confirmed it is suspending financing for some Chrysler dealers.
In May, after Chrysler filed for bankruptcy, GMAC became Chrysler dealers’ preferred lender, taking over for Chrysler Financial, a separate company from Chrysler the car maker.
The approval for new financing provided hope the necessary lending would be provided for many Chrysler dealers to remain in business.
“GMAC has been providing underwriting for individual Chrysler dealers on an interim basis while the credit evaluations are being conducted,” said Beth Coggins, a GMAC representative. “GMAC has begun the process of alerting Chrysler dealers on its decision whether or not to extend permanent financing.”
GMAC originally received $7.5 billion in additional government aid for loans, but the company said it cannot provide for financially unstable dealers. It began reviewing dealerships in May, and the process can take nearly six months.
“GMAC evaluates applications based on our standard underwriting procedures to determine dealer credit worthiness,” Coggins said.
Without the financing, Chrysler dealerships could be pushed out of business, further reducing sales and adding to the 789 dealers Chrysler has already shed.
GMAC declined to say how many of the dealers would no longer get financing, and would not discuss when the process will be completed.
However, the Wall Street Journal reported that about 60% of Chrysler’s remaining 2,400 dealers applied for wholesale financing with GMAC, and about 6% have been informed that their wholesale financing has been temporarily suspended.
“We offer financing for qualified dealers and consumers,” Coggins added. “GMAC is committed to being part of the solution to stabilizing the U.S. auto industry.”
