More Chrysler dealers could be facing the ax as GMAC – the new lending arm for the Michigan automaker – has suspended floorplan financing to several Chrysler dealerships. GMAC has given an unspecified number of dealers 30-days to shore up their finances or be forced to find a new lending company.
If those dealers earmarked for improvement don’t attract new investors or find other means of injecting new capital, they will be cut off from GMAC for their floorpanning needs. “This shouldn’t be a surprise,” a GMAC spokesman told Automotive News. “We said we would take 180 days to evaluate dealers on their individual creditworthiness.”
Although GMAC and Chrysler are keeping tight lipped about how many dealers are being suspended, The Wall Street Journal is reporting about 80 Chrysler dealers are facing the boot. Of Chrysler’s 2,400 remaining dealers, roughly 60 percent applied for wholesale financing through GMAC. About 6 percent of those dealers that applied for financing were put on suspension.
During its time in Chapter 11 bankruptcy, Chrysler was able to shed 789 dealers.
Although it’s possible those dealers left behind by GMAC could find new lenders, it remains highly unlikely those 80 dealers will find new lenders. Credit markets remain tight, with those lenders with money reluctant to hand out cash to companies in the automotive segment. If no new money can be found, Chrysler could be down to just 2,320 dealers.
