GMAC Rejects Chrysler Dealers

Bad news, once again, for the troubled American dealers... After last month GMAC extended interim inventory financing for Chrysler dealers, today the bank has announced it has suspended floorplan financing for an unspecified number of Chrysler Group dealers for 30 days, Autonews reported.

This means that in the given timeframe, dealers must prove their creditworthiness to continue inventory funding, Mike Stoller, GMAC spokesman said. Otherwise, the dealers will be offered an unspecified period of time to find themselves other lenders.

"We said we would take 180 days to evaluate dealers on their individual creditworthiness," Stoller was quoted as saying by the aforementioned source.

Although no official number of rejected dealers has been made public by GMAC, The Wall Street Journal writes that GMAC has already suspended financing for 85 dealers, or 6 percent of the 1,440 who applied for long term wholesale financing.

"We fully expect a majority of Chrysler dealers for which we are providing interim financing to be approved for longer term wholesale agreements," GMAC's spokesman added. "However, we did notify some Chrysler dealers that they did not qualify for long-term wholesale financing based on our credit criteria."

In all, Chrysler's dealer network now stands at 2,400. Out of them, 60 percent applied for wholesale financing from GMAC, after Chrysler Financial lost the funding it needed to provide commercial loans to dealers.

Even if GMAC is so gracious and gives dealers time to find new lenders, dealers themselves are not as thrilled. Dealer attorney Eric Chase summed it up the best: "Lenders aren't accepting new business. GMAC's rejection is the kiss of death."