NADA to Help Dealers Shift to GMAC

Following the announcement made yesterday by the US Treasury Department that the former financial arm of Chrysler, Chrysler Financial, will be closed by the end of 2011, the National Automobile Dealers Association (NADA) announced it will try and negotiate a deal with GMAC Financial Services, to help Chrysler's dealers transfer their credit lines.

Their task is however not easy, as the two financial groups are now disputing their rights over which lender will have priority over the dealerships' assets. According to NADA chairman for regulatory affairs, Forrest McConnell, if middle ground isn't reached soon, many dealers will be forced out of the business.

"Dealers are stuck in the middle," McConnell wrote in a letter to members, quoted by Autonews. "GMAC has indicated that it will not finance a number of these floorplan loans without priority, and Chrysler Financial is not willing to give it up."

GMAC has already sent out letters to some 29 Chrysler dealers, telling them about the new requirements they will have to meet, including extra collateral.

"These dealers have large real estate and working capital loans from Chrysler Financial that GMAC cannot refinance due to its lending guidelines and regulatory policies," GMAC President Bill Muir said. "GMAC is hopeful for a resolution to be able to provide wholesale financing to these dealers."

GMAC has become the primary lender for the former Chrysler Financial customers earlier this year. Ever since, the two have engaged in a bitter dispute over who will take what.

"NADA urges Chrysler Financial and GMAC to resolve this impasse at the earliest possible time," McConnell concluded. "The availability of these loans is of vital concern to dealers and for Chrysler."