By on May 25, 2009

Automotive News reports that bailout binging, eleventh-hour-back-room-rule-change bank (and former captive financier) GMAC has one set of rules for Chrysler dealers, another for GM’s. “Chrysler dealers must make monthly payments totaling 10 percent of the original outstanding balance on new vehicles that have been sitting on the dealership lot at least a year. [Plus a $25 “surcharge” per year-or-older car.] By contrast, GM dealers make monthly payments totaling 10 percent of the original balance on new vehicles that have sat on dealership lots at least 18 months. [Plus a $15 “surcharge” per year-or-older car.] Hey! Not fair! “And GMAC will finance just 80 percent of the purchase price when Chrysler dealers buy used vehicles at auction, compared with 100 percent for GM dealers.” Double not fair! GMAC’s reasoning (or lack thereof) after the jump.

“We are trying to waterboard thousands of dealers in a quick time frame,” says GMAC spokesman Mike Stoller. “We’re part of the industry solution, not the problem.” Just kidding, he said “on-board.” But it still doesn’t explain the discrepancy. Neither does this:

Stoller refuses to discuss details of GMAC’s interim floorplan agreement with Chrysler dealers. In a few months, the lender will renegotiate long-term finance agreements. At that time, GMAC may consider more favorable loan terms based on the dealer’s individual merits, Stoller says . . .

“For a lot of dealers, this is like negotiating the price of a life preserver while the ship is sinking,” says Mike Charapp, a McLean, Virginia, dealer attorney.

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8 Comments on “GMAC Financing Favoring GM Dealers Over Chrysler Stores...”


  • avatar
    Tommy

    Is it me, or has GMAC never been part of the solution?

  • avatar
    lw

    Let’s see, the US government owns GMAC and Chrysler right now. And will own GM shortly.

    Maybe GM dealers have agreed to fund the ACLU and Acorn and cease all cash flow to anyone who has every considered disagreeing with the One.

  • avatar
    kaleun

    If you have cars on the lot for more than a year or even 18 months you should have discounted that car a long time ago. It probably isn’t going to get you much money anyway… that is a bad dealership management decision to keep cars that long… they probably hoped someone would pay the MSRP+ fees+ undercoating+ $ 1000 for floor mats. Greed kills…

    Maybe Chrysler cars have a higher depreciation than GM cars? (60% in the first year vs. 50%) and therefore more liability?

    No mercy for any of them.. if they are credit worthy they can get financing from the local bank and not tax-subsdidized GMAC loans

  • avatar
    amadorgmowner

    Lets see here:

    1. GMAC gets bank holding status but doesn’t meet the requirements, avoiding bankruptcy.

    2. Bailout #1 comes just after Christmas

    3. GMAC kills off GM dealers across the country, mostly in rural areas; even dealers with new facilities they financed when owned by GM (such as my community).

    Even after my local community rallied to save the GM/Toyota/Chrysler-Dodge-Jeep dealerships (on national TV -CBS SUnday Morning 4-26-09) – GMAC then vetoed a plan for Toyota to purchase the dealerships and finance them, saying they had to be in first position and then required the dealer principal to raise $2million in new capital – which he could not do in this poor economy.

    That left us with no place within one hour to have our cars serviced; 4. GMAC gets second bailout when after they take over CHrysler’s financing. My question is: Why do we still need GMAC when they can’t even stand on their own two feet and are irrepsonsible? Wouldn’t other financial institutions step in to finance dealers if GMAC went away? I would think so.

    Since my community got rudely screwed out of our local dealer even as GMAC got bailed out is unforgiveable. I hope GMAC people read TTAC. THey would know exactly what dealer and community I am writing from. (Hint – its in the Mother Lode area of California) I say no more bailouts for GMAC.

  • avatar
    Dr. No

    It will be interesting to see the terms GMAC offers to GM dealers once GM enters C11. Chrysler, last time I checked, is in C11, so there’s greater risk to GMAC. Risk/Reward –why the surprise here?

    If the terms are not equivalent after GM’s C11, then you can make your own “fairness” arguments.

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