GMAC Rubbing Out Chrysler Dealers

We’ve said it before: both Chrysler and GM have been using GMAC as their “bag man”: withdrawing credit from dealers to kill them without messy political blowback. This despite the Small Business Administration’s new federal loan guarantee program for beleaguered car dealers. The Wall Street Journal reports that where the feds giveth, GMAC is still taking away. “GMAC LLC is suspending wholesale financing for certain Chrysler Group LLC dealers it considers to be too risky to lend to, GMAC and Chrysler confirmed Wednesday. The move could ultimately push more Chrysler dealers out of business and hurt the company’s ability to sell vehicles.” That last bit’s pretty funny—providing you’re not a Chrysler dealer. Anyway, the WSJ runs the numbers or at least tries . . .

About 60% of the roughly 2,400 dealers who survived Chrysler’s bankruptcy applied for interim wholesale financing with GMAC, according to Chrysler. So far about 6% — more than 80 — have been informed that their wholesale financing has been temporarily suspended, the company said.

So how many ChyrCo dealers face GMAC’s hit squad? In the spirit of transparency proclaimed by fellow bailout buffet binge eater GM—forgetting for a moment that GMAC is also a recipient of billions of dollars worth of TARP aid—Chrysler refused to state how many dealers are under the gun or how many the lender has equipped with cement overshoes. But we do learn that the hits will keep happening right until the end of the year: “The company said it will need about six months to complete the vetting process.”

Meanwhile, how mafia is this?

GMAC said the process was part of normal due diligence. It needs to shore up its own financial position by avoiding risks it cannot afford, said spokesman Mike Stoller . . . .

Mr. Stoller said GMAC wasn’t working with Chrysler on this effort and that it had “no particular goal in mind” for the number of dealers to continue to receive loans.

According to GMAC, suspended dealers typically have 30 days to improve their balance sheets or they must find another company to provide them wholesale lending.

The WSJ ends its expose with a piercing glimpse into the obvious, in a bold attempt to shore-up its suspicion that the dealer cull works to Fiatsler’s disadvantage.

Chrysler expects to have most of its surviving plants running again by July, and will need dealers to buy cars so the company can begin generating revenue.