More than 100 Chrysler Group LLC US dealerships face possible closure if they cannot reach new financing deals with GMAC Financial Services or another lender, people involved in the process said on Thursday.
Still, the automaker was “optimistic” all or nearly all of the dealerships would find financing for vehicle inventories and other expenses by the end of November whether through GMAC or other lenders, Chrysler spokeswoman Kathy Graham said.
Chrysler emerged from a US government-funded bankruptcy in June with about 2,400 dealerships and had 2,366 at the end of October, about right for its expected 2010 sales, she said.
Some 1,500 Chrysler dealerships sought financing through GMAC, which replaced Chrysler Financial as preferred lender to the dealerships in April, while the rest made other deals.
While most of the applications have been approved or are expected to be approved, GMAC has rejected 83 dealerships and up to 60 remain under consideration, GMAC spokesman Tony Sapienza said.
Graham said 10% to 20% of the roughly 140 dealerships had already found alternatives to GMAC.
“We are optimistic that none of them are going to have to close,” Graham said.
Graham said Chrysler had no plans to end franchise agreements with the dealerships, but the automaker could do little to save them if they could not find financing.
During Chrysler's bankruptcy, the automaker terminated nearly 800 dealerships in an effort to reduce the network to a size that could be supported by its US market share.
GMAC is partly owned by private equity firm Cerberus Capital Management LP CBS.UL and General Motors Co GM.UL, while Chrysler Group LLC is now under management control of Italy's Fiat SpA. Cerberus owns Chrysler Financial. (Reuters)