Not Surprisingly, GMAC Cuts Off Certain Chrysler Dealers

GMAC LLC has reportedly cut floorplan financing from about 80 dealers, or 6% of the surviving Chrysler dealerbase. Without floorplan financing, those dealers face daunting prospects, and are likely to fail.

There is no surprise in GMAC's action. The pseudo-captive is merely behaving like a financial institution should, dispensing risk with care.

What is surprising is that when I wrote how GMAC might not do all the Chrysler financing the White House was saying it would, GMAC gave me grief, saying I was making something out of nothing. Saying that GMAC would blindly finance Chrysler dealers -- now that would merit grief from GMAC.

Tags: chrysler, gmac

Comment by Brian Reed on June 26, 2009 at 12:46pm: I hate to see dealers getting their floorplan pulled but if this really did occur, there might be hope for GMAC. Floorplanning is a great business with the right dealers but a couple of bad apples can really hurt an auto finance company like GMAC. GMAC needs to act like a real business to survive.

Comment by Matthew Burril on June 26, 2009 at 4:38pm: And they will. GMAC is setting up for a great run later in Q3 and 4. Remember, GM and Cerebus must sell down their GMAC voting shares, and getting themselves in a solid position by culling Chrysler dealerships is just one step in improving the value of the GMAC stake. Also, they will probably issue the remaining 2.9 billion in FDIC notes before the end of July, giving them a cash infusion at a cost of funds of about 2.2%. GMAC is the linchpin in this entire story... floorplan and consumer credit will be flowing before year end.

Comment by JJ Hornblass on June 29, 2009 at 10:08am: I received the following statement from GMAC LLC this morning that I think deserves attention:

We fully expect a majority of Chrysler dealers for which we are providing interim financing to be approved for longer term wholesale agreements. We continue to work aggressively to support the vast majority of the Chrysler dealer body at large.