Chrysler Could Lose Another 145 Dealers

As part of its bankruptcy filings, Chrysler terminated 789 dealers, leaving roughly 2,400 shops in the U.S. Now, a credit issue may cause another 145 dealers to close their doors.

Chrysler Financial once backed loans to dealers so they could stock inventory. The company, which is owned by Cerberus Capital Management (Chrysler’s former owner), is in the process of terminating all loans to dealers while maintaining its loan business to car buyers. It’s transferring this dealer business to GMAC now; the government is planning to wind down all of Chrysler Financial’s business in liquidation by the end of 2011.

To back these new dealer customers, GMAC is asking for more collateral, which is often in the hands of Chrysler Financial in terms of mortgages and other debts the dealers have leveraged.

Sounds like a blast to be a dealer, doesn’t it? The financial wrangling has already led to 85 dealers not getting GMAC financing; another 50-60 dealers are still in negotiations.

Chrysler May Lose 145 Dealers on Lack of Financing (Bloomberg)