As part of Thursday’s announcement that Chrysler LLC is declaring bankruptcy while forming a partnership with Italian auto maker Fiat Auto Group, President Obama says GMAC Financial Services will begin providing financing for Chrysler dealers and customers.
The U.S. government will give additional capital to GMAC, he says, “to help unlock the frozen credit markets and free up lending, so consumers can get auto loans and dealers can finance their inventories, a measure that will help stabilize not only our auto market but the broader economy as well.”
“Chrysler Financial, would, on its own, require an unacceptably large stream of taxpayer money to remain viable,” President Obama says. “That’s something I refuse to provide.”
But speculation the financing arm will cease to exist is premature, says Bill Porter, director-communications for Chrysler Financial. He tells Ward’s the finance company still has a $50 billion portfolio to manage and will continue its day-to-day operations.
Chrysler Vice Chairman and President Jim Press tells Chrysler dealers in a conference call Thursday GMAC is creating a new finance organization that will provide products and services for customers and dealers, while sharing the back-end technology. The new organization will consist of Chrysler Financial and GMAC assets.
GMAC will be the preferred provider of new wholesale financing for Chrysler dealer inventory and has a 4-year agreement for incentivized retail financing with limited exclusivity. However, agreements are still being completed.
"We intend to work through the operational process quickly and effectively to ensure the appropriate level of credit is available to support the sale of Chrysler vehicles," GMAC CEO Alvaro de Molina says.
Although details of Chrysler’s partnership with GMAC are still being worked out, Press tells dealers he envisions Chrysler Financial to continue floorplanning vehicles that are currently inventoried. As the vehicles are sold, Chrysler Financial will be paid off and liquidate.
GMAC will begin floorplanning new Chrysler vehicles once an agreement is in place.
President Obama also says the Small Business Admin. this week will begin expanding eligibility requirements for suppliers and dealers to make it easier for them to obtain financing.
