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Saturday, June 15, 2024

Chrysler Dealers Face Foreclosure as Financiers Bicker

Despite the sunny outlook for Chrysler, at least 40 Chrysler, Jeep, and Dodge dealerships face foreclosure due to a continued conflict between Chrysler Financial and GMAC. According to the Detroit Free Press GMAC is expected to take over wholesale financing operations from Chrysler Financial. This transition could be the end for many dealerships across the country.

In the past Chrysler Financial accepted the value of the dealerships inventory as collateral for loans. Now GMAC is telling dealers this isn’t enough. Many of these dealerships are looking to draw on their mortgages, however Chrysler Financial (the holder of some of their mortgages) refuses to relinquish its stake in these properties.

The dealerships are unable to turn to commercial banks for assistance either. According to Dick Huvaere, a dealer from Richmond, Michigan, "today, there’s not a bank on the planet that will loan a dime to any Chrysler or GM dealer."

A Chrysler spokesperson said they are not concerned that critical dealerships are in danger. They suggest consolidation of Chrysler, Dodge and Jeep sales into one dealership. Chrysler dealer’s prior optimism regarding the company turn-around has now been smothered by worries of foreclosure.