GMAC has tougher rules for Chrysler Wholesale Accounts

[XDCX]

A story in the May 25th edition of Automotive News indicates GMAC will have tougher rules for Chrysler dealers with wholesale accounts.

Listed below are the primary differences between the new rules GMAC will impose on Chrysler dealers compared to their existing rules for GM dealers:

• Limit funding to 80% for used vehicles purchased at auction. (GM dealers = 100% financing.)
• Require 10% monthly curtailments for new vehicles 12 months old. (GM dealers = 10% curtailments for new vehicles 18 months old.)
• Impose fees of $15/month and $25/month for each vehicle that is over 6 months and 12 months old, respectively. (GM dealers = no fee.)

The article did point out that these rules applied to the interim wholesale agreement and the situation may change when long-term agreements are negotiated.

There was a great quote in the story from Mike Charapp, a dealer attorney in McLean, VA - "For a lot of dealers, this is like negotiating the price of a life preserver while the ship is sinking."

Mr. Charapp makes an excellent point, dealers have little choice but to accept any available terms and hope to renegotiate when the credit market is more favorable.