GM could lose 40% of dealerships if GMAC goes out of business

Posted: Dec 11, 2008
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According to GM’s National Dealer Council, GM may lose as many as 40 percent of its 6,500 U.S. stores if GMAC LLC defaults.

“There’s so many dealers on the edge, if GMAC goes out of business 30 to 40 percent of dealers won’t be able to get financing from anywhere else,” Martin NeSmith, a member of GM’s National Dealer Council, said in an interview with the Detroit News. “They’ll go out of business.”

GMAC announced yesterday that it lacks funding that is needed to become a bank holding company and to free up cash for dealer-inventor financing. GMAC is GM dealers’ largest source of financing for buying and selling new vehicles.

The lending firm has said that plans for $38 billion in debt exchange to raise capital hasn’t attracted much participation.

Source: Detroit News


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  • zermatt

    Is this a leverage tactic by Cerberus to get GM to merge?

    With Cerberus having 51% ownership interest in GMAC I would have thought that they would want to make sure that another one of their investments would not fail. Again, Cerberus has the ability to put more capital into this company, but they choose not too. Could this be a badly thought out game of game of chicken with the Senate Republicans?

    If GMAC takes down 2500 or so dealers that is one way for GM to eliminate dealers faster than GM outlined on the proposal to Congress.

    Any way you look at it, GM and Chrysler/Cerberus are in a really bad financial situation. Kill both of them with sticks.

  • zermatt

    Is this a leverage tactic by Cerberus to get GM to merge?

    With Cerberus having 51% ownership interest in GMAC I would have thought that they would want to make sure that another one of their investments would not fail. Again, Cerberus has the ability to put more capital into this company, but they choose not too. Could this be a badly thought out game of game of chicken with the Senate Republicans?

    If GMAC takes down 2500 or so dealers that is one way for GM to eliminate dealers faster than GM outlined on the proposal to Congress.

    Any way you look at it, GM and Chrysler/Cerberus are in a really bad financial situation. Kill both of them with sticks.