Chrysler LLC CEO Bob Nardelli says 240 Chrysler dealers have been forced out of business this year because they could not get access to adequate financing.
Another 250 dealers have been put on credit hold, Nardelli told congressional hearings over the past two days. Both figures show a noticeable spike from Chryslers dealer attrition during 2007.
That has impacted us another 63,000 units on an annualized basis, Nardelli said in response to a question about how much the credit crunch has hurt the car companies.
Chrysler has been working on a consolidation program, called Project Genesis, which seeks to put the Chrysler, Dodge and Jeep dealerships under one roof wherever possible.
Chrysler began this year with 3,585 dealerships, 225 more than it had as of Nov. 7.
Nardelli told Congress that Chrysler Financials inability to offer sufficient credit to customers and dealers has badly damaged Chryslers car business.
They provide 70 percent of consumer loans and a similar amount of floorplan, he said. Chrysler Financials forced withdrawal from consumer leasing cost the company 20 percent of its sales volume overnight, he said.
Nardelli said Chrysler Financial had applied for $4 billion to $5 billion in federal funds including $1.6 billion for wholesale funding for dealers and another couple of billion to support retail so consumers could get competitive loan rates.
A Chrysler Financial spokesperson could not confirm the amount. But Chrysler Financial confirmed it applied for Troubled Asset Relief Program funding in early November.
In 2004, Chrysler Financial applied to the Federal Deposit Insurance Corp. for a bank charter. That application is pending. If the application is approved, Chrysler Financial would gain access to more attractive interest rates because its deposits would be insured by the FDIC.
That access would put Chrysler Financial on more equal footing with banks and other lending institutions in gaining access to affordable funds.