DETROIT -- GMAC Financial Services is offering a lifeline to many General Motors Co. dealerships that are winding down their franchises: inventory financing for used-vehicle stores or for non-GM new-car brands.
In the past, as the captive financial arm of GM, GMAC typically did not extend credit to used-only dealerships. GMAC no longer is a captive but was designated by the Obama administration's auto task force as a lender for GM and Chrysler Group dealerships. The U.S. Treasury Department has a majority stake in GMAC.
Tony Sapienza, a GMAC spokesman, says that if a dealer is transitioning to a different brand for new vehicles or to a used-only dealership, "if the relationship with us is strong and the business fundamentals are there, we're going to work with them."
Many dealers finance only new cars and pay cash for used vehicles. But many are looking to used vehicles for salvation beyond Oct. 31, 2010. That's the date by which about 1,350 GM dealerships must close because their franchise agreements expire. GM has said it won't renew the contracts. Of those, GM says about 300 have requested to close before next October.
John Rogin, 55, is scheduled to wind down his Buick and GMC stores in suburban Detroit. But on Nov. 19, he got a call from GMAC.
"They wanted to assist in positioning me for the transformation from a new General Motors dealer to a predominantly used dealer," Rogin says. "To say I was pleasantly surprised doesn't even describe the elation."
Rogin says he carries $1 million to $2 million in used-vehicle inventory. He doesn't need financing for it now but is grateful for GMAC's offer.
Many rejected franchise dealers who have become used-car dealers say they have trouble finding adequate financing for inventory. That's because captive finance companies typically don't provide financing for independent used-car dealers.
Sapienza says GMAC is not calling most wind-down dealerships and declines to estimate how many will be offered the financing. But if a dealership is a customer of the lender in good standing and offers a good business case, GMAC encourages an application to finance used vehicles or new vehicles of a different brand.
Says Sapienza: "It's good business for us and good business for them."
Arlena Sawyers contributed to this report