Chrysler raised concerns Thursday about reports that rival General Motors is interested in buying back the auto financing business from the former GMAC Financial Services.
CEO Sergio Marchionne told reporters that Chrysler was wary of being put at a competitive disadvantage with General Motors when it comes to offering lease and loan deals to consumers. GMAC, now called Ally Financial, is the preferred lender for both GM and Chrysler after the Obama administration wound down Chrysler's lending arm, Chrysler Financial.
"One of the things which we do not wish, under any circumstances, is to have an uncompetitive relationship vis-a-vis GM," Marchionne said following a meeting with Michigan lawmakers.
"In other words, if they control the lending practices and the degree of penetration and support that they gave to Chrysler, that would make us very, very concerned and we would have to look for alternative ways of financing our portfolio," he said.
General Motors Co. executives are exploring the possibility of buying back the auto-financing arm from the former GMAC or starting their own lending operations, an official who asked not to be identified because the plans have not been made public recently told The Associated Press.
GM sold a 51 percent stake in GMAC Financial Services in 2006. The new owners, led by private equity firm Cerberus Capital Management LP, ran into problems in 2008 with bad mortgage loans and were bailed out by the federal government, which now owns 56 percent of the company.
GMAC has received more than $16 billion in loans from the federal government, which considers the lender a major component to the rebirth of GM and Chrysler Group LLC, which have received billions in federal aid.
Auto manufacturers can benefit from having a captive financing arm because the company can dictate lending terms to help the automaker's bottom line. Competitors, such as Ford Motor Co. or Toyota Motor Corp., control their own financing arms.
Marchionne said Chrysler would need "to transition into a permanent, stable solution for Chrysler going forward."
"And once they tell me that GMAC is going to go back into General Motors, we need to have the time, the space, to find alternative long-term solutions to the financing of Chrysler," he said.
"What cannot happen, I hope, because of what we have done here and the fact that we have really handed over the majority of our book over to GMAC, is that we can't have that yanked," he said. "It's too painful of a transition. The dealers have already gone from Chrysler Financial over to GMAC."
Marchionne gave the lawmakers a progress report on Chrysler, which said earlier this week its financial performance exceeded its expectations and suggested an initial public offering could come sooner than expected following last year's government-led bankruptcy.
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