Chrysler dealers support automaker's bid for lender

New York : Chrysler Group LLC's dealers prefer to continue working with Ally Financial Inc. for auto financing and would support an investment in the lender by the automaker, David Kelleher, president of the carmaker's dealer council, said.

"Dealers would be extremely supportive of Chrysler, or some sort of alliance that included Chrysler, buying Ally," Kelleher, a dealer in Glen Mills, Pennsylvania, said in a phone interview. "We're very concerned that there isn't anybody out there" for Chrysler to partner with as a full-service solution to dealers' financing needs, he said.

CEO Sergio Marchionne has said Chrysler is in talks with several financial companies as it weighs whether to let its preferred-lender agreement with Detroit-based Ally expire in April 2013. The US Treasury Department, which put $17.2 billion (Dh63.18 billion) into a bailout of Ally, would prefer a break-up and sale of the lender because an initial public offering may not succeed, people familiar with the matter said.

The Treasury is pushing for Ally to split into at least two pieces, one part being its auto-finance unit and the other its online bank, the people said. Ally investor Elliott Management Corp. also recommended a sale in a letter sent to Ally's board that was obtained by Bloomberg News.

Wells Fargo & Co., Santander Holdings USA Inc., General Electric Capital Corp., US Bancorp and JPMorgan Chase & Co. are among banks that have negotiated with Chrysler, which generates more than $25 billion in auto loans annually, three people familiar with the talks said last month.

Selling stake to GM

The Treasury has suggested Ally consider selling its captive-finance business to General Motors Co.. If GM were to buy Ally, Chrysler dealers "would have to go elsewhere," Kelleher said. "We can't share a captive relationship with GM, not one that's controlled by GM."

Kelleher is a member of Ally's national dealer advisory board. He said Ally finances his inventory, handles 60 per cent of his new-car sales and half of used-car sales, and provides insurance and a line of credit to his dealership.