Gm And Chrysler To Get Money

12.29.08 | FL News Team

Both General Motors and Chrysler are scheduled to get a four billion dollar cash infusion today. The money will keep the financial wolf from their respective doors for awhile but both have major problems to overcome.

Bloomberg reports GM has set a goal to close more than 17-hundred showrooms across the country, about 27 percent of dealerships over the next four years. Chrysler wants to pare down its 33-hundred dealerships but hasn't announced a target.

The idea is to have fewer but larger, healthier dealerships. Closing dealerships could be costly with many expected to file legal action against the car companies. It cost GM more than a billion dollars eight years ago to shut down its Oldsmobile unit due, in part, to lawsuits over forced closures.

One dealer says GM hasn't told outlets how it plans to pare the numbers but suggests if the market stays this slow very long and with GM cutting the cash it sends back to dealers in the form of incentives the trimming could happen on its own.

Another major issue for dealers is the limiting of loans to buyers with credit scores of 700 or higher.  That excludes more than 40-percent of U.S. consumers.

The four-billion in government loans each company will receive today is just a first installment. GM will receive another five-point-four-billion dollars next month and could see another four-billion in mid February if Congress expands the Troubled Asset Relief Program originally set up to bail out banks.