DETROIT – Chrysler Group got a boost this week when Ally Bank, the former GMAC, lowered its credit-score threshold for Chrysler customers to qualify for a vehicle lease from 660 to 620, reported Automotive News.

The move by Ally, Chrysler’s preferred finance provider, broadens the pool of lease customers. A 660 FICO score is on the lower end of prime, while a 620 score is on the upper end of subprime.

In a memo to dealers this week, Chrysler confirmed that Ally had revised its minimum score. Dealers confirmed the 620 figure.

A credit score helps determine what interest rate a bank will charge a customer for a loan. FICO scores range from 300 to 850.

Chrysler’s leasing business collapsed in July 2008 when its former captive finance company, Chrysler Financial, left the leasing business when the resale value of its pickups and SUVs plunged amid soaring gasoline prices.

In 2006, when Chrysler Financial was still its captive finance company, leases accounted for about 22 percent of all Chrysler new-vehicle transactions. After Chrysler Financial left the leasing business, along with most of Chrysler’s lenders, that percentage plummeted to under 1 percent by mid-2009, according to Ralph Kisiel, a Chrysler spokesman.

“Since then, as lenders have resumed leasing, our corporate average has gradually been increasing to where we’re at today, 4 percent to 6 percent,” said Kisiel. “We are now taking a disciplined approach to leasing. We still want to remain competitive by offering a wide variety of financing options.”

Leasing will account for less than 22percent of sales, he said, and Chrysler is “comfortable” with leasing levels at their current level.

David Kelleher, owner of David Doge Chrysler Jeep in Glen Mills, Pa., and a member of Chrysler’s National Dealer Council, said the shift would be a big help to dealers in extending lease offerings to more customers.

Ally declined to comment on the change in Chrysler credit scores.

WASHINGTON – Dealer advocates are questioning whether a federal audit that challenged dealership cuts by General Motors and Chrysler was delayed until after arbitration hearings were completed, Automotive News reported.

The report by the inspector general for the Troubled Asset Relief Program was released Sunday, after the last of more than 100 dealer arbitration hearings was completed Wednesday, July 14. The federal audit began a year ago.

Two dealer advocates said they had had extensive contacts with audit staff, which suggested that the report was on the verge of being released at least six months ago. A third advocate said an auditor told him in May that a draft was being circulated within the administration.

The U.S. Treasury Department’s brief response to the draft was sent Friday, July 16.

“This seems like too much of a coincidence to be a coincidence,” said Tammy Darvish, a co-leader of the Committee to Restore Dealer Rights, a rejected-dealer group.

Dealer lawyers said the 33-page report would have provided ammunition for them to use in seeking reinstatement for rejected dealerships.

The inspector general’s office said today that the timing of its report was a coincidence and that no decision was made to withhold the report until after arbitrations were completed.

“It’s impossible for a deadline to have been breached on this because we didn’t set a deadline for it,” Kris Belisle, a spokeswoman for the inspector general, said in an e-mail. “We will sometimes predict a rough time frame, but always with the understanding that nothing is firm. We did not release this report earlier for the simple reason that it was not yet ready.”

Belisle declined to comment on dealer contacts with audit staff.

The Treasury Department neglected to consider the potential job losses and economic impact when it pushed General Motors and Chrysler LLC to step up plans to close dealerships as part of their government-funded restructurings, a federal watchdog said.

A report by the Special Inspector General for the Troubled Asset Relief Program that handled the federal bailouts said the Obama administration’s auto industry task force wasn’t focusing on the savings for the automakers either when it pushed them to shut dealerships faster, reported The Detroit News.

“The fact that Treasury was acting in part as an investor in GM and Chrysler does not insulate Treasury from its responsibility to the broader economy,” said the audit by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, the $787 billion stimulus program known as TARP.

“Job losses at terminated dealerships were apparently not a substantial factor in the Auto Team’s consideration of the dealership termination issue,” it said.

The Auto Team is part of the Treasury Department, which objected strongly to the report and denied pushing GM and Chrysler to single out dealerships in March of 2009 when it asked them to revise their restructuring plans.

In a letter attached to the inspector’s report, a senior Treasury official said the restructurings required “deep and painful sacrifices” from all stakeholders.

“The Administration’s actions not only avoided a potential catastrophic collapse and brought needed stability to the entire auto industry, but they also saved hundreds of thousands of American jobs, and gave GM and Chrysler a chance to re-emerge as viable, competitive American businesses,” said Herbert Allison, assistant secretary for financial stability at the Treasury Department.

Administration officials said it was easy in hindsight to question whether things could have been done differently. The report “takes the situation dramatically out of context,” one administration official said.

Two of Detroit’s three automakers were on the verge of extinction, the official said. “Over a million jobs were saved by virtue of saving GM and Chrysler.”

While the report focused on job losses at dealerships, more were lost in other parts of the industry, another administration official said. Since June 2007, the number of jobs in auto manufacturing has fallen 30 percent, compared with an 18 percent drop in auto retailing jobs.

In March of 2009, after the Auto Team rejected the restructuring plans submitted by GM and Chrysler along with requests for aid, the companies revised their plans. Chrysler said it would terminate 789 dealerships by June 10, 2009, and GM announced plans to close 1,454 dealerships by October 2010.

The terminations remain an issue, with some dealers still appealing the decisions while automakers find they need some of the stores.

The report also stoked political differences over the government’s role. “This sobering report should serve as a wake-up call as to the implications of politically orchestrated bailouts and how putting decisions about private enterprise in the hands of political appointees and bureaucrats can lead to costly and unintended consequences,” said Rep. Darrell Issa, R-Calif., ranking member of the House Committee on Oversight and Government Reform.

GM said that it was showing “substantial progress” a year later. “The events depicted in the report have since been overtaken by a new GM and a stronger dealer network to match,” it said.

WASHINGTON – Rejected-dealer leader Jack Fitzgerald lost a bid for reinstatement of his four Chrysler stores in Maryland when an arbitrator held that they didn’t fit the company’s plan of consolidating its four brands into each dealership.

The decisions were a victory for Chrysler’s Project Genesis strategy, which has largely but not completely carried the day in other arbitrations.

Fitzgerald’s dealerships in suburban Washington each carried one or two Chrysler brands but not all four.

“I found little evidence that the dealer had a well-thought-out and sound business plan for fitting within the Chrysler business plan, which I considered as itself well-thought-out and sound, having been developed by experts in the field,” arbitrator James Constable wrote yesterday in four identical decisions.

He echoed Chrysler’s rationale for Genesis: that it may increase per-dealer sales and create jobs.

In a twist, the arbitrator’s reasoning clashed with the decision of a Florida arbitrator last month to grant Fitzgerald’s bid to reinstate his Clearwater, Fla., store.

The Florida arbitrator challenged Chrysler’s Genesis plan and said it wasn’t in the public interest for the company to close Fitzgerald’s store.

Chrysler hopes to have 100 percent of its dealerships house all four brands by the end of next year.

Fitzgerald is unconvinced that Genesis is working, and he cited both national and local sales figures to buttress his argument.

“Genesis is a failure,” he said in an interview today. “It has promoted fewer sales and fewer jobs.”

Fitzgerald said a competing Genesis dealership in suburban Maryland was selling substantially fewer vehicles than his terminated stores had sold.

Fitzgerald, 74, is one of three leaders of the Committee to Restore Dealer Rights, a rejected-dealer group that successfully led the fight in Congress for legislation to set up arbitrations for rejected Chrysler and General Motors stores.

Chrysler Group said in a statement that it is “pleased” with the arbitration judgments.

“The decisions to select dealers for the company’s right-sized dealer network were carefully considered as part of Chrysler’s Genesis Project,” the statement said. “Placing all four brands under one roof in modern, well-located facilities has already resulted in enhanced profitability for the Genesis dealerships.”

Fitzgerald’s Maryland dealerships were in Silver Spring, Gaithersburg, Kensington and Frederick.

The arbitrator said all four failed to meet Chrysler’s sales criteria.

Fitzgerald said that the arbitrator was “confused” and that only one of the four didn’t perform adequately. The Gaithersburg store, in fact, was the top-performing Chrysler dealership in Montgomery County, he said.

Separately, Fitzgerald has reached settlements with General Motors Co. to maintain two of his dealerships that had been on the company’s wind-down list.

A decade ago, the PT Cruiser roared onto the road with trendsetting looks and Al Capone swagger. In a sea of bland Honda Civics and Toyota Camrys, it was a retro hit. Chrysler could barely keep up with demand.

On Friday morning, the last Cruiser rolled off the assembly line in Mexico, finally killed off after years of declining popularity. Chrysler sold just 18,000 last year, compared with nearly 145,000 in 2001, MSNBC reported.

What happened in between is symbolic of the larger problems that helped drive Chrysler into bankruptcy — and a cautionary tale for its new owners, who are planning to release a similarly stylish car later this year.

Love it or hate it, the Cruiser was a head-turner. With flared fenders, a sloping hood and tall doors, the Cruiser was a cross between an old-time milk truck and luxurious sedans of the 1930s. Its looks were different from anything on the road.

It spawned imitators like the retro Chevrolet HHR, and appreciation for the historical American design embodied by cars like the Ford Mustang and Chevrolet Camaro.

“I remember the first time I saw one at an auto show. It was jaw-dropping,” said John McEleney, an Iowa car dealer who sold Chryslers at the time.

The Cruiser was a demographic-buster: It appealed to everyone from retirees to customizers to young people looking for something spacious and inexpensive, said Aaron Bragman, an analyst with IHS Automotive who owned a turbocharged PT Cruiser GT.

But Chrysler failed to invest in the car or think of ways to expand its appeal beyond new paint colors or a convertible top. Although fans clamored for two-door and panel van versions, Chrysler never made a significant update.

“If Chrysler had invested money in a major restyling, there could have been a positive payback on that,” McEleney said.

While the Cruiser was waning, Chrysler was starved for resources. After a nine-year partnership with Daimler AG, the company was sold in 2007 to private equity firm Cerberus Capital Management, which led it into bankruptcy last summer.

Other Chrysler cars languished in the chaos, including the Sebring sedan, which was panned for its cheap materials and mediocre performance even after a 2007 update.

While Chrysler’s new owner, Fiat Group SpA, plans to revamp most of its lineup, and new vehicles like the 2011 Jeep Grand Cherokee have gotten positive reviews, Chrysler still isn’t updating models as quickly as its competitors are.

Between 2011 and 2014, the average Chrysler model will be on the market for 3.1 years, compared with an industry average of 2.5 years or Honda’s 1.9 years, said Merrill Lynch analyst John Murphy.

That means Chrysler will have to fight harder to get noticed.

McEleney said the PT Cruiser is a product of a different time. Increasingly, automakers are building cars that will have appeal around the world to make sure they can recoup their significant research and development costs.

He doubts something as distinctly American as the Cruiser would be desirable outside the U.S.

Chrysler has about 5,700 PT Cruisers left for sale and has been selling about 1,000 per month. Prices start at about $19,000, and the company is offering end-of-the-model-year deals like $2,000 cash or no-interest financing for five years.

Because Chrysler made so many Cruisers, the car is unlikely to attract collectors, so its price will probably depreciate just like most other cars, said Dave Kinney, publisher of “Hagerty’s Cars That Matter,” a guidebook of classic car prices.

When first introduced, the roomy Cruisers were in high demand, but recently they became common in rental car fleets and were used widely to deliver pizzas and office supplies, Kinney said.

“They went from being the cool kids to everybody on the block,” he said.

The Fiat 500, which is smaller than the Cruiser, is the company’s next hope, with better fuel economy and a European look. Jack Nerad, editorial director of Kelley Blue Book, said it has the potential to be a new head-turner for Chrysler.

But Chrysler has to be careful not to let the 500 become another one-hit wonder. When the PT Cruiser first came out, it was so desirable that dealers were fetching well over the sticker price, Nerad said. Chrysler responded by producing as many as it could, quickly turning the car into a commodity.

Chrysler didn’t want to comment on the Cruiser’s demise, other than to confirm that production had ceased.

By contrast, BMW has tightly managed production of a similar niche car, the Mini Cooper, and has invested in a full redesign and rolled out the elongated Clubman version since the Mini was introduced eight years ago.

That’s a pattern Chrysler may be following with the 500. To create an exclusive aura around the car, Chrysler is requiring dealers who want to sell it to have separate Fiat showrooms and staffs. BMW did the same thing with Mini.

DETROIT — After a 26-year absence, Fiat dealerships will be returning to the United States — but in a small way, The New York Times reported.

Chrysler said Tuesday that it planned to set up about 200 outlets by the end of the year to sell the Fiat 500, an Italian designed subcompact. The dealerships will be run by existing Chrysler dealers and in many cases located on the same property, but they will have separate showrooms and employees.

The strategy runs counter to a general trend of consolidating multiple brands into one showroom. It also requires dealers to commit significant resources to a lineup that initially has a single model. A convertible, the 500 Cabrio, is scheduled to arrive in 2011, followed by a battery-powered 500 in 2012, but Chrysler has not revealed plans to expand Fiat beyond that.

BMW used a similar approach to successfully reintroduce its Mini brand to the United States nearly a decade ago, requiring dealers to build auxiliary showrooms to sell the Mini Cooper. But investing in an expansion for what analysts consider to be a niche model, at a time when auto sales are depressed and many dealers are struggling, is a gamble.

“If I were a dealer, I would be somewhat reluctant to make that investment,” said Erich Merkle, an automotive analyst and president of Autoconomy.com in Grand Rapids, Mich. “You have to go and build a new facility to sell a brand that really is going to take a considerable amount of time to get any kind of volume.”

A Chrysler spokesman, Ralph Kisiel, said the company intended to have Fiat dealerships in 125 markets in about 41 states. He said most would be concentrated in metropolitan areas where small cars were already popular and where demand was expected to increase.

Executives sent letters this week to all 2,320 Chrysler, Dodge, Jeep and Ram dealers inviting them to apply for a Fiat franchise. Fewer than 10 percent will be selected, and the locations will be announced in September, Chrysler said.

“We want our best performing dealers to get these franchises,” Kisiel said, adding that Chrysler has focused on “markets that have a high number of small-car registrations.”

The Fiat 500 is a major piece of Chrysler’s efforts to diversify a lineup that has relied heavily on trucks and sport utility vehicles, hurting sales as American consumers began seeking more fuel-efficient alternatives. The company plans to build more than 100,000 of the vehicles a year at a plant in Mexico, sending half to the United States and half to South America.

Access to a dealership network in the United States was a major reason that the Italian carmaker’s chief executive, Sergio Marchionne, pursued a takeover of Chrysler. The 500 fills a hole in Chrysler’s lineup, but also gives Fiat a quick way to re-establish itself in the United States.