Lithia Motors bolstered its ability to acquire dealerships with the completion of a new $1 billion, five-year syndicated credit line.
A syndicated credit line is a loan offered by a group of lenders (called a syndicate) who work together to provide funds for a single borrower.
"This is a result of an improving auto market and will primarily be used to finance the acquired stores we have been purchasing as well as more new and used inventory," said Lithia's vice president for finance, John North.
U.S. Bank is administering the syndicated credit line, pooling resources from seven manufacturer-affiliated finance companies and six banks. Lithia said the credit line could eventually rise to $1.25 billion.
The Medford company's previous credit line, North said, was $800 million. The revolving credit line provides $700 million for new vehicle inventory floor plan financing, $150 million for used vehicle inventory floor plan financing and $150 million for general corporate purposes, including working capital and acquisitions.
Mercedes-Benz Financial Services, Toyota Motor Credit Corp., BMW Financial Services, American Honda Finance Corp., Hyundai Capital America, Nissan Motor Acceptance Corp., and VW Credit, along with U.S. Bank, JPMorgan Chase Bank, Bank of America, Bank of the West, Key Bank, and TD Bank were partners in the syndicate.
Lithia said at present borrowing levels, pretax interest expense will be reduced by approximately $350,000 per quarter.