As we have covered in some detail previously, many Australian new car dealers are facing their own credit crisis, with GE Money and GMAC Financial Services pulling out of the Australian floor-plan credit marketplace at the end of this year.
Dealerships that are currently financing their stock through GE Money and GMAC have until December 31, barely five weeks away, to secure wholesale finance for their dealerships. The harsh reality is that if they fail, they will likely close. It is expected that country dealerships will be hit hardest, as, serving smaller markets, they will find it more difficult to make a case to secure alternate finance at a time when car sales are in decline generally and while the global credit shortage ripples through the Australian economy.
The Australian Automobile Dealer Association (Vic), the new car division of VACC, is now calling on the Federal Government for decisive leadership, and action, to secure a solution to the dealer finance crisis.
The AADA (Vic) is urging Prime Minister, Kevin Rudd, and Treasurer, Wayne Swan, to realise the gravity of the situation and the potential for large scale job losses should a solution not be found.
?The time has come for a decisive lead from the Federal Government on this crisis,? said VACC Executive Director, David Purchase.
The Rudd government has been quick to throw a billion or three at any problem it doesn?t quite understand, but the AADA is proposing a more measured response, asking the government to pressure the credit providers to extend their 60 day deadline, and look to develop (in consultation with financiers and dealers) new ways of financing the industry, such as;
- Could new finance be fast-tracked?
- Can more credit companies, banks and financial institutions be enticed to branch into floorplan finance?
- Can existing contracts be renegotiated?
- Can GE and GMAC be prevailed upon to extend the December 31 deadline?
- Can interest payments be suspended?
?We need a solution, and we need it quickly. For that we may need the intervention of Government,? Mr Purchase said.
The VACC and AADA (Vic) are both pushing hard in an effort to see dealers obtain the breathing space and government assistance that they need. Letters have been written to GMAC Financial Services, GE Money, State and Federal Governments laying bare the gravity of the situation.