We recently brought you the shock news that GE Finance and GMAC Financial Services are withdrawing their services from the local car market at the end of 2008. What this means to the layman is that dealers who have been using either of the providers to finance their floor stock, are being left high and dry, right in the middle of a credit crunch. You can click the following link to read more about GE Finance and GMAC's decision to leave Australia.
This, as you can imagine, has come as a huge shock to many dealers, and left them in a situation where their businesses are put at considerable risk. With two of the big guns in floor plan finance pulling out (citing that it is no longer a cost-effective market place for them), it?s hard to imagine the smaller players stepping into the breach.
This has left many car dealers in Victoria, who rely on rolling credit to purchase vehicles from manufacturers, in a precarious financial situation.
With this in mind, the Australian Automobile Dealer Association (Vic), the new car division of the VACC, and new car dealers, met yesterday to discuss the financial crisis threatening the automotive industry.
?As the peak industry body in Victoria, we were pleased to provide new car dealers with the opportunity to discuss this worrying development,? VACC Executive Director, David Purchase said.
?It was a productive meeting and car dealers took the opportunity to ask questions, swap information and voice their concerns to a panel of industry consultants, legal advisors, accountants and government representatives."
The consensus from the meeting was that the Federal Government is unlikely to make funds available to the car industry to arrest the situation. However, the VACC would like to see the Government intervene regarding the repayment deadlines that have been imposed on dealers caught up in the GE and GMAC mess. These dealers have been advised that their funding will cease, and have been given 60 days notice to find an alternative provider.
?In our opinion, this period of notice is too short and unreasonable. So we are calling on Government and the finance providers to reconsider their time-frame and work with industry bodies and new car dealers to provide a decent period of notice."
The VACC acknowledges that there is still a lot more to discuss, and in the meantime has advised affected dealers to maintain a tight rein on business costs, including tightening the management of their cash flow, debt management and capital outgoings.