Lifeline for Aussie Auto Industry

[DucksNuts]

With the withdrawal of GMAC and GE Auto Finance from Australia, 400+ dealers Australia wide have been seeking new financiers

For those who dont realise, the majority of new and used dealerships have their stock funded by external sorces....mainly, GE, GMAC, Esanda, and Alphera (BMW).

Originally Posted by liberalorg

Thu, 20th November 2008

Government must secure minimum 6-month extension from GMAC, GE to ease car dealer crisis

The Rudd Government needs to act immediately to address the credit crisis in car dealerships right around the country, which has been exacerbated by their bungled unlimited bank deposit guarantee.


The withdrawal of GMAC and GE Money from the wholesale car dealer finance market has left a $2b. black hole in Australia’s automotive industry.


If this hole is not filled by 1st January, not only will dozens of car dealers and thousands of jobs be lost – particularly in regional areas - but the flow on effect to Australia’s already suffering car manufacturers will be catastrophic.


If people aren’t able to sell cars, then people aren’t able to buy them, and therefore there is no need to make them.


After extensive consultation with the sector, the Coalition urges the Government to immediately secure an extension of a minimum six months from both GMAC and GE Money before they cease their Australian wholesaling car dealer financing operations, in order to ensure an orderly transition to new financiers.


Given the complexities of the sector, this is the clearest and most sensible way to ease the crisis.


It is up to the Government to determine exactly what measures are necessary to secure this outcome.


Subject to a full briefing, and the measures being grounded in solid advice, the Coalition will be pre-disposed to supporting these measures in a bipartisan way.


It has been almost a month since GMAC and GE announced they would withdraw from the wholesale car credit finance market.


Confidence has been lost and thousands of workers are in limbo.


The Government caused this crisis. It is time the Government acted to fix it.

Dont fully agree with the last sentence.

Last week....

Originally Posted by treasurer website

Today I am pleased to announce a Special Purpose Vehicle (SPV) will be established with the support of leading Australian banks to provide liquidity to car dealer financiers who have encountered financing difficulties as a result of the global financial crisis.

The automotive industry plays a vital role in Australia's economy, supporting many thousands of Australian jobs, and today's announcement will support a stable and viable future for the industry, in the face of very difficult global conditions.

The SPV - which will be established as a financing trust - is a private sector solution which will provide liquidity to car dealer financiers through the securitisation of eligible loans provided to car dealers. The SPV will be implemented by 1 January 2009.

This announcement follows a further meeting today with the Chief Executive Officers of ANZ, the Commonwealth Bank of Australia, the National Australia Bank, and Westpac. At this meeting an agreement was reached to provide critical liquidity support to car dealerships that have up until now been financed by GE Money Motor Solutions and GMAC.

Over recent weeks, the Rudd Government, assisted by the Future Fund Chairman David Murray, has been working very closely with the automotive industry, car dealer financiers and the four major banks to devise a workable solution that will allow viable car dealerships to secure the critical financing they need.

The recent announcement by two major car dealer financiers, GE Money Motor Solutions and GMAC, to exit the Australian dealer floorplan financing market is a result of ongoing global financial challenges. This has placed great pressure on a large number of car dealerships and the Australian automotive industry more generally.

The overall size of the SPV will need to be around $2 billion. The Government will provide support to the SPV in the form of a guarantee expected to cover a minor proportion of the securities issued.

The SPV will be designed to support viable businesses. It will not seek to provide an artificial lifeline to unviable dealerships. The eligibility criteria that will apply will be fair and transparent.

Credit Suisse is providing the necessary technical support to develop the SPV. Treasury will continue to work closely with the major banks, Credit Suisse and its advisers over the next three weeks to finalise the details of the SPV and to put it into effect.

This is a transitional arrangement only and will remain in place until viable dealers establish new funding arrangements. Financiers who have refinanced GE or GMAC financed dealerships since those companies announced their withdrawal from the market will be eligible for SPV funding provided they meet the SPV's eligibility criteria.

The SPV will operate with Government support, refinancing dealerships for a period of 12 months, after which its funding level will run down.

It is therefore possible that in light of the overall economic climate, some unviable dealerships will leave the industry.

The SPV will be available to both new vehicle and mixed vehicle dealerships that trade cars, trucks, motorbikes, boats, caravans and other commercial vehicles as long as they are currently financed by GE Money Motor Solutions or GMAC.

The financing that will be available under the SPV will be for wholesale floorplan financing only. Retail financing will continue to be available through banks, building societies, credit unions and finance companies.

I would like to take this opportunity to thank the CEOs of ANZ, the Commonwealth Bank of Australia, the National Australia Bank, and Westpac, along with representatives of the automotive industry, in particular the MTAA, for the overall co-operation and support they have provided to allow this proposal to proceed.

Today's announcement will help ensure the long-term viability of the automotive industry and forms part of the Government's commitment to protect jobs in this vital industry and right across the Australian economy.
SYDNEY
5 December 2008

Recently I said *we* (my place of employment) were all set, seems I was misled.

Whether the above means we will be now...Im unsure.

Im polishing up my resume.
I may stab my boss' wife too....I wonder how that will look on my resume

[xoxoxoBruce]

It's OK if she deserves it.

Do you think your dealership might be unviable?

[ZenGum]

I don't think the government caused it, but I think it is a good idea for the government to fix it.
The problem is a flow on from the global liquidity crisis; the solution seems to be some kind of guaranteed liquidity. Done properly it might even be mildly profitable. Duck's job should be fine, or at least, won't crash immediately due to liquidity problems. A longer term decline as consumers become more wary is a distinct possibility.

[DucksNuts]

The business itself is definitely viable...its awesomely viable....but its badly geared.

There is no decline in our area, well, in our business, I am stupidly busy and with my boss' head totally out of the game....even more so.