New Cars Sales Slump: Dealer Finance Crisis
Motoring Channel Staff - 27/November/2008
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Car Dealer Finance Crisis
There are hundreds of cars sitting in holding
paddocks across Australia, but car dealers may
find it difficult to find the finance to buy them
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Melbourne, Australia — It's not just the car makers that are feeling the pinch from the global economic slowdown. Car dealers around Australia are in distress because two of the biggest credit lenders - GMAC Financial Services and GE Money - are pulling out of Australia on December 31st due to adverse conditions in the market. The problem is that most car dealers, whether Holden, Toyota, Nissan or any of the other myriad brands, would borrow money from GMAC
Financial Services and GE Money to buy the cars from the manufacturers
at cost price to then sell to customers in the showroom for a profit. In
the past few years dealers have made a killing in Australia with record
annual sales, but now things are looking grim and Motoring Channel
sources claim that many dealers have their backs to the wall and some
will go bust without finance in 2009. The Australian
Automobile Dealer Association is pleading with the Federal
Government to take action to improve the financial security of car
dealerships for decisive leadership, and action, to secure a solution
to the dealer finance crisis. "The time has come for a decisive
lead from the Federal Government on this crisis," said David
Purchase of the VACC, which represents the Australian Automobile Dealer
Association in Victoria. "Time is running out for new car
dealers. Those affected by the withdrawal of GMAC Financial Services
and GE Money have only until December 31, barely five weeks away, to
secure wholesale finance for their dealerships. Without it, they will
close," stated Mr Purchase. "It can take months for a car dealer
to secure new credit finance, made worse by the credit crisis affecting
financial markets. "Any dealer who needs new finance and
does not have it in place by now is at serious risk of closure. This
could result in thousands of job losses," warned Mr Purchase. The
reality is that many car dealerships will go under unless new major
financing deals are made, and with car sales slowing due to personal
loans becoming harder to get and people holding off on major purchases,
it's not likely to get better any time soon. Related Links:
- US Car Makers Face Grim Future (2008)
- Australian Electric Car Network (2012)
- Portable Satellite Navigation (2008)
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