A front page story today shows that The Australian has finally discovered the $2 billion hole left in car financing by the departure of GE Money and GMAC. (GE Money and Wizard Finance are about to make a deal on the future of GE’s local mortgage business).
The Fairfax press and the ABC have had a similar discovery in the past 10 days, but this time The Australian reports on a plan to raid the public purse.
CAR dealers facing closure because of a credit drought sparked by the global financial crisis could be underwritten by a $2 billion Rudd Government-sponsored debt guarantee.
With the immediate operations of many new-car dealers threatened by the withdrawal of two of the industry’s largest financiers, Kevin Rudd and Wayne Swan have been presented with rescue options to entice banks and other credit providers to create a special car financing funding pool.
The plan produced by Future Fund chairman David Murray, who has been acting as a special envoy liaising with the banks and the regulators during the global credit crisis, is understood to have provided options to the Prime Minister and Treasurer on how a government guarantee could be provided to entice the major lenders into the car financing business.
None have mentioned an announcement to the ASX from the country’s biggest car dealer, Automotive Holdings. Crikey did the week before last, when it was made on November 3. And why is it important? Because the company says it has replaced GMAC in its dealer floor plans and had replaced GMAC with a new entrant to the market, Nissan Finance.
Automotive Holdings says it is:
Australia’s largest automotive retailer, with its major operations in Western Australia, New South Wales and Queensland. In 2006, AHG acquired the Sydney based McGrath Lander Group, providing the first beach head for growth along the eastern seaboard. In 2007, AHG acquired the Zupps Group in Queensland, further consolidating its position as Australia’s biggest automotive retailer. AHG also operates the Prestige Hino truck dealership in Dandenong, Victoria – one of the largest in the country.
So if it can replace GE Money and GMAC, why can’t other dealers attempt a similar move? Why can’t the various industry groups get the dealers together in larger co-operatives to give them scale to deal with the same groups Automotive Holdings did?
Why does it need a government solution?