Rudd Government considers $2 billion plan to help car dealers

Just a week after giving Australian car markers $6.2 billion of industry assistance, the Federal Government is considering a $2 billion plan to help car dealers that have been left without finance as a result of the credit crunch.

Just a week after giving Australian car markers $6.2 billion of industry assistance, the Federal Government is considering a $2 billion plan to help car dealers that have been left without finance as a result of the credit crunch.

Car dealers have been hit hard by the withdrawal of financiers GE Money and General Motors Acceptance Corporation from the Australian car market.

The Federal Chamber of Automotive Industries chief executive Andrew McKellar says this has left a funding gap of about $2 billion, with up to 30% of Australia’s car dealers affected.

“If they can find an alternative source of funding then we will have strong, viable businesses that will be at risk,” he told ABC radio this morning.

“If fundamental damage is done to the industry then it could undermine the longer-term ($6.2 billion automotive) plan.”

Under the proposed plan, the Government would encourage finance companies to contribute to an automotive industry pool, which would be underwritten by a Government debt guarantee. A small fee – payable by dealers but ultimately passed on to consumers – would fund the guarantee.

The move to help car dealers comes as a survey from the Australian Industry Group reveals small and medium businesses are reporting greater difficulties getting funding from banks and raising corporate debt.

But it seems the automotive industry will receive special attention before all other sectors.

Do you agree with the idea of providing assistance to car dealers? Are you facing funding issues in your industry? Send your thoughts to feedback@smartcompany.com.au.

Related stories:

• Good money after bad for Australia’s car industry
• Car industry gets $6.2 billion assistance package