Canberra car dealers are experiencing their toughest trading conditions in memory, with sales and sources of financing in short supply.
Canberra Ford dealer principal John McGrath says October was a good month for character-building.
That was the month GE Money gave him 60 days' notice of withdrawing its finance for cars on his showroom floor.
GE Money and fellow US financier GMAC's withdrawal from the Australian market has sent dealers across the country scrambling to find new sources of finance.
Finance companies are crucial to dealers. They own the cars in showrooms, buying them from makers or importers and then leasing them to dealers who pay interest on them until sold.
Mr McGrath said he was confident of sourcing alternative finance.
''I don't believe I have a problem. We have a few different ways of handling the situation. It is not cut and dried.''
ANZ's Esanda Finance, Capital Finance, which funds several new car dealers in Canberra, and St George Bank are poised to fill the void aided by a Government-backed lifeline announced on Friday.
ANZ, Commonwealth Bank, National Australia Bank and Westpac will establish a $2 billion financing package to provide funds to car financiers. The loans for financiers will be securitised in an arrangement set to take effect on 1 January.
The Government will provide a guarantee for a minor proportion of the securities issued.
The arrangement 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 or GMAC.
While falling interest rates and petrol prices are helping sales of bigger vehicles, new car sales have been in decline over the past six months. Sales in Canberra dropped 16.1 per cent in November compared to a year ago.
Large and small dealerships are closing around the country, with one Melbourne business auctioning 55 new Holdens last Tuesday.
In a buyer's market, savings of up to $5000 for new cars and $3000 on second-hand cars are being offered.
Mr McGrath said only six dealers out of 80 GE customers in NSW had found replacement finance. Smaller used car yards, which have low turnovers and are not attractive to financiers, are expected to have the biggest problem in refinancing.
''I am talking to five or six people now. It takes financial institutions to go through this process.
Holden dealer principal Gerald Slaven said Canberra did not normally suffer in downturns to the extent it was now. Asked if he was selling the business, Mr Slaven said, ''Do you know any buyers? They are very few and far between.''
Motor Trades Association ACT used car spokesman Paul McGuiness said most of the dealers were strong enough to weather the withdrawal of financiers, but smaller yards could be in trouble.
Queanbeyan dealer principal Bill Lilley, who has Capital Finance, said smaller dealers would not be able to get refinancing and there would be job losses, although these would be absorbed in bigger dealerships where there was a skills shortage. with AAP
Email a friend