Treasurer Releases Update on Car Dealer Financing and the Special Purpose Vehicle

TREASURER RELEASES UPDATE ON CAR DEALER FINANCING AND THE SPECIAL PURPOSE VEHICLE

Today I am pleased to release an Information Guide for Car Dealers on the Special Purpose Vehicle (SPV) facility.

The Information Guide sets out how the SPV will work, the general eligibility criteria, the participating financiers and what affected car dealers should do in seeking to secure alternative wholesale floorplan financing.

On 5 December 2008 I announced the establishment of a Special Purpose Vehicle (SPV) 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 SPV will provide critical wholesale floorplan financing to commercially viable car dealerships that are currently financed by GE Money Motor Solutions or GMAC, both of whom have announced an intention to exit the Australian dealer floorplan financing market.

The SPV will support a stable and viable future – amid very difficult global conditions - for the car industry which plays a vital role in Australia’s economy and provides many thousands of jobs.

Work on the establishment of the SPV is progressing well despite the very significant challenges involved in setting up a complex financial arrangement in a very short period of time.

I would like to thank and acknowledge the support and co-operation of the four major banks - the ANZ, the Commonwealth Bank of Australia, the National Australia Bank and Westpac - as well as the various financiers who have already expressed their intention to participate in the SPV arrangement, including Alphera Financial Services (a division of BMW Group), Capital Finance, Esanda, Nissan Finance and St George.

The continued support and co-operation of these leading financial institutions is critical to the effective implementation and operation of the SPV arrangement.

Although the SPV is expected to be established by 2 January 2009, the SPV will need some time, particularly throughout January 2009, to become sufficiently capitalised and fully operational.

It is therefore very important that GE Money Motor Solutions and GMAC continue to support its dealers at least until the SPV can become fully operational.

GE and GMAC are reputable commercial organisations which have enjoyed the strong support of loyal Australian customers and successive Australian Governments over many years. The Government is therefore confident that both GE and GMAC will do the right thing.

I have today written to both GE Money Motor Solutions and to GMAC seeking their assurances in this regard.

I am also very pleased to announce that the Rudd Government has received assurances from Ford in the United States and Ford Australia, that Ford Credit intends to remain in Australia and will continue to provide financing support to its extensive dealer network.

The Rudd Government will be working closely with Ford Australia and Ford Credit in the New Year on possible arrangements.

Canberra
19 December 2008

Contact: Matt Coghlan 0415098050