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.
19 December 2008
On 5 December 2008, the Australian Government announced the establishment of a Special Purpose Vehicle (SPV) with the support of leading Australian banks to help provide critical wholesale floorplan financing to those viable car dealers that are currently financed by GE Money Motor Solutions and GMAC, both of whom have announced an intention to exit the Australian dealer floorplan financing market in the near future as a result of ongoing global financial challenges.
This Information Guide sets out what the SPV is, how it will work, who is eligible and what eligible dealers should be doing in trying to secure wholesale floorplan financing.
Ben is the owner and operator of "Big Ben Motors"; a new car dealership on the NSW South Coast. Big Ben Motors has its floorplan financing arranged through GE Money Motor Solutions. Ben is well aware that GE Money Motor Solutions is exiting the Australian floorplan finance market and has been anxious about securing alternative financing arrangements.
Ben has arranged to speak with one of the participating financiers about the possibility of transferring his book to the finance provider.
Ben, who has always run a professional dealership and has kept his records up to date, is told by the finance provider that whilst he has a good business case, the finance provider is not prepared to take him on in the current market environment.
However, as Ben satisfies the basic eligibility criteria for the SPV, the finance provider agrees to lodge an application for floorplan financing from the SPV on Ben's behalf.
As Ben has been able to demonstrate that he has a viable business model and satisfies the general eligibility conditions of the SPV, the finance provider is able to secure funding for up to 12 months for Ben through the SPV to allow him to run his business.
Over the course of 2009, Ben works hard to reinforce the business by cutting any unnecessary costs and improving the overall efficiency of the business. He maintains a close relationship with the finance provider.
Despite a difficult trading environment, Big Ben Motors performs well and in late 2009 the finance provider agrees to take Ben on for a longer term relationship.