Federal Treasurer Wayne Swan on Tuesday announced the Federal Government of Australia’s intention of propping up the beleaguered auto loan industry and in particular Ford Credit through the activation of a special industry wide guarantee.
“The government has been advised that the possible departure of Ford Credit from Australia would seriously jeopardise thousands of jobs, most of which are in regional areas, not only across the Ford dealership network, but in the Australian car industry more broadly,” Mr. Swan said in a statement.
In December as the global banking crisis approached its apex in December, the Labour government in directed Australian banks to provide funds to the auto finance companies after GMAC and GE exited the Australian market.
Car dealerships across the country descended into a tizzy trying to arrange alternate sources of finance as the effects of the global crisis in banking meant that their original sources were no longer viable.
Federal Treasurer Wayne Swan said Ford Credit alone provided finance to 230 dealers throughout Australia. The original commitment was for up to A$2 billion ($1.53 billion) of funding, but Swan said the guarantee facility would now be no larger than A$850 million.
Mr. Swan said after the government negotiated a deal with Ford Credit through Credit Suisse that the enable the auto finance company to access up to A$550 million over the next year to support its dealerships.
Ford Motor Company, is the only US Automaker that has not asked for US Federal funding, though it has been hit just as hard as its rivals as the market for new vehicles has contracted substantially over the last twelve months.