Australian govt eyes guarantee for new car lending fund

The Australian government is looking at options for a government guarantee of car loans through a fund provided by Australia's major banks, the Australian newspaper has reported. "With the immediate operations of many new-car dealers threatened by the withdrawal of two of the industry's largest financiers (GMAC and GE), Kevin Rudd and Wayne Swan have been presented with rescue options to entice banks and other credit providers to create a special car financing funding pool," The Australian reported here."The plan produced by Future Fund chairman David Murray, who has been acting as a special envoy liaising with the banks and the regulators during the global credit crisis, is understood to have provided options to the Prime Minister and Treasurer on how a government guarantee could be provided to entice the major lenders into the car financing business," it reported. There are no suggestions yet of a similar guarantee in New Zealand even though the withdrawal of GE and GMAC has had a similar impact, particularly on used car sales. New car sales in New Zealand have held up reasonably well, although the remaining largest lender Motor Trade Finances has been unable to raise new funding through the European Commercial Paper market and is now relying on a NZ$600 million bank funding facility with CBA and Westpac. * This article was first published yesterday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.