Depressing news from Australia.
“CAR DEALERS are the latest casualty of the credit squeeze after two of the country’s main vehicle lenders stopped writing loans, and one also scaled back finance for small businesses and home mortgages.” – Sydney Morning Herald
This is something feared in the trade for some time, if dealers cannot put their stock on a funding plan then they have to find an alternative which could lead to businesses closing at a rapid rate, as nearly all dealers use that kind of finance to fund their used car stock.
Not many will be in a position to fund the stock themselves which means less choice and less dealers,, especially smaller independent dealers. Even if they can obtain a funding solution it could be very expensive given the global situation and maybe more importantly in this country, the motor dealer is not seen as a solid business for many banks and lenders given the volatility of the industry.
The only potential winners are franchised dealers who often obtain funding for their stock through the manufactures own finance arms.