The credit crunch continues to take a terrible toll on the financial services sector, with the nation’s oldest car finance company, GMAC Finance, set to withdraw from the Australian market as a result of the credit crisis.
The credit crunch continues to take a terrible toll on the financial services sector, with the nation’s oldest car finance company, GMAC Finance, set to withdraw from the Australian market as a result of the credit crisis.
GMAC, the finance arm of US car giant General Motors, provided finance to Holden, Subaru and Suzuki dealers. It is believed about 400 dealers will be affected by GMAC’s decision to cease retail and wholesale vehicle finance.
The company will sack around 185 workers in Australia and New Zealand as part of its withdrawal. GMAC Australia’s managing director Roger Stoneking said the company wanted to cease financing by the end of December, but has told dealers the company will “exercise some flexibility to ensure a smooth transition”.
GMAC had a loan book of about $2.6 billion at the end of 2007.
Its withdrawal from Australia comes as rumours build that consumer finance giant GE Money is also preparing to pull out of the Australian market.
The company is widely expected to announce the sale of its Wizard Home Loan business to National Australia Bank next week, but it appears GE Money is keen to cut back its Australian operations even further.
GE Money told website Crikey that the credit crisis has forced the company to “reduce its exposure… across the business” including the automotive industry.
“As a result we have been terminating agreements with some retail and wholesale motor partners over the last few weeks,” a spokesman says.
“A few other examples across the business have been reassessing our loan-to-value mortgages, cutting our fixed rate mortgage options and flexible options prime mortgages since August, and also tightening up on cash limits for financially-stressed card customers and reducing eligibility for credit limit increases.”
No doubt more finance companies will be looking to pull back in the coming months unless credit market conditions improve.
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