Local car dealers gear up for hard times
THE global financial crisis has hit Northern Rivers car dealerships, with one major company being placed in receivership and others on the edges of their seats waiting to see what the future holds.
North Coast Motor Group, which has offices in Lismore and Ballina, is now in the hands of receivers, Brisbane-based business advisory company Grant Thornton.
It operates as a dealership for leading car brands including Mitsubishi, Mazda, Suzuki and Mercedes-Benz.
A spokesperson for Grant Thornton failed to return The Northern Star's calls yesterday.
The crisis facing car dealerships nationally comes as the Federal Government has announced a $6.2 billion 'rescue package' for Australia's ailing car-making industry, aimed at creating a greener automotive sector over the next 12 years.
The rescue package has been welcomed by the country's largest manufacturers, Toyota, Ford and Holden. But some local car dealers fear it will not be enough to prop up smaller dealerships that have lost financial backing due to the global financial meltdown.
Adrian Lenton, owner of Mays Motors at Ballina, said while he was 'one of the lucky ones', he felt for other local car dealers whose financiers had left them 'high and dry'.
Car dealerships generally fill their showrooms with cars bought on credit, with the idea that money owing on cars is repaid when the cars sell.
“It's quite worrying times for the industry,” Mr Lenton said.
“In a time of economic downturn the Government needs to spend money on bailing out some of these car dealerships that have lost their financiers, but this assistance package is basically a whole lot of nothing.”
With the two major lenders, GE Finance and GMAC, pulling out of funding car dealerships nationwide, the NSW Motor Traders' Association estimates about 40 per cent of motor dealers will have to close their doors by the end of the year.
The withdrawal of funding means car dealerships in jeopardy can no longer fund their showroom stock, leaving them unable to meet their franchise agreements with the manufacturers.
The Government's rescue package, which builds on $3 billion it had already committed to the industry, includes a $3.4 billion transformation scheme and a $1.3 billion fund for car companies to build environmentally friendly vehicles.
Federal Finance Minister Lindsay Tanner conceded there were limits to the help available to car dealers hit by the withdrawal of motor finance companies.
However, he said Treasury and other branches of the Government were working very closely with a taskforce to help car dealers left without in-house sales finance.