Vehicle makers back Frydenberg credit loosening


Recovery initiative comes as difficulties getting finance are underlined

Vehicle makers back Frydenberg credit loosening
Josh Frydenberg

 

The federal government’s proposed easing of credit limits on financial institutions has been greeted positively but manufacturers.

Federal treasurer Josh Frydenberg is seeking to increase to flow of credit and that current restrictions, following the global financial crisis, are an economic hindrance.

"As Australia continues to recover from the Covid-19 pandemic, it is more important than ever that there are no unnecessary barriers to the flow of credit to households and small businesses," he says.

Despite a critical response to the move from certain sectors, Heavy Vehicle Industry Australia (HVIA) is in no doubt the move addresses an issue in need of resolution.

"Industry has been reporting back difficulty in getting finance for heavy equipment purchases, and HVIA has been providing this feedback to government," HVIA CEO Todd Hacking. 

"Today’s announcement is welcomed as the reform package will unlock capital, reduce red tape and makes it easier for vendors to be able to make heavy equipment purchases."


 Read about the federal government's instant asset writeoff move, here


The Federal Chamber of Automotive Industries (FCAI) was equally certain of the move’s benefit, chief executive Tony Weber insisting, the news could not come at a better time for the embattled Australian new vehicle market.

"As we strive to recover from the Covid-19 pandemic, a more efficient flow of credit to consumers and small business will be a strong stimulant to the economy," Weber says.

"This is particularly true of the automotive sector in Australia, which has recorded some of its lowest sales ever during 2020.  

"Year-to-date figures for August demonstrated a 20.4 per cent drop in sales nationally for the industry."

This decline in sales is on the back of a difficult period for the automotive sector, which has recorded over 29 consecutive months of decreasing sales.  

"The market regression has been attributed to a drop in consumer confidence sparked by a number of factors including the prevalence of natural disasters, unfavourable exchange rates and economic uncertainty," the FCAI argues.

"However, it has been well reported that restrictive lending conditions have been one of the major factors contributing to the declining market.  

"Freeing up restrictions around financial lending, while at the same time continuing to safeguard consumer protections, will act as a stimulus for Australian industry."

"The Federal Government’s initiative to ensure that access to credit is more readily available for Australian households and small business will increase discretionary spending, boost business and safeguard jobs"

 

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