Only a matter of time before a wave of insolvencies hits the automotive industry, putting truck dealers at risk
It is only a matter of time before a wave of insolvencies hits the motor dealer industry, one expert predicts.
The last few months have been “catastrophic” for auto dealers with continued falls in consumer confidence and sales exacerbated by the arrival of the financial crisis.
The resulting exit of financiers GMAC and GE has only made turnaround plans harder, with more than half of available funds to the Australian automotive industry leaving with them.
A number of truck dealers have been caught up in the GMAC and GE exists.
KMPG partner Bill Noye says it is a formality that finance will not be re-secured by all those forced back out into the market.
“The motor industries are getting hit by a tsunami. Their outlook is disastrous,” he says.
“Over 50 percent of Australian motor dealers have to find a new financier for their finance and in many cases for capital loans.
“That will not occur in 100 percent of cases.”
There are a multitude of reasons driving this, Noye says.
Along with the current curtail on consumer spending and tightening access to capital, he says the small supply of “boutique” local motor industry financiers will struggle to come anywhere close to filling the gap left by the two global giants.
“They have this perfect storm and there will be significant fallout in that industry,” he says.