Swan swoops to take car dealers under state's wing

Swan swoops to take car dealers under state’s wing

The federal government will extend $2 billion to auto dealers across the country to prevent a car loans drought in the wake of the departure of GMAC and GE Finance from the market.

Treasurer Wayne Swan confirmed that dealerships which are in danger of going under will now be underwritten by the Fed, freeing up the market and helping businesses to get cars off the forecourt with the aid of car loans.

According to the Herald Sun, the new deal will work by calling on banks and other credit providers to create a pool of finance which dealers can dip into when they need to provide a customer with a car loan.

The announcement follows a $6.2 billion scheme championed by prime minister Rudd which will aim to keep the Australian car-making industry on its feet during strong economic headwinds.

Meanwhile, car giants GM and Chrysler have approached the US government with a plea for a similar deal to prevent the US industry from going under.

The companies have been plagued by debt since the onset of the financial crisis.