Federal government extracts promise from Ford

Federal Treasurer, Wayne Swan, issued a press release on Friday of last week, announcing that Ford in the US had agreed to keeping Ford Credit open and operating in Australia as a financier of dealer floor stock.

The Treasurer issued the press release as a broad-brush explanation of the way the Special Purpose Vehicle (SPV) would operate to keep dealers solvent beyond the end of the year -- when GE Money and GMAC will cease to extend finance to dealers for their floor stock (floorplan finance).

Although the SPV is effectively open to any financier currently in the business of providing financial support to dealers for their floor stock, it will only be available to financiers in the event that they are not in a position to finance dealers, but have been approached by one or more eligible dealers in need of finance.

The onus is thus on the dealer to make the initial approach, but the SPV can only be accessed by a financier, as we reported previously (more here).

In his press release, the Treasurer notes that the SPV will commence operating from January 2, but may take some time to reach fully operational status. Both companies had earlier announced that their support of the industry would cease from January 31, but the Treasurer expressed the hope that GE and GMAC would "do the right thing" and continue to finance their existing clientele until they can be recompensed by other financiers.