Ford cuts credit

Ford Credit will no longer provide finance to private car buyers in Australia from February 28.

However existing loans will continue to be serviced by Ford Credit for the original terms of the contract.

The announcement, made yesterday, comes less than a month after Federal Treasurer Wayne Swan announced that Ford in the US had agreed to keeping Ford Credit open and operating in Australia as a financier of dealer floor stock. Swan also announced a special funding facility to help keep dealers solvent (more here).

Ford Credit will continue to fund wholesale financing to dealers, unlike GE Money and GMAC which pulled out entirely before Christmas.

"Existing loans will continue to be serviced by Ford Credit, and if customers have a query about their loan they can still phone Ford Credit," Ford spokesperson Sinead McAlary told the Carsales Network.

Ford Credit was servicing approximately 10 per cent of retail finance in Australia.

In terms of impact on sales, McAlary says that Ford Australia and Ford Credit anticipate customers will be able to find several other finance options.

"We know already a few of the other providers are rubbing their hands together in glee," said McAlary.

Ford has just over 220 dealerships around the country but not all use Ford Credit for financing, and some might only "write a loan" with the company, said McAlary.

Volvo, Land Rover, Jaguar and Mazda dealerships which use the retail finance will also be affected.

Volvo Australia spokesperson Laurissa Mirabelli said: "For Volvo Car Australia it is business as usual.

"It's less than 10 per cent of our sales that are financed through Ford Credit, so we don't anticipate there to be too much of a disruption to the way Volvo dealers will be doing business going forward."

McAlary said it was too early to talk about replacement finance, and that dealers were able to make their own finance arrangements with their preferred suppliers.

The VACC's new car division, the Australian Automobile Dealer Association (Vic) suggested an extension on the February deadline was necessary.

"AADA (Vic) and VACC is disappointed this situation has occurred. We consider the six weeks notice period to be too short and unreasonable," VACC spokesperson Murray Collins said

"Firstly, we are calling on Ford Credit and the State and Federal Governments to consult with dealers and make every effort to extend this deadline.

"Secondly, we recommend Government paves the way for new financial institutions to enter the dealer retail and wholesale credit markets, therefore providing dealers and consumers with increased options," Collins said.

Over 100 staff employed at Ford Credit Australia's retail finance department are expected to lose their jobs. Spokeswoman for Ford Motor Credit in Detroit Libbey Meredith said the decision was "difficult but necessary".