SYDNEY -- Australian Treasurer Wayne Swan said Friday the government will activate from Sept 1. a special fund to provide liquidity for auto dealer financiers encountering difficulties due to the global credit crisis
The government announced last December it would create the special purpose vehicle worth up to 2 billion Australian dollars ($1.66 billion) with the support of country's big four banks -- Commonwealth Bank of Australia, National Australia Bank Ltd., Australia and New Zealand Banking Group Ltd. and Westpac Banking Corp.
The government in June lowered the estimated size of the vehicle to around A$550 million, following a better-than-expected functioning of the market and the ability of dealers to secure funds through remaining lenders.
Like in the U.S., scarce credit has hammered Australia's A$7.7 billion auto sector in recent times.
The Australian government decided to establish the auto fund following plans by GE Money, a unit of General Electric Co., and GMAC, to exit the local market, leaving an estimated A$2 billion hole in funding lines to auto dealers. Swan said Friday the so-called OzCar program has helped ensure their orderly withdrawal.
"However, it will still be necessary to activate OzCar so that the remaining GE and GMAC dealerships will have more time to secure ongoing financing," Mr. Swan said in a statement.
"The activation of OzCar will also provide Ford Credit Australia with access to the liquidity required to continue to support its dealerships -- most of which are in regional areas."
Legislation enabling the fund was passed by lawmakers in June.
The fund is backed by the government's AAA sovereign guarantee but the government won't contribute direct funding.
Holden, the Australian unit of General Motors Corp., Ford Motor Co. and Toyota Motor Corp. currently manufacture cars in Australia.