Finance industry experts estimate that New Zealand’s motor dealers urgently need $250 million dollars worth of credit to keep their businesses afloat.

The shortfall is due to the sudden withdrawal of large industry players GE Money and General Motors Acceptance Corporation. The two were responsible for credit lines to dealers totaling $250 million.

The two financiers have told customers that those lines are shortly to close down as the pair are ceasing to do business in New Zealand.

Some motor dealers believe the sudden shutdown was harsh and capricious, given the vehicle sales industry has had a tough year.

The credit lines used by dealers are of two types.

One is known as floorplan, being the money the dealer needs to borrow to buy cars for the showroom and the yard. The other is retail, the finance the dealer can offer to a customer buying a car.

Even opposition financiers were less than impressed with the suddenness and the timing of the withdrawal of the two large lenders, but they are especially unhappy with the GE shutdown.

“GE clearly led the price of finance down,” Marac general manager of motor and consumer business Chris Flood says. “It took an aggressive stance to gain large chunks of business."

That meant its sudden departure was ill-timed, he says. Dealers had had a bad sales year.

“There is now $250 million worth of dealer demand for finance looking for a home. The companies that are in a position to meet it are my own firm Marac, UDC, Daimler Chrysler Finance and a subsidiary of BMW called Althera.”

Mr Flood says it’s known within the finanace industry that Daimler Chrysler Finance was looking at financing dealerships that principally sold Daimler Chrysler brands but the BMW subsidiary looks at any good quality application. Both operators use their own treasury lines from Europe.

Mr Flood says whether the collective appetites of the four operators would add up to $250 million is yet to be seen.

He says whichever financier a dealer applied to for a funding line, the dealer would have to show significant equity in the business.

“Gone are the days when you can run a dealership on a 10% equity.”

Motor Trade Association spokesman Andy Cuming says his association was trying to facilitate fast track access for member dealers left in the lurch, to lenders with available finance.

Mr Cuming says floorpan finance is key to a dealership’s survival.

“Without floorplan finance a dealer is out of business. And the car manufacturers start coming round and hooking the cars off the yard.”

He had not heard of this happening to any dealers affected by the GE and GMAC withdrawals yet, as the dates for the closure of the credit lines were still approaching in most cases.

That was why the MTA was trying to introduce dealer members to likely lenders as fast as it could.