Money for some? not for others?

[Xahn1960]

I can't help but feel there is more than a little bias and double standards in our governments decision to help out car dealers with their floor plans while boat dealers go under..

http://www.news.com.au/heraldsun/story/0,21985,24755227-661,00.html

I don't really believe in government bailouts at all, but if your going to help one industry then you should be helping all of them. Am I just not getting it or have the patients gained control of the asylum??

Bill:-/

[Mike Delisser]

If I read it right, car yards don't own the cars on their lots, the finance companies do until they are sold. These finance companies (2) have packed up and left Australia and car yards can't afford to replace floor stock.
Is this the same in the boating industry??? I don't know, when Sundown went belly up Quintrex turned up and took their boats back so I suppose they owned them or at least Sundown haddn't paid for them. I thought the prob with the struggling boat yards was no one was buying new boats.
I have noticed some truely amazing deals ATM on new cars($40k down to $30k), a real buyers market, still waiting to see that at marine dealerships.
Cheers

[tigermullet]

You won't have to wait long. There will be deals all over the place very soon unless money velocity picks up speed and that doesn't look like happening.

[Xahn1960]

My understanding is that boat dealers are little different from car yards when it comes to needing a floor plan for there stock.. If this is so then why not make the $2b cover all businesses that need one to survive? Boating may well be a luxury but then again, according to the tax man so are half the cars currently on the market.

[squizzytaylor]

Its sheer ecomomics, how many people are employed in the automotive industry vs the boating industry approximately 20:1.

GT

[PinHead]

true squizzy..but a Govt should not be there to prop up private enterprise.

[PADDLES]

i agree pinhead, i'm sick of it myself. it seems these days that anyone who is doing things a bit tough (whether it's their own fault or otherwise) has their hand out for a handout. what happened to good old capitalism and a free market? when times were good the blokes at the car yards weren't cutting anyone any slack and now that times are a little tougher they still want to earn the big bucks. the pr!cks just want their bread buttered on both sides.

bottom line for me is that k.rudd has spent OUR, i repeat OUR, budget surplus in one year and basically not achieved any of the things he set out to achieve other than keeping himself popular, if the government were a publicly listed company the shareholders and the other board members would have had him shafted long ago.

[-spiro-]

true squizzy..but a Govt should not be there to prop up private enterprise.


right on the money Pinhead -no bail outs-you own it- you solve it8-)

[Xahn1960]

i agree pinhead, i'm sick of it myself. it seems these days that anyone who is doing things a bit tough (whether it's their own fault or otherwise) has their hand out for a handout. what happened to good old capitalism and a free market? when times were good the blokes at the car yards weren't cutting anyone any slack and now that times are a little tougher they still want to earn the big bucks. the pr!cks just want their bread buttered on both sides.

bottom line for me is that k.rudd has spent OUR, i repeat OUR, budget surplus in one year and basically not achieved any of the things he set out to achieve other than keeping himself popular, if the government were a publicly listed company the shareholders and the other board members would have had him shafted long ago.

I agree totally with your thoughts there, but the only ones with there hands out here are the finance companies. All the dealers get is the ability to continue with the floor plan they have allways needed to hold their stock, I don't see they really gain much. My original point was, why help only some of the businesses? This guarantee could be for all floor plans, why only cars?

Bill.

[FNQCairns]

Things used to get bought and sold 20 years ago before the virtual money era came along. correct me if I am wrong but wont the government financing floor plans not actually sell cars? it will do nothing but keep the legal business entity alive but the work ie wages/people will be sacked anyway.

Ditch diggers/factory/sevice industry workers get thrown over 5 times a year every year and no one bats an eye so in kind I hold with this philosopy throught the socioeconomic layers and understand we need to rationalise but without the big bump at the bottom, government is doing what it can, repeated mulitple times world wide now. The surplus cost us a lot this last 10 years and we paid for it handsomly in so many ways and 2 times over. Deflation coming not long after xmas...it's gotta have another stab, our dollar was not long ago the 4 lowest in the world, Zimbabwe and Tanzanaea (sp) etc just below us.

cheers fnq

[disorderly]

right on the money Pinhead -no bail outs-you own it- you solve it8-)

Bit of a tough stance there fella's...

There are legitimate reasons to provide funding for private industry however funding floor stock for car dealers is not one of them IMO...

As FNQ states above it's not going to actually sell more cars ..only allow them to continue to have huge amounts of cars sitting on their lots costing taxpayers money....

Bloody cars..what a waste of money..

[PinHead]

One would have to ask..the car dealers have just been through a boom time like everyone else..mining companies etc have bought a lot of vehicles..what have they done with those profits if they still need help?

[tigermullet]

One would have to ask..the car dealers have just been through a boom time like everyone else..mining companies etc have bought a lot of vehicles..what have they done with those profits if they still need help?


Their profits might have been punted up on the share and property markets (on margin probably) but now that the investing world has changed a lot of money has gone to money heaven.

As one Wall Street broker recently said, 'The recession's over, Dude - we're now into depression. Get used to it.'

[trueblue]

We have to look at what the government has actually done - they are not giving the car dealers anything. Banks are now going to provide finance where GE etc have pulled out. All the government is going to do is charge the car buyer (through the dealer) a charge on each car sold to 'guarantee' the debt with the banks - its just an insurance plan by the government because the banks really didn't want to offer finance to the car dealerships.

would be nice though if the same situation applied to boat dealerships, however the government probably views boats as luxuries that don't have a sufficient proportion of the population employed to warrant the same action.

cheers

Mick

[FNQCairns]

So does that mean we will have 2 different sorts of dealers to choose between? one that charges the fee and one that doesn't due to the way they view their floor plan financing, what size would this fee be?? Competition might null it within new car/second hand car quotes??

cheers fnq

[Mindi]

We have to look at what the government has actually done - they are not giving the car dealers anything. Banks are now going to provide finance where GE etc have pulled out. All the government is going to do is charge the car buyer (through the dealer) a charge on each car sold to 'guarantee' the debt with the banks - its just an insurance plan by the government because the banks really didn't want to offer finance to the car dealerships.

would be nice though if the same situation applied to boat dealerships, however the government probably views boats as luxuries that don't have a sufficient proportion of the population employed to warrant the same action.

cheers

Mick

Yeah agree Mick...and the underwriting of floorplanning is also to do with the political and economic desire to keep the end to end car industry alive because it reaches so far beyond the actual car companies. Same argument could be applied to boats but (a) much much smaller and less important to the national economy and (b) much more "discretionary" in nature so politically more touchy....but there is some inconsistency on the face of it.

[seabug]

Oops,Double post
Apologies

seabug

[seabug]

We have to look at what the government has actually done - they are not giving the car dealers anything. Banks are now going to provide finance where GE etc have pulled out. All the government is going to do is charge the car buyer (through the dealer) a charge on each car sold to 'guarantee' the debt with the banks - its just an insurance plan by the government because the banks really didn't want to offer finance to the car dealerships.

would be nice though if the same situation applied to boat dealerships, however the government probably views boats as luxuries that don't have a sufficient proportion of the population employed to warrant the same action.

cheers

Mick

Hi ,
The same item appeared in the Herald Sun today on page 9

But it includes the following paragragh

Quote"The SPV(Special Purpose Vehicle) will be available to new vehicle dealerships,which have been using "wholesale floor-plan financing",as well as businesses that sell trucks,motorhomes,boats,caravans and other commercial vehicles"

Personally I think it is a good idea.

It keeps all those businesses open to service the warranties that were given on articles/vehicles sold.

With so many businesses allready closed,who is going to service the boats .

It maintains the skills base

And it is better to have all those people employed ,and paying taxes,than have them lining up to Centrelink for Christmas.

Regards
seabug

[PinHead]

The Govt is going to underwrite the banks loans for this finance..once again..NO WAY..this is taxpayers money..Govt is not there to underwrite these transactions...complete and utter crap...let the dealers run their business on their own..not interested in underwriting any bloody car dealer.

[trueblue]

The Govt is going to underwrite the banks loans for this finance..once again..NO WAY..this is taxpayers money..Govt is not there to underwrite these transactions...complete and utter crap...let the dealers run their business on their own..not interested in underwriting any bloody car dealer.

right or wrong, they are not actually spending any tax payers money, unless a car dealer goes broke, and fails to pay the bank back their loans the government isn't spending any money.

Generally speaking the car dealerships were fairly healthy, and were ticking along just fine with their previous finance (withdrawn by GE etc through absoluely no fault of those businesses). The probability of the government acually having to pay anything out of taxpayers money is fairly slim.

And to cover potential expenditure in the future, the gov't is charging a fee on all cars sold to fill their koffers.

Too many people have jobs associated with the motor vehicle industry. If this industry goes under, the economy will take a huge plunge.

[seabug]

right or wrong, they are not actually spending any tax payers money, unless a car dealer goes broke, and fails to pay the bank back their loans the government isn't spending any money.

Generally speaking the car dealerships were fairly healthy, and were ticking along just fine with their previous finance (withdrawn by GE etc through absoluely no fault of those businesses). The probability of the government acually having to pay anything out of taxpayers money is fairly slim.

And to cover potential expenditure in the future, the gov't is charging a fee on all cars sold to fill their koffers.

Too many people have jobs associated with the motor vehicle industry. If this industry goes under, the economy will take a huge plunge.

Hi trueblue,
Well put

For neglible risk the Govt. has stabilised the industries.

The alternative is to have major losses in commercial property markets caused by the closing down of the huge car sales businesses in major cities

This would have some impact on some Superannuation.

Major job losses in cities like Geelong ,Ballarat and Albury as parts and accessory makers go bust.

Redundancies at Ford ,Holden ETC as less cars are bought.

A huge increase in unemployment ,with extra costs for social services,family stress and healthcare.

More mortages getting behind as people lose their jobs through no fault of there own.

Add the trickle -down effect ,where a dollar spent circulates 7 times around a town.

It does not matter who is in Govt. It had to be done.

Regards
seabug

[tigermullet]

It might all seem well and good for the Government to be acting as a guarantor for car dealer loans but why will the banks not step in to fill in the void left by finance companies without a government guarantee?

Could the loans be too risky? Perhaps past practices show that brokers and finance companies failed to lend prudently?

Last year I asked a dealer how customers were qualified when they applied for finance arranged in-house. The answer was that the dealer filled in the form but the qualification was left to the broker and, ultimately, the finance company but as far as he could tell, it was sufficient that the customer be able to stand up and breathe at the same time.

I hope that a more responsible approach will be taken to vehicle lending and leasing in the future otherwise the tax payer is put in the position of guarantor.

And what else is a guarantor but a fool with a fountain pen?;D

[Mike Delisser]

true squizzy..but a Govt should not be there to prop up private enterprise.

I don't disagree with your statement Greg but in this case economically and politicly it's the right move. But I'd like to know if you include primary producers in that as well, drought and or flood relief ect ect.

Tigermullet
It's not that the banks won't do it without Gov guarantee, it's that the banks will need to borrow the money themselves and they will need the Gov guarantee to do that.
Cheers
Mike

[Hairy_Harold]

I'm gunna stick with my opinion that the only reason the government is giving money to car industry is the same reason it's how it is to import cars. It's because they know if they stop throwing money into the Australian car industry it will fall on it's ass and cease to exist. What else do we have to offer apart from farming and cars? Answer is nothing

[tigermullet]

Tigermullet
It's not that the banks won't do it without Gov guarantee, it's that the banks will need to borrow the money themselves and they will need the Gov guarantee to do that.
Cheers
Mike

Well, I guess that things are worse than I thought. On October 12th Kevin Rudd backed up the overseas fund raising by all of our banks by guaranteeing those borrowings. That is, any Australian bank (or Foreign banks with a presence in Australia) comes under the umbrella of Australia's AAA credit rating.

This sounds like an additional guarantee made directly to the banks by the Government but I could be wrong.

It's a pity that the guarantee wasn't in place prior to this - some of our boat dealers might have been saved. Although I'll bet that some dodgy lending practices went on in those businesses too.

Not that I'm blaming the dealers - they were just operating under the standards (or lack of them) set by foreign based lenders.

[Noelm]

I think we need to remember that ALL car dealers do not rely on a "floor plan" it is their choice, sure most need the finance, but not all, just as some Boat dealers have the same plan, it is just a way of doing business, the Finance company "buys" the cars/Boats/Planes whatever the product is, and charges Intersest on the Money, when the Car is sold, the Dealer SHOULD pay it out, but a lot don't, it is bad business, but it still happens, the Finance Company send around an Auditor sort of person, they check the stock, and reconcile it against the Finance liability, if you get caught having sold an item, but not paying for it, you may face a penalty or get a "please explain" why the Auto industry was singled out is anyones guess, but I would be thinking the whole big picture would mean countless jobs if most of them folded, not just salesmen and so on, but maunfacturing as well, plus mechanics, the whole box and dice could cause major instability to Australia, but it still does not make it right!

[PADDLES]

i can understand that the government would be doing this to prop up the jobs but surely the market should regulate the industry. ie. if there are too many car dealers and not enough sales to go around then some of those dealerships should be closing up shop. the government is merely propping up businesses that are unsustainable. same goes for the boat shops, when times were good they popped up everywhere, we've hit a bit of a rough patch and a few have had to close their doors. "the tribe has spoken" so to speak.

[Mike Delisser]

I don't disagree with your statement Greg but in this case economically and politicly it's the right move. But I'd like to know if you include primary producers in that as well, drought and or flood relief ect ect.

Cheers
Mike



??????????

[PinHead]

??????????

I do not even know how you can draw that bow..Primary producers produce food..something we all need.

[finga]

i can understand that the government would be doing this to prop up the jobs but surely the market should regulate the industry. ie. if there are too many car dealers and not enough sales to go around then some of those dealerships should be closing up shop. the government is merely propping up businesses that are unsustainable. same goes for the boat shops, when times were good they popped up everywhere, we've hit a bit of a rough patch and a few have had to close their doors. "the tribe has spoken" so to speak.
Well said :)


I do not even know how you can draw that bow..Primary producers produce food..something we all need.
Apparently I don't need so much of it :-[

[Mike Delisser]

I do not even know how you can draw that bow..Primary producers produce food..something we all need.

True we all need food, but I draw that bow because on average from the year 2000, with a population of around 21 million, Australia produces enough food to feed 80 million and enough cotton to cloth 200 million, so the vast majority is sold and exported.
BUSINESS IS BUSINESS