Subaru finance rescue

SUBARU Australia has formed a new finance company in the wake of the upheaval caused by the imminent departure of GMAC and GE money.

Australia’s number nine car brand has established a new partnership with ANZ subsidiary Esanda to provide vital dealer finance for its 108 national dealers as well as to car buyers.

Subaru Finance will commence operations by April 16, when Subaru Australia’s contract with GMAC expires, despite the US finance company’s intention to exit Australia by tomorrow.

In the meantime, GMAC continues to battle for survival in the US, where it is trying to raise regulatory capital of $US30 billion ($A44 billion) to become a bank-holding company and therefore able to access the US government’s $US700 billion bailout fund.

The US Federal Reserve last Friday approved the finance company’s request to become a bank holding company subject to raising the required funds, which requires a complicated debt-for-equity exchange.

Subaru Australia managing director Nick Senior told GoAuto earlier this month that his company was in a better position to find a quality replacement for GMAC because of the quality of its dealers and its strong position in the market.

Announcing the new partnership with Esanda yesterday, Mr Senior described the company as “a quality organisation”.

“To have reached this milestone in just two months is testament to the synergies between the organisations,” he said. “It is also a reflection of the quality of the Subaru book and the brand’s strength.”

Subaru’s financial services manager, Andrew Sinclair, said the deal not only solves the immediate need to replace GMAC but provides the basis for a better retail and wholesale finance operation into the future.

“Based on Esanda’s broad industry knowledge, it represents a real opportunity to grow our offerings,” said Mr Sinclair.

“Our negotiations took place during a time of great turmoil in both the finance and automotive sectors. However, we remained confident that, due to the quality of our book and brand, and the commitment of the Esanda management team, we could reach our mutual goal in a timely manner.

“Our long-term partnership with Esanda ticks all the boxes.”

Esanda dealer relationships head David Hannah noted that the company has been in the auto finance industry for more than 50 years and is one of Australia’s largest providers of retail finance through dealerships.