50 HOLDEN Dealers to Close Down ?

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GENERAL Motors' finance arm is to shut down its Australian and New Zealand business, costing 185 jobs and putting a question mark over the operation of about 400 car dealers nationwide.

GMAC, which has operated in Australia since 1926, will close the division by the end of the year and wind up its local loan book, worth about $2.6 billion.

"We're going to cease retail and wholesale vehicle financing in Australia and New Zealand," GMAC spokeswoman Tina Proia said.

She said GMAC had decided to abandon Australia because of funding woes brought on by the global credit crisis.

In the US, the struggling company has slashed new lending and demanded dealers start paying off the full amount of loans over floor stock.

Adding to the sector's woes, the finance arm of multinational GE is winding down its Australian motor finance book.

GM, which trades in Australia as Holden, holds 49 per cent of GMAC after selling 51 per cent to a consortium led by private equity outfit Cerberus Capital in 2006.

About 160 staff in Australia and 25 in New Zealand are to be made redundant.

In addition to consumer finance, GMAC provides the wholesale motor finance dealers use to buy their display stock.

Those dealers will have to find new finance or repay the capital amount -- a potentially ruinous scenario for smaller dealers lacking in cash flow.

It is believed GMAC services about 50 of the 265 Holden dealers in Australia.