The Australian government is creating a special A$2 billion ($1.3 billion) fund for the country’s car dealers crippled by the planned withdrawal of two of the market’s biggest lenders.

Treasurer Wayne Swan says in a statement the fund, called the Special Purpose Vehicle (SPV), will be established from Jan. 1.

The SPV will allow viable dealerships affected by the withdrawal of GMAC Financial Services LLC and GE Capital Finance Australasia Pty Ltd. (GE Money) to keep trading.

The two money lenders said they were quitting vehicle financing in Australia and New Zealand as a result of the global financial crisis.

“The automotive industry plays a vital role in Australia’s economy, supporting many thousands of Australian jobs, and today’s announcement will support a stable and viable future for the industry in the face of very difficult global conditions,” Swan says.

The SPV, which will be established as a financing trust, is a private-sector solution that will provide liquidity to car dealer financiers by securing eligible loans provided to car dealers.

It is being supported by Australia New Zealand Bank Ltd., Commonwealth Bank of Australia Ltd., National Australia Bank Ltd. and Westpac Bank Ltd., with technical support from Credit Suisse Australia Ltd.

Swan says the lenders’ decision to quit Australia has placed great pressure on a large number of car dealerships and the Australian automotive industry more generally.

“The overall size of the SPV will need to be around A$2 billion,” he says. “The government will provide support to the SPV in the form of a guarantee expected to cover a minor proportion of the securities issued.”

The SPV will be designed to support viable businesses, Swan says. “It will not seek to provide an artificial lifeline to unviable dealerships. The eligibility criteria that will apply will be fair and transparent.

“Credit Suisse is providing the necessary technical support to develop the SPV. Treasury will continue to work closely with the major banks, Credit Suisse and its advisers, over the next three weeks to finalize the details of the SPV and to put it into effect.”

Swan says this is a transitional arrangement only and will remain in place until viable dealers establish new funding arrangements.

Banks that have refinanced GE- or GMAC-financed dealerships since the lending firms announced their withdrawal from the market will be eligible for SPV funding provided they meet eligibility criteria.

The SPV will operate with government support to refinance dealerships for a period of 12 months, after which its funding level will run down.

“It is, therefore, possible that in light of the overall economic climate, some unviable dealerships will leave the industry,” Swan says.

The SPV will be available to both new- and mixed-vehicle dealerships that trade cars, trucks, motorbikes, boats, caravans and other commercial vehicles, as long as they now are financed by GE Money or GMAC.

The financing available under the SPV will be for wholesale floorplan financing only. Retail financing will continue to be available through banks, building societies, credit unions and finance companies.

The Victorian Automotive Chamber of Commerce greets the news with relief. “This is most welcome news for new car dealers, in particular, and the Australian economy as a whole,” says Executive Director David Purchase.

The SPV will allow viable dealerships that are affected by the withdrawal of GE and GMAC to keep trading. “Today’s outcome is a creative solution to the problem,” Purchase says.

The A$2 billion fund comes after the government in November nearly doubled its assistance to the Australian auto industry to A$6.2 billion ($3.9 billion) over the next 13 years.

Prime Minister Kevin Rudd says the extra A$3.4 billion ($2.2 billion) in funding is part of the government’s strategy to protect jobs and focus the country’s auto industry on becoming more economically and environmentally sustainable by 2020.