Australia's largest non-bank lender, GE Money, yesterday became the latest victim of the global credit crisis, announcing it was pulling the plug on its car finance and mortgage operations.

The news came as the Federal Government said it would consider extending its deposit guarantee to investment funds, which claimed to be freezing $12 billion in cash, before it is moved to protected bank accounts.

The Government also announced that, from November 28, it will charge up to 1.5 per cent on protected bank deposits of $1 million and above.

Banks which did not want the insurance charge could opt out.

The decision by GE Money was made just a day after GMAC, the finance arm of General Motors, announced it too was abandoning the car finance business.

GE will shed about 335 jobs in the process, 78 in NSW.

Together, the two companies provided finance for more than half of all dealerships in NSW. The dealers rely on the finance to buy their stock, and also to provide easy credit to customers.

GMAC hits the brakes

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 told BusinessDaily from New York yesterday. “This is it for the time being.”

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.

“Unfortunately our employees in that area are going to be affected through the course of the transition,” Ms Proia said.

She said some staff would continue to be employed in Melbourne to work on the company's Asia Pacific business.

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.

Ms Proia declined to say how many dealers would be affected.

“We are going to work with our dealerships to have as smooth and orderly transition as possible over the next few months,” she said.

One car dealer said GMAC's exit would cause “quite a ripple” for dealers dependent on loans from the company.

“It would be pretty devastating,” he said.

Penfold City Holden dealer Craig Illing, who uses GMAC for wholesale finance, said the pull-out was an opportunity to get a better deal.

“I suppose we'll just use another financier,” he said.

“We've got financiers approaching us looking for our business.”

Holden spokesman Jonathan Rose said GMAC was an independent business and played down the impact on the car company's dealer network.

“The vast majority of our dealers are not GMAC providers,” he said.

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

Much of the finance company's client base is believed to be made up of small rural dealers of other vehicle brands, including Suzuki.

Making the market tighter, GE Money has begun running down its Australian car finance business.

“We have terminated a few agreements in recent weeks,” GE Money spokesman Tristan Everett said.

“This will have a dreadful impact,” James McCall, from the Motor Retailers Association, said.

“There are very few other providers of finance and we are desperately trying to seal a deal with another bank. If car dealers can't get finance they will go bust, it's as simple as that.”

GE also provides finance for most of Australia's interest-free retail schemes and will continue that business.

GE Money is also pulling out of mortgage lending and small business finance in Australia and New Zealand with its parent company — the world's third largest — blaming rising costs and a plummeting share price brought on by the credit crunch.

It will continue to offer mortgages through Wizard Home Loans, which it bought from founder Mark Bouris for $500 million in 2004, and which it is currently looking to sell.

Meanwhile, yesterday's announcements of changes to the deposits guarantee scheme follows investment sector complaints that the decision has caused a flow of cash out of their accounts to protected bank deposits.

The Investment and Financial Services Association said two-thirds of the top 20 fund managers had locked up their cash, affecting self-funded retirees, investors and small businesses.

Treasurer Wayne Swan said the Treasury and ASIC were “assessing all relevant actions that might be appropriate” to keep the sector healthy.

“This involves consultation with a large number of firms,” Mr Swan said.

ASIC will “provide urgent advice in relation to retail investor hardship”.

And, given the push-button convenience of the latter these days, the car's upper garb often comes off quicker.

Spring is also, of course, the time when Carsguide preaches to the convertible.

It's a task made easier by the ever-expanding range of topless four-seaters _ cars that combine a decent degree of utility with a goodly serving of desirability _ so that now ever more are converting.

The facility to have it off and on at will (most such lids fold up or down in around 20 seconds and some can do it at 30km/h) is worth a lot more as a selling point than all the kilowatts and cornering force figures in the world combined. Otherwise, just buy a coupe.

Not that BMW's 125i (priced from$63,755) lacks a means of propulsion or is in any way reluctant to address bends.

Even detuned to 160kW/270Nm, this three-litre jobbie is a classic example of the Bavarian's trademark in-line six _ which, combined with rear-wheel-drive dynamics, is unique among current compact convertibles.

Contrary to the hairdryer image of this genre, the only thing soft about the 125i is its roof which, in a world increasingly given to folding metal numbers, is of fabric construction.

For a car that, even by the compromised norm of this type, is knee-crushingly cramped in the back, it's starting to get bloody dear _ though even that's relative, given it's $30K easier on the wallet than the identically engined 325i.

Equally, the Volkswagen Eos TFSI (from $49,990) offers value _ indeed, allure _ that would necessitate spending maybe $40K extra on a more prestigious badge.

The VeeWee also boasts the best top of all these sometimes-roofless Germans: one with a number of variations, all of which enable it to be completely convincing as either a convertible or as a coupe. In either guise, it looks great.

The TFSI shares the Golf GTI's platform and drivetrains: a slick, six-speed manual or a twin-clutch auto driving that sublime two-litre, direct-injection turbo four-potter.

If you tick the optional sports suspension with 18-inch tyres box, it can do a fair dynamic imitation of this now-ubiquitous warmish hatch.

So can Audi's A3 2.0 TFSI Cabrio (from $54,900) _ as it should, given that it has the same underpinnings and go bits as the allegedly humbler Eos.

But although perceived prestige badges can have a disorienting effect on some punters' sense of proportion, the Eos's trick roof is enough to see it shroud out its soft-topped cousin.

It used to be that to go topless in traffic, you had to be Swedish; time was, indeed, that Saab's 9-3 was synonymous with this sort of behaviour.

But that was 10 years ago. Today, a 9-3 Convertible is an unreliable and outclassed alternative to simply wearing a T-shirt that reads: “Clueless”.

Fortunately for Scando enthusiasts, there's Volvo's C70 T5 (from $79,950). No, it doesn't get up and go anything like those mentioned above (despite a worthy 2.5-litre, five-cylinder turbo), much less handle.

But it does have visual presence, GT composure, a smart folding metal roof and _ perhaps more to the Swede-lover's point _ a perceptible quality of having been hewn from something extremely solid and ever-so safe.

Just as Lexus's IS sedan chucked a spanner into the compact prestige segment by doing a rear-drive/six-pots-up-front package that undercut the Germans for value, so too will the Lexus IS250C coupe/convertible.

Seen at the Sydney motor show, this folding-aluminium-roof number is due in these parts in the second half of 2009 _ no doubt priced at a point to cause the Europeans maximum discomfort.

The IS250C has a rear overhang some 50mm longer than the sedan, and Lexus claims class-leading boot space even with the lightweight, three-piece lid folded.

Roof up, it looks better still, with a coupe sleekness that becomes the IS more than the four-door shape.

The IS250C shares the sedan's 153kW/252Nm 2.5-litre V6 and six-speed, paddle-shift automatic.

At $1.19 million, the ultimate convertible costs 20 times more than the least expensive car here, but the Rolls-Royce Phantom Drophead Coupe is quite possibly the world's best car _so this seems only right and proper.

We mention it mainly to have an excuse to run its exquisite likeness, because next to none of us is ever going to get into one.

But it somehow helps to know that those who do have the wherewithal aren't wasting their dough on rubbish.

Besides, as the stock market goes at the moment, a Rolls is probably a better investment than shares.

The boom has been tipped after recent amendments to the luxury car tax and the introduction of new diesel fuels.

The luxury car tax now has a fuel efficient car limit for cars that consume no more than seven litres of fuel per 100km. These green cars would not attract any luxury tax until a new higher threshold of $75,000.

For example, the BMW X3 2.0d has dropped from $63,225 to $61,830, as it no longer attracts the luxury car tax.

It is expected that the new tax threshold will encourage premium manufacturers, including Mercedes Benz and Audi, to rollout more newdiesel models, especially SUVs.

Diesel vehicle sales in Australia have increased by 34 per cent since 2003.

Private diesel passenger sales this year have risen 28.4 per cent to 16,376, while non-private passenger diesels are up 86.8 per cent to 12,250.

SUV private diesel sales are up 24 per cent to 19,670 and non-private up 40 per cent to 24,780.

Sales might have been even higher except that many of the modern frugal diesel engines are not suitable in Australia because our diesel fuel's sulphur content, until recently, could be up to an unacceptable 500 parts per million.

By next year it has to be no more than 10parts per million, which is the standard to which BP Ultimate is produced.

Oil companies are now starting to supply diesel fuel with the lower sulphur content and claimed improvements in performance and economy. Shell is already selling diesel restricted to less than 10 parts per million of sulphur and other suppliers will have to conform to that standard next year.

BP Australia is also releasing BP Ultimate diesel after a successful trial of the fuel in Perth.

The new diesel contains anti-foaming agents to stop frothing and smells when filling up. It also has less sulphur, allowing us to use the latest generation of European diesel engines.

The BP Ultimate fuel was independently tested, with results showing better economy and fewer pollutants when compared with ordinary BP diesel. It was shown that with ongoing use, Ultimate diesel increased the power output of a passenger car by up to 8.3 per cent (average 2.8 per cent) compared with ordinary diesel.

BMW Group Australia managing director Guenther Seemann says tax changes and the lower sulphur content will mean continued high sales of diesels and more diesel models being offered.

He says they are now seriously considering bringing in the six-cylinder BMW 330d, with 180kW of power and 520Nm of torque, yet consuming only 6.8L/100km.

So far this year 4055 BMW customers opted for a diesel, representing a 65 per cent increase over the same period last year. The proportion of diesel buyers has also grown from 19.6 per cent to 30.6 per cent of all BMW sales.

BMW offers nine diesel models in Australia: 1 Series Hatch; 3 Series Sedan; 5 Series Sedan; X3 Sports Activity Vehicle; X5 Sports Activity Vehicle and X6 Sports Activity Coupe.

Mercedes-Benz Australia president and CEO, Wolfgang Schrempp, says he expects the upward trend for diesel car sales to grow.

Currently about 23 per cent of all Mercedes-Benz cars sold here are diesel and the figure is even greater for the Mercedes-Benz M-class off-roader. “The interest in diesel is not diminishing,” he says.

“It's a question of the torque available in these cars. It's changing perceptions.”

And Audi Australia have already said they will try to turn a provision in the increased luxury car tax to their advantage when they revamp their A6sedan and wagon range next year. Audi Australia managing director Joerg Hoffmann says they can use the “green” provision in the luxury car tax by having smaller diesel engines than offered in theA6 range: the 2.0 TDI and 2.7 TDI V6.

Efficient cars, such as the A4 and A5, with the 3.0 TDI V6, are liable for the LCT only on the cost of the vehicle above $75,000.

Volvo has announced that diesel fuel will continue to power its cars into the next decade despite it also having plans for more efficient petrol engines and even hybrids.

A production plan for the first major remake of Australia's only homegrown SUV is now locked in place ahead of a changeover early in 2009.

It comes as Ford continues to downsize its workforce, not just on the production line that produces the Territory and Falcon but also in white-collar jobs at both Broadmeadows and its manufacturing base at Geelong.

The Territory plan shows an ongoing commitment to the car, even if it is not yet included in the V6 engine changeover set for the Falcon in 2010.

The makeover is not a big spend or a major alteration, but will give Ford's local wagon a worthwhile freshen-up and some added showroom impact. Ford is not quite ready to go public on the Territory update, although the company confirms something is happening.

“We have forward model plans for Territory,” admits Ford Australia's spokesperson, Sinead McAlary.

“Basically, we are continuing to move forward with Territory.

But we are not sharing any details at this time.”

The changeover of the Territory is expected towards the end of the first quarter of next year, probably in late March.

The timing points to a preview of the updated Territory at the Melbourne motor show, with the first vehicles likely to come down the line at Broadmeadows some time in February. The changes to the Territory will be extensive, from sheetmetal to the interior.

But there is no news yet on a dedicated LPG model. Insiders point to a more edgy look to the body, which will pick up some of the Ford styling direction already incorporated in the FG Falcon. It could easily pass for an upsized Kuga, the European compact all-wheel-drive wagon based on the Focus.

But the work will be concentrated on the front end, with nothing major planned for the tail. The dashboard from the new Falcon, or at least elements from it, is expected to be transplanted into the Territory.

New Ford Australia president Marin Burela believes FG Falcon is undersold and plans to reverse that both at dealer level and with potential customers.

Battling the fallout from last week's job cuts and falling large car sales, Burela believes the big-six segment is not dead — and nor is the Falcon.

Burela has already met many of the national dealers and is taking on board the critical feedback regarding what needs to be done.

“The FG Falcon is building its share in the large-car segment — even though that segment is reducing and has been reducing over recent months,” Burela says.

Despite rave reviews, FG Falcon sales are down 6 per cent compared to the same time last year.

Burela acknowledges the segment is a “critical” one for Ford and “one that is very difficult” in the current circumstances.

This year Falcon sales trail Commodore by more than 13,000 vehicles and the Toyota Corolla and Mazda3 have outsold it in some months.

At 11 per cent of the total market, Burela believes the large segment has bottomed out.

“Our objective is to ensure that we promote its (Falcon) virtues, strengths, quality and everything about the car that makes it what it is,” he says.

“That's what we're going to do, targeting our fair share of this reduced segment.”

He is also adamant that Ford will continue to make cars here, while not being specific on the ongoing future of the Falcon.

“We're committed to making sure that every step we take will put us on a solid and firm foundation so that we can actually build a very viable business going forward,” he says.

“We're here to be viable, to be profitable and to be here for the long term.”

The Holden Commodore arrived as the red lion's reaction to the global oil crises of the mid-1970s, downsized and based for the first time on a car from Europe.

It also put the sword to the most classic of Aussie family cars - the Kingswood.

The VB Commodore of 1978 was almost a polar opposite of its deadly rival, the Ford Falcon, which continued as a hulking beast based on traditional big-six basics. It won the early battles but Ford fought back and the tribal fight between the Falcon and Commodore continues today.

"I thought the car was right for its time. The Commodore took us into the future. It had a major impact," the current head of Holden Design, Tony Stolfo, said yesterday.

He has driven the latest development of the car, the VE Commodore, which has become a major overseas success as the Pontiac G8 in the USA. As well as spawning a new-age ute which is also sold in America and a retro-styled coupe which will be sold to Americans as the Chevrolet Camaro.

GM Holden marked the milestone for the Commodore yesterday with a party at its headquarters in Fishermans Bend where company chiefs, as well as Commodore enthusiasts, celebrated alongside a range of cars from the VB to the VE with everything between.

That’s the standing World Land Speed Record, set by British Wing Commander Andy Green in the ThrustSSC on 15th October, 1997.

Now Green, joined by his former team boss – and fellow record holder — Richard Noble OBE, are getting set for a bid to hit 1000mph – that’s Mach 1.4, or 1609kmh in our language. Or roughly translated, the equivalent demerit points to lose your licence until sometime in the fifth millennium.

Their four-year Bloodhound Project, which they say is “as much an engineering adventure as the ultimate speed record challenge”, is intended to boost enrolement in science, technology, engineering and mathematics education, and boost interest in technology careers.

The Bloodhound Supersonic Car (SSC) is a marriage of jet, rocket and piston-engined power packed into a 12.8m, 6400kg bullet to be fired in 2011 at a location still to be decided, but possibly Black Rock Desert in Nevada that was used for the Thrust SSC record.

Prior to that, it will warm up with an 800mph bid in 2009, and be continuously honed and improved, with a 900mph run in 2010.

The project informations says the car will be “more advanced than most spacecraft and faster than a bullet fired from a handgun. Its 900mm diameter wheels will spin at over 10,000rpm, generating 50,000 radial g at the rim. The car will accelerate from 0 – 1,050mph in 40 seconds and at V-max (maximum velocity), the pressure of air bearing down on its carbon fibre and titanium bodywork will exceed twelve tonnes per square metre. At this speed, Andy Green will be covering a distance equivalent to over four football pitches every second, or 50m in the blink of an eye.”

That completely overshadows what we refer to as `low flying’ and if the Bloodhound’s speedo hits the 1000mph mark, it will not only be the biggest jump in the history of the World Land Speed Record; but will also overtake the 994mph low altitude speed record for aircraft.

And all in the name of education, Green says. “I’ve met graduate engineers who are adamant that our previous record was what inspired their career choice as youngsters: that sort of thing makes all the effort worthwhile,” he says.

“Bloodhound SSC will be so much faster and, we hope, will fire up every school kid about the science and technology.

“We’re going to invite everyone to follow our adventure in this, the most exciting and extreme form of motorsport – the World Land Speed Record.

“Both as a mathematician, and as a Royal Air Force fighter pilot, I can’t think of anything better.”

Ford has produced the key to parents' peace-of-mind.

The U.S. car-making giant has produced a car ignition key to make teen drivers adopt safer and more fuel efficient driver habits.

Called “MyKey”, the feature is set to become standard on the 2010 Focus coupe in the U.S. and subsequently will be offered on other U.S. Ford, Lincoln and Mercury models.

The key can be used to limit the vehicle's top speed and sound system volume as well as programming the car to issue earlier “low-fuel” warnings. The system, which also can be programmed for alert chimes at several different speeds, reads the ignition key and sets the appropriate driving mode.

The standard seatbelt reminder can be extended to include muting the sound system until seatbelts are used. The key also can keep active safety systems - such as parking radar, blindspot warning and stability control - from being deactivated, as well as limiting the top speed to 130km/h.

Reduced speeding also is beneficial to fuel economy, which Ford's research says can be improved by as much as 15 per cent driving 88km/h instead of 104km/h.

Ford group vice president of Sustainability, Environment and Safety Engineering, Susan Cischke, said the company was committed to crash protection systems and developing new technologies.

“MyKey can help promote safer driving, particularly among teens, by encouraging seatbelt use, limiting speed and reducing distractions,” she said.

Ford electronics engineering team director Jim Buczkowski said they had upgraded the existing anti-theft system. “Simple software upgrades . . . we've developed a new unique feature that we believe will resonate with customers,” he said.

“We also developed MyKey's functions in such a way to quickly spread it across multiple vehicle lines, giving us the ability to go mass market in the spirit of other Ford innovations such as safety belts, stability control and SYNC.”

Ford Australia public affairs brand manager Edward Finn said the system was a U.S.-only proposition at this stage. “Ford Australia has a keen interest in new technologies offered by Ford Motor Company and monitors these developments as they are introduced,” he said.

“We will consider consumer interest and demand in relation to new developments to ascertain if they are desired in models available for sale in Australia. Until that time, we are not prepared to speculate on future model plans or possible features of new models.”

Ford's research shows 75 per cent of parents of teen drivers liked the speed-limiting feature, 72 per cent liked the more insistent safety-belt reminder and 63 per cent liked the audio limit feature.

The survey also said about 50 per cent of parents would consider purchasing MyKey and said they would allow their children to use the family vehicle more often if it were equipped with the new technology.

The National Highway Traffic Safety Administration says teens are more likely to take risks such as speeding - a contributing factor in 30 per cent of all fatal crashes. Teens also are less likely to wear safety belts than older drivers.

They are not toys. And the batteries are included.

The Mini E is the first solid sign that the BMW Group is getting serious about electric motoring, promising a workable battery-powered range of more than 200 kilometres and running costs of less than five cents a kilometre.

The funky plug-in is already up and testing in Europe ahead of a public unveiling at the Los Angeles Motor Show in the second week of November.

A full fleet of 500 cars will be ready for action early next year, and will be sold into key US cities including LA and New York.

The Mini E loses its conventional petrol or diesel engine in favour of a high-tech Lithium-Ion battery pack which powers a 150 kiloWatt electric motor.

It is claimed to have a top speed of 150km/h, 0-100km/h time of 8.5 seconds and a re-charge time of less than three hours.

The Mini move comes quickly after American officialdom demanded a percentage of each carmaker's fleet must be zero-emission by 2012, but not as quickly as Mercedes-Benz or Mitsubishi.

Benz already has a 100-strong fleet of Smart electric cars under test in London and Mitsubishi plans to have its i-Miev electric minicar in full-scale production in 2009.

The Mini E is being introduced as a test vehicle with government departments and a small number of private owners on a least system.

There are no plans yet to bring the car to Australia, although Mercedes and Mitsubishi are both committed to local sales of their plug-ins and the i-Miev should be on the road locally in 2009.

But it may be some time before it reaches Australia.

“At the moment it is only being produced in left-hand drive,” Hyundai Australia's Ben Hershman says. “We're anxious to convince head office the the Coupe is important to us here.

“It is the car that will show just how far Hyundai has come and how exciting the brand is.”

The replacement for the ageing Tiburon Coupe takes Hyundai into new territory with its rear-wheel-drive architecture and sports performance.

Powering the top end Coupe is an all-aluminium 231kW 3.8-litre DOHC V6, while at the entry level the engine is a 166kW 2.0-litre turbocharged four.

The V6 features dual continuously variable valve timing and with 361Nm of torque on tap the car will set behind a 0-100km/h sprint 6.3 seconds.

The V6 is mated to a six-speed ZF automatic. A six-speed manual is also available and features a short-stroke shifter, optimised gear ratios and triple cone synchronisers.

The optimised chassis makes for dynamic handling and more accurate steering. Dual MacPherson struts control the front and the rear has a five-link set-up. High strength steel give a stiffer, lighter body structure.

Safety fare is likely to include anti-lock brakes, traction control, stability control, six airbags and active headrests.