Car finance firm stops lending
Go Car Finance is being pulled from the New Zealand market as its parent company warns of uncertainty here for the foreseeable future and eyes “better growth opportunities” in Australia.
Solvar Ltd acquired Go Car Finance in 2019 for A$21.6 million and says the business has since contributed more than A$90m (NZ$98.4m) in cumulative earnings before interest, tax, depreciation and amortisation.
However, Go Car Finance stopped considering new finance applications and lending from August 6 and Solvar plans to direct capital returned from New Zealand into the expansion of its Australian operations.
“Go Car Finance has positively contributed to the group’s current robust financial position. However, macroeconomic conditions in New Zealand have been challenging for an extended period, which has created uncertainty for the foreseeable future,” says Solvar in an announcement to the ASX.
“Solvar’s view is that there are now substantially better growth opportunities in the Australian market.
“This coupled with the subdued outlook for the New Zealand economy and the higher relative funding costs has led the board to make the decision to cease new lending in Go Car Finance.”
The statement issued by Solvar in late July adds that Go Car Finance will continue to collect and service outstanding loans from customers and seek to minimise disruption to customers and staff.
“As a result of the decision to cease new lending, it is expected the A$9.2m of goodwill and intangibles associated with Go Car Finance will be impaired and written down,” it continues.
“Solvar anticipates Go Car Finance will contribute positively to group earnings during FY25. As at June 30, 2024, the Go Car Finance loan book was A$139.2m with associated drawn wholesale funding of A$73m.”
Go Car Finance is currently the subject of civil proceedings in the high court after the Commerce Commission alleged it breached the Credit Contracts and Consumer Finance Act when providing vehicle loans to consumers between 2019 and 2022.
