The Australian government has rescued its car dealers from going bankrupt by giving them a much-awaited $2 billion financial package.

The package  has ben brokered with the four major banks in the country to provide financing after two big automotive financiers, GMAC and GE Money decided to quit Australia.

The move comes as consumers have stopped buying new vehicles and the big lenders fleeing the market, making it difficult for car dealers to raise funds in the current global financial crisis.

The Kevin Rudd government unveiled the rescue plan for car dealers after treasurer Wayne Swan met with top management of Westpac, ANZ, NAB and the Commonwealth Bank yesterday to chalk out a plan to rescue the car dealers.

According to the rescue package, a new trust of $2 billion, financed by the big banks will be formed and it will start giving loans under government guarantee to new and used car dealers as well as traders in trucks, motorbikes, boats and caravans.

After announcing the financial package, Treasurer Wayne Swan said that credit would not be given to "unviable" dealers as the funds were not an "artificial lifeline" and only dealers who were doing business successfully before the credit crunch hampered their source of funding, can avail of this credit line.

Swan said in a statement, "Today's announcement will help ensure the long-term viability of the automotive industry and forms part of the government's commitment to protect jobs in this vital industry and right across the Australian economy.''

With the exit of GE Money Motor Solutions and GMAC, two of the country's main vehicle financiers, who controlled nearly 40 per cent of the nation's car dealerships, many dealers had to shut shop because of the unavailability of different source of funding.

The government had to act fast as the Motor Trades Association of Australia had warned that hundreds of dealers would be forced to shut shop if the finance crisis is not resolved at the earliest.

As many as 500 dealers all over the country were on the verge of near bankruptcy, with one of the biggest dealer of Holden and Subaru cars also being affected and one big dealer from Victoria has already filed for bankruptcy because of the credit crunch.

With new motor vehicle sales showing a decline of 22 per cent in November, the Rudd government was worried that by dealers shutting shop, it would also affect the sales of new cars thereby affecting car manufacturers and importers also.

The scheme would start from January and would be a temporary one until dealers are able to find new alternative source of finance.

The move comes as three CEO's of GM, Ford and Chrysler went back empty handed after being scolded, derided and packed off like school boys from the Congressional hearings yesterday by the Senators, in their bid to get a $34 billion bailout for the auto industry.