The chief executive of Australia's biggest car dealership group says a squeeze by banks on credit availability to customers has been a large drag on an industry already hit hard by falling house prices and brittle consumer confidence.

John McConnell, the boss of Automotive Holdings Group, which is about to be swallowed by rival AP Eagers in a $2.3 billion buyout, said banks had been a lot tougher with customers and that was delaying many deals.