Ottawa, Ontario – Canada’s auto dealers and manufacturers have called on the federal government to introduce an aggressive scrappage program that would stimulate new vehicle sales by removing higher-emitting, less safe vehicles from the road. Similar programs have already been implemented in other countries, including Germany, France and the U.K.
“Canada would see immediate economic, environmental and safety benefits from a program that encourages drivers to replace older vehicles with new ones,” said Richard Gauthier, president and CEO of the Canadian Automobile Dealers Association. “Germany is a good example where, after implementing a meaningful and simple scrappage program worth $3,800 (CDN), new vehicle sales increased by 20 per cent in April and 40 per cent in May. Prior to the introduction of their program, sales had declined by 14 per cent in January.”
The industry’s proposal mirrors the successful German program. It includes a consumer incentive of $3,500 toward the purchase of any new light-duty vehicle, providing a used vehicle at least 10 years or older is traded in and scrapped. The program would operate for a specific duration, such as a year, or until the program funding is spent, and would be immediately implemented by enhancing the existing “Retire Your Ride” program.
Canadian new-vehicle sales have fallen by 20 per cent, or over 141,000 units in 2009, compared with 2008. This drop has affected sales revenues by more than $3.5 billion, and federal GST collection by at least $175 million. The groups anticipate that the program would drive an additional 100,000 new vehicle sales across Canada. Of the more than 19.5 million light-duty vehicles in the country, roughly 40 per cent are at least 10 years or older.