Ottawa, Ontario – The Canadian Automobile Dealers Association (CADA) has renewed its call for the implementation of a robust vehicle scrappage program at the federal level.

CADA said that since November 2008, vehicle sales have been in steep decline in Canada, and all other measures taken in support of the auto industry to date mean nothing if the demand side of the issue is not addressed. The association indicated that a fleet renewal program that is more significant than the current $300 program would do much to stimulate sales in Canada.

“We congratulate the federal government in its recent efforts to stabilize Canada’s auto sector, but more must be done to address the issue of declining sales across Canada,” said CADA chairman Bill Taylor. “Without robust demand in the marketplace and showrooms full of potential buyers, we fear that the investments that have already been made may not have the desired effect of stabilizing the industry.”

Taylor congratulated the government on the announcement of the $12 billion Canadian Secured Credit Facility (CSCF) in the 2009 federal budget, and said the program must be designed and rolled out as quickly as possible. “Despite record-low interest rate reductions from the Bank of Canada, commercial banks have not been open for business for months for our dealers,” Taylor said. “This is not acceptable or sustainable. The CSCF should help ease tightening credit conditions facing Canada’s dealers and consumers, but the money needs to flow immediately. If this program were combined with a fleet renewal program worth $3,000 for the retirement of an old vehicle, the effect on sales would be immediate. Germany’s program, for example, worth 2,500 Euros, has increased sales in that country by some 300,000 units.”

Scrappage programs remove old vehicles from the road and replace them with new ones, refreshing the national vehicle fleet more quickly that an unregulated market’s rate of attrition would allow. CADA said that scrappage programs also offer numerous environmental benefits, since older cars pollute as much as 37 times more than a new car.

CADA has also urged the government to close regulatory loopholes that allow several thousand right-hand drive vehicles on Canada’s roads, despite the fact that they do not comply with the Canadian Motor Vehicle Safety Standards. The association said the vehicles pose a risk to Canadian citizens and undermine the pursuit of Canada’s safety and environmental goals.

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