The head of Toyota Canada urged Ottawa to release its aid package to consumers faster to spark automobile sales.
With auto markets in freefall, Toyota Canada has warned that the billions of dollars federal lawmakers plan to use to boost domestic auto demand may not be enough.
The warning comes as the automaker echoed calls for higher cash incentives for those who trade their old cars for new ones, or a temporary sales tax holiday. Toyota has also begun offering credit protection for car buyers who have subsequently been laid off.
Speaking in front of a parliamentary committee in Ottawa, Stephen Beatty, managing director of Toyota Canada said a $12-billion credit facility legislators have earmarked in the federal budget to buy up car-loan backed securities off overburdened balance sheets could fall well short of restoring the confidence of auto-financers.
“While substantial, [the fund] may not be enough to cover even the needs of those financing arms operated by the various automakers — let alone other, independent sources of credit,” Mr. Beatty said. “The single most important request Toyota has of the Canadian government is to open access to credit — now.”
The auto executive wasn’t about to turn the amount down, though.
The multibillion-dollar fund, called the Canadian Secured Credit Facility, holds the potential to “kick-start” consumer confidence, but time is short considering the bulk of sales usually occur between March and June, Mr. Beatty told members of Parliament.
“We need to unlock these funds immediately or consider other, timely approaches to stimulate consumer spending.”
If the fund, being reviewed by the Senate alongside the rest of the budget bill, cannot be unrolled in short order, he suggested that Ottawa consider bringing in other temporary measures to light a fire under Canadian car buyers. The measures should include raising cash incentives for those who trade their old cars for new ones, or a temporary sales tax holiday.
Many of Mr. Beatty’s comments about the need for consumer aid, particularly the need for the $12-billion in financing aid and the desire for a more comprehensive “scrappage” program, were similar to those made by Ford Canada chief executive David Mondragon to the committee Monday night.
For its part, Toyota quietly launched a radical new incentive plan of its own -- for the next few months, if a buyer purchases a Corolla, Yaris, Matrix or RAV4 vehicle, Toyota Financial Services will offer, free of charge, $10,000 of credit protection if the customer is laid off.
While a similar promotion has grabbed headlines and sales for Hyundai Corp. in the United States, Toyota is the first big car company to offer a Canadian program aimed at countering the fear buyers feel from watching a wave of unemployment sweep North America.
Toyota has been offering the program to Canadian customers for more than a week, but has not formally announced or promoted the plan.
The move is an about-face for Mr. Beatty, who in an interview last month said job-loss guarantee plans like Hyundai’s portray the buyer as “afraid” and that if car companies really want to get customers buying they need to be “inspired.”
With one of the most fuel-efficient product lineups on North American roadways, the company also suggested Ottawa increase financial incentives for buyers who upgrade to more fuel-friendly vehicles.
Toyota is perhaps the most integrated automaker in Canada, selling more domestic-made vehicles in Canada than any of the so-called Big Three of General Motors Corp., Chrysler LLC or Ford Motor Co.
Mr. Beatty said it was “important to note” that “the debate [on financial relief] so far has been focused on manufacturing, which overlooks the fact that approximately 50% of employment in the Canadian auto industry is in sales, distribution and dealerships.
“Incentives to consumers will help to clear dealer lots and reopen the manufacturing pipeline, providing the financial resources everyone in the supply chain needs to ensure the economic health of the sector.”
Domestic recovery, however, means little if sales in the United States continue to free-fall, officials said on Tuesday.
“If Americans aren’t buying cars, Canadians buying cars really doesn’t make up the difference,” said Tony Clement, the Minister of Industry, in a speech in Toronto.
U.S. auto sales fell to the lowest level in 28 years in February — down 41% year-over-year.
“The problem for the Canadian auto-assembly sector ... is that 85% of what we produce is exported to the United States,” he said.
The sales slump has hit Detroit automakers particularly hard, forcing the re-negotiation of labour contracts as they fight for financial survival.
Mr. Clement’s remarks came as union members from the Canadian Auto Workers at General Motors Canada began voting on a new bargaining agreement yesterday that would freeze wages and pensions until 2012.
The tentative agreement will help GM slash costs in its bid to demonstrate to Canadian and U.S. lawmakers it can remain in business long-term, therefore qualifying for bridge loans.
Government officials in Canada have extended almost $10-billion in loans to GM and Chrysler. Yet the loans can be reneged if the companies cannot show viable plans by the end of the month.
Mr. Clement said on Tuesday the new labour pact was one “piece of the puzzle.
“We’re going to make a decision based on the totality [of the plans],” the minister said.
