Along with Ford, Toyota has asked the Canadian government to provide incentives to consumers in order to increase new car sales. These proposals include a $2,700 US incentive to purchase a new vehicle in 2009 as well as credit and tax breaks.
Incentives have been proposed in the U.S. including incentives to purchase Hybrid vehicles and other 'buy American' proposals, but while the various auto manufacturers have been offering various incentives and rebates, it does not appear, as far as I can tell, that the U.S. government is offering anything close to what the auto manufacturers are asking of the Canadian government.
The argument put forward by Toyota Canada is that rather than focus on a bailout to the Big Three, the Canadian government would be better off stimulating the auto industry via incentives to consumers. This would positively impact the whole supply chain by stimulating demand. Of course, this way the bailout would help Toyota and not just the Big Three. Interestingly enough, Toyota has asked the Japanese government for a $2 billion US loan in order to help cover expected losses of $3.9 billion US in 2009. Additionally, Toyota has indicated that GM and Chrysler should be given a loan from the US as this will help all automanufacturers by ensuring suppliers stay in business.
It's hard to reconcile the two but perhaps the argument can be made that if GM Canada goes under it won't negatively impact Toyota or other Asian automanufacturers since suppliers in the U.S. are far more important. Additionally, by stimulating consumer demand, Toyota stands to gain in Canada whereas the potential loss of critical suppliers in the U.S. would have a devastating impact on Toyota and other Asian auto manufacturers.
Perhaps the U.S. should follow Canada's lead and offer incentives to U.S. consumers to trade in old vehicles for new ones. This would be in addition to any incentives offered by the automanufacturers themselves. Not only will this help stimulate sales, it will be better for the environment by getting old polluters off the road. Such proposals are likely being considered but I'm pretty sure they have not been implemented.
I think incentives to trade in old vehicles for new ones is a great idea, especially since this strategy appears to be working in Germany.
ReplyDeleteI agree.
ReplyDeleteNow Chrysler Canada is in trouble. They're threatening to close down canadian plants unless the receive 2.3 billion US from the Canadian government. Obviously,closing plants in Canada is an opportunity for Toyota and other auto manufacturers.