The head of Ford’s Canadian unit has called on the government to introduce a better vehicle scrappage scheme and said he was grateful for new support for component makers.
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David Mondragon told Reuters he supported the move by the government of Canada to increase the funding it would make available to insure money owed by automakers to parts suppliers.
“Our industry is very interdependent, as we all know, and we understand the fragility of some of the suppliers in Canada and in the US, so any support that can be offered to them is well supported … by Ford,” he said.
But he added he’d really like to see a new scrappage programme in Canada to replace the current acheme that gives consumers only C$300 (US$242) towards a new, more environmentally friendly vehicle when they trade in older models.
“I think that less than a dozen people have taken advantage of that C$300 offer to scrap their vehicle,” Mondragon told the news agency, pointing out that the average 10 year-old car in Canada is worth between C$3,000 and C$4,000.
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By GlobalDataMondragon said he believed a ‘cash for clunkers’ programme that offered C$3,500 towards an new vehicle would help the industry, and the economy, claw back some of the losses brought on by five straight months of vehicles sales declines.
Germany has been offering EUR2,500 for some time, with sales rising 21% in February and 40% in March, and has just boosted the funds available to the scheme. Other programmes elsewhere across Europe are having positive effects on new vehicle sales.
Chrysler Canada CEO Reid Bigland also told Reuters he would also like to see a more aggressive scrappage programme in the country.
“Done right, these programmes can provide a welcome economic stimulus, automotive sales stimulus, and help the environment at the same time by getting older vehicles off the road,” Bigland said.
“Remember that the average 1987 model year vehicle emits 37 times the (greenhouse gas) emissions as a current model year vehicle.”
According to the report, Ford’ Mondragon recommended the C$92 million budget in place for Canada’s current scrappage programme be put toward an expanded plan and also would like to see all taxes generated from new vehicles bought under the more robust programme put back into the plan to keep it running for six months, until the industry stabilised.
Mondragon told Reuters he met last week with legislators from the conservative government, as well as the opposition, on the idea an expanded scrappage plan and said the response was strong, but the concept still needed a champion on parliament hill.
Over 6m vehicles, more than 30% of the Canadian fleet, are over 10 years old and would qualify for the programme, the report added.
“My fear is that we would do it and quite frankly, it would be over-subscribed in a big way,” Mondragon told Reuters. “I think there’s that much interest from average consumers in Canada.”
