How to Save our Automobile Industry

The plan is simple. It’s paying Canadians to junk their old clunkers and using the money to buy modern new cars.

Better than giving our money directly to big car companies with no guarantee of saving the industry.

Just like us right now, back at Christmastime the Germans had a big problem with their automobile industry.

Sales had gone down the tubes. Nobody was buying. The dealerships lots were crammed with unsold new cars.

But instead of handing over taxpayer money to the car companies, the Germans did something smart.

They offered $3,500 to every owner of a car 10 years or older who sent it to the junkyard.

German citizens by the thousands happily trotted off with their $3,500 cash certificates to dealerships to see what they could get, fearing of course that prices would have risen by $3,500.

But no, when they got there, dealerships, shocked and despertate to see a real, live, walking and talking customer coming through the door, immediately knocked another $1,500 of their own off the price of a new car, rather than let the customer get away.

The parade of walk-ins became a riot. Suddenly a $20,000 car could be had for $15,000 or even less.

The market economy was working again.

Sales of new cars shot up 22 per cent in February. The German car industry turned around.

Sure some people didn’t have $15,000 lying around, so they borrowed, and that helped banks and lenders, and got that moving again.

The environmentalists loved plan. Every 10-year old car is 94% more pollutant that a car made today. Every extra smudge pot in the junk yard made them the happier. A side benefit, nobody had counted on.

News of the success of the German miracle spread. On Monday of this past week, Ford Canada President David Mondragon (whose company doesn’t want a government bail-out) proposed the plan to the federal politicians in Ottawa.

Give everybody who turns in an old clunker a $3,500 certificate to buy a new car. Let them choose where to buy it. Watch the ailing car dealerships scurry to top up the deal with their own additional incentives.

Mondragon said he figures there are about 100,000 old cars on Canadian roads today. He has no idea how many owners would take up the offer. After all, some people are emotionally attached to their old wrecks.

That doesn’t matter. Even new car sold will be one more car getting the auto industry back on its feet.

And what’s better? Giving car companies a $10 billion bail out with no guarantee they won’t be back for more tomorrow, or giving taxpayers $3.5 billion to buy themselves new cars and get the industry moving again using a market approach?

Right now the car industry is really hurting. The Americans have their banks in trouble; we have our car industry.

Hundreds of thousands of auto workers in Ontario and Quebec have hit the asphalt. New car sales are down 13% across Canada in the past two months, even with dealerships offering all sorts of good deals.

That’s a loss of 250,000 cars, a loss of $20 bilion in sales, and a loss of $3 bilion in lost government tax revenue. Can the picture be any clearer?

Time is running out. GM Canada and Chrysler Canada are talking about bankruptcy and thinking of heading south.

A day after Mondragon’s speech, the president of Toyota Canada announced he too was signing on to the plan. He added one condition. The new cars must be made in Canada to be eligibile, such as Ford, GM, Chrysler, Honda, and his own Toyota. No dummie that guy.

The other car makers? Too bad. If you want in, build a plant in Canada.

The plan seemed to catch the sleeping Harper government by surprise.

It will never work, warned Finance Minister James Flaherty, who made it clear he wasn’t interested. “People who are driving old cars don’t tend to buy new cars when they replace them.”

Might they think otherwise Jim, if they had an extra $5,000 to buy a new car?

And what guarantee does Flaherty have that doling out $10 billion to the car companies will sell one more car? Right now our auto industry needs to sell every new car it can.

Industry Minister Tony Clement says he’s already got a government environmental plan that pays $300 to every one who junks a car 12 years old or more.

The plan has failed. Nobody is taking him up on it because $300 isn’t enough. They can make more selling the heap in the want ads.

Everything leads us to believe the Harper people will stick instead to the old tried and failed practice of throwing huge amounts of cash at the car companies, rather than passing out the money to individual Canadians and letting them figure out for themselves the best deal in a new car.

Should it not be time that our government tried something less conservative – something that hasn’t failed?