Canadian Car Dealers Ask Government to Support Auto Sector

Asked for aggressive action to ensure U.S. automakers survive

Car dealers in Canada are predicting a record sales year in 2008, but fear a credit crunch and U.S. auto manufacturers' woes could still force several shops to close, their association said on Nov.21.

Richard Gauthier, president of the Canadian Automobile Dealers Association, said that car salesmen expect to post their "second or third best sales year in history" this year due largely to pent up demand in the marketplace and huge manufacturers' discounts. But Canadian banks and the Big Three U.S. automakers' financing arms have recently curtailed credit to dealers to buy stock, he said. "Predictable and accessible credit is the oil in the auto industry's engine," Gauthier said.

He urged Ottawa to ask Canadian banks to ease recent lending restrictions to car dealerships, and also to take "aggressive" action to ensure the Big Three U.S .automakers' survival. If Ford, Chrysler or General Motors fail, he explained, consumers will stop buying their cars over concerns about warranties and the availability of replacement parts, forcing dealers of these brands out of business.

The Canadian Automobile Dealers Association represents 3,500 dealers which employ over 140,000 Canadians across the country. General Motors, Chrysler and Ford employ roughly 40,000 Canadians at its assembly plants in Ontario province, and are responsible for an estimated 300,000 direct and indirect jobs in Canada, including parts suppliers.

And the Big Three's failure, according to the head of the Canadian Auto Workers' union, would be a "devastating blow" to the Canadian economy. "I cannot emphasize enough that the current automotive manufacturing downturn will have a ripple effect in every community in this country," said Gauthier.

Earlier, Statistics Canada said car prices fell 9% in the 12 months to October, after a previous 9.3% drop in September.

Copyright Agence France-Presse, 2008

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