Comment of the day

Ford urges Canada to give incentives to car buyers


The problem facing the Big 3 is not a bottom line problem. It is a top line problem. Without sales, it doesn't matter how efficient or cost effective their operations, they will never be able to cover their costs.

I think the point that the Ford CEO was trying to make is that a scrapage program would be more effective than a "bailout" because for every $3500 of taxpayer money used, it could generate $20 000 (maybe more, maybe less) in revenue. Taxpayers might be more accepting as well since they would recieve a direct material benefit.

Does it make sense to put a scrapage incentive on a 1 year old car? If the majority of consumers with 10 year old vehicles trade up as Elroy suggests, used car prices also rise due to higher demand and lower supply (no leased vehicles feeding the used car market). With falling new car prices, eventually a point is reached where the average consumer decides the price difference is immaterial and they purchase new vehicle instead. Used car prices have already appreciated during this most recent economic downturn.

The CEO of Toyota recommended a similar plan to the same Commons committee today. Does this make the suggestion any more credible now?

A broader focus in my opinion doesn't target the industry in need? The bankrupsy of Nortel or the closing of a candy bar factory, although sad, won't cause the economic collapse of Ontario. You might depise the Big 3 and resent the CAW but the economic void left after their downfall might have long term implications on everyone's stardard of living. Be careful what you wish for.


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