McGuinty's plan has no juice to help car buyers

Ron Loveys

TADA PRESIDENT

Car buyers need help today, not a year from now.

Last week, Ontario Premier Dalton McGuinty announced a government rebate program for purchasers of plug-in and electric vehicles.

Starting on July 1, 2010, anybody who buys a plug-in or electric vehicle will be eligible for a government rebate worth between $4,000 and $10,000.

This program is meant to kick-start the fledgling electric-car industry in Ontario, to offset the surplus costs associated with buying a plug-in or electric vehicle and to help protect the environment.

In theory, rebate programs can work for our industry, but this rebate program seems premature, and it will probably have minimal impact on new-car sales.

There's no doubt that the electric revolution is underway. Within three years, dozens of industry-altering plug-ins and electric cars will be offered for sale across the country. That's where the car business is going.

But we're not there yet. The electric-car industry is still in its infancy; it accounts for less than 3 per cent of the new-car sales in Canada.

This rebate program begs more questions than it answers. For instance: Is the grid capacity and battery recharge infrastructure in Toronto and other urban centres equipped to handle potentially hundreds of thousands of plug-in vehicles all at once?

Are consumers going to be lining up to buy first-generation plug-ins and electric vehicles, given the shaky histories of first-generation technologies? The first generation of any technology usually contains bugs that have to be worked out.

Automakers aren't going to achieve a critical mass of acceptance for plug-ins and electric vehicles until the technologies are perfected and the costs come down. So why target such a small segment of the car-buying market with a rebate program?

Another problem with the government's strategy to boost electric car sales in Ontario: The federal and provincial governments don't appear to be working from the same playbook.

On one hand, the government is throwing up roadblocks for the Toronto-based Zenn Motor Company to sell electric automobiles in this province, while on the other hand, with this rebate program, it seems intent on fast-tracking the electric-car industry. Which is it?

The real problem with the rebate program is that it does nothing to address the needs of the vast majority of car buyers today.

The big issue on the minds of buyers is not technological wizardry of plug-ins and electric vehicles. Nor is it the environmental merits of small vehicles versus large.

Rather, consumers are talking about how difficult it is to get financed, and how much they'll have to pay for car insurance. These are the hot-button issues affecting most buyers.

Those with good credit ratings and good jobs are being denied car loans every day. Instead of coming up with a plan to address the urgency facing these buyers, the provincial government has decided to step forward with a program aimed at a tiny segment of the market a full year down the road.

If the government wants to provide incentives to kick-start our industry, then why not introduce a subsidy or rebate for all car buyers?

If government programs are designed properly, they can have a big impact. For instance, in Germany, auto sales rose by a whopping 40 per cent in June, thanks to a government-backed scrappage program. Similar scrappage programs in Italy and France have boosted sales in those countries by 12.4 per cent and 7 per cent, respectively.

In the meantime, however, car buyers across Ontario are facing huge difficulties in obtaining loans to buy and lease vehicles.

What is the provincial government going to do to help these motorists?

This column represents the views of TADA. Email: president@tada.ca or visit www.tada.ca.Ron Loveys, president of the Toronto Automobile Dealers Association, is a new-car dealer in the GTA.

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