Canadian car dealers plead for help

Richard Brennan

OTTAWA BUREAU

OTTAWA-Canadian auto dealers say even though they are looking at one of their best years for sales, the banks are increasingly refusing to lend them money to buy vehicles for their showrooms.

"We are seeing the financing that dealers receive dry up," Hugh Williams, director of public affairs for the Canadian Automobile Dealers Association, told a press conference today.

The CADA is calling on the federal government, which has put up billions of dollars to ease the banks' credit crunch, to ensure that financing is made available to the 3,500 auto dealers.

Williams said it is hard to understand why banks have suddenly changed their tune on lending money to the 3,500 dealers when the industry is on track to sell more than 1.6 million vehicles this years.

Williams said the "phone has been ringing off the hook" for several weeks now with calls from dealers complaining that bank financing is drying up.

"There is an anomaly in the Canadian marketplace that we're tracking to have one of the second or third best years in history on a retail basis ... (and yet) dealers are getting into trouble with respect to not being able to get ... financing," he said.

CADA president and CEO Richard Gauthier said the Canadian public and policy makers must understand that the auto industry is the engine of the entire country's economy.

He said automotive dealers employ about 140,000 people across the country and are represented in almost every community in Canada.

"Predictable and accessible credit is the oil in the auto industry's engine. Any effort by government to support the banking sector must be accompanied by a strong message to the banks that they must continue to support small, sound business," he said.

Gauthier said the dealers' credit crunch, which he emphasized has not hit Canadian consumers, is compounded by the fact the automotive manufacturers also can't tap into financing like they used to to help out the dealers.

He said Ottawa must understand that dealership are not company stores, but independent businesses. "Dealers do no take vehicles or parts on consignment from their manufacturers. Dealers assume the risk of financing inventory," he said.

Gauthier said noted that it's "very good time" to buy a car, adding: "Cars have not been this affordable in a generation."

More videos from Wheels.ca and our partners