Canadian Loophole Increases Truck Sales
As Robbie Burns might have put it, "The best-laid plans o' mice an' politicians gang aft a-gley." A study conducted by DesRosiers Automotive Consultants and reported in Financial Post reveals that Canada's eco-Auto program has backfired. The legislation was designed to lure Canadians out of their SUVs into hybrids and other more fuel efficient vehicles. Instead of increasing sales of the fuel sippers, buyers are turning to large pickups. The program places an excise tax of up to $4k on SUVs and other gas guzzlers like sports cars. However, because a pickup is a "need" for work rather than a "transportation choice," they're exempt. Sales of small pickups are up 18 percent so far this year, while large truck sales have increased 14 percent. It's only a matter of time– and not much of it– before the loophole cinches shut.
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Dean, It DOES affect current existing owners though. Sure, they may not vote out the pols this way, but it changes their behaviour. I agree with your post, but there is another side to the story which you will likely agree with as well. In many places, they so heavily tax new vehicles that people are highly incentivised to keep driving their older car rather than buying a new ULEV. The fact that a new Suburban is less polluting than an old Accord gets lost in the political process. The fact that it's cheaper to fix the old Accord than buy a new one due to the taxes isn't lost in the family budget process.
Landcrusher, That is a very valid point, one that the Canadian governemnt had been talking about when they introduced this carrot-and-stick incentive program. There was talk of incentives to get rid of cars older than 9 years old, but for some reason that talk stopped. It probably had something to do with (as stated above) how poorly the cash incentives were being returned to buyers who bought the fuel efficient cars. If I recall right, the $1000 or $2000 you were getting back came off of your taxes at tax time where the $4000 levie was paid at the time of purchase.
You better believe that pickup sales will start to plummet in Canada soon. Canadians are much more price sensitive than American buyers, and as gas prices continue to climb, consumers will be squeezed. A lot of people will avoid buying pickups. Fact is a lot of pickups are used for show, not for work. I see tons of pickups with huge chrome wheels everywhere I go.
It's been hinted at by previous posters, but part of the reason pickups sales are so healthy is also the robust housing market here in Canada, which has not seen the sort of jitters that the US has.