Tougher vehicle recall laws could be in place in Canada by the end of the year, but without a legislated formula that would force automakers to compensate dealers stuck with recalled cars on their lots.
The act will give the Canadian government broad, U.S.-like powers to order recalls and fine manufacturers that don't comply. It will also allow regulators to set strict timetables for repairs. But it won’t force automakers to compensate new-vehicle dealers for recalled vehicles they can’t sell.
The original plan would have required manufacturers to pay dealers one per cent a month of the value of vehicles they can't sell.
Transport Minister Marc Garneau quickly signalled his opposition to the plan, however, and on Tuesday told the House of Commons the provision is beyond the scope of safety legislation and could result in court challenges and enforcement issues.
"We believe that it is possible to address dealers' concerns while avoiding those unintended consequences," Garneau said without providing details.
However, the national dealership body says it is confident its members will somehow be protected even without the Senate amendment.
"We weren't going to live or die based on the specifics in the formula," Canadian Automobile Dealers Association chief economist Michael Hatch said Thursday.
Hatch said CADA president John White had a "productive" meeting with Transport Minister Marc Garneau in Ottawa Wednesday to discuss protection for dealers.
Because of a legislative logjam the Strengthening Motor Vehicles Safety Act was routed first to the Senate, which in February approved the bill with the addition of the compensation scheme after lobbying by the dealer group.
Hatch said CADA is prepared for further consultation with government and to testify at federal transport committee hearings that will take place before the bill gets final approval.
Submissions are also possible from the Canadian Vehicle Manufacturers’ Association and the Global Automakers of Canada, both of which opposed the Senate amendment designed to compensate dealers. The GAC argued that compensation for vehicles that cannot be sold is a contractual matter and inappropriate in a safety bill.
"If you stand back and look at this situation, the manufacturers and the dealers are in a symbiotic relationship as they deal with the consumer," GAC president David Adams said Thursday. “It's not really in the interest of any manufacturer to be short-sighted and problematic in their dealings with the dealer."
The act will give the Canadian government broad, U.S.-like powers to order recalls and fine manufacturers who don't comply. It will also allow regulators to set strict timetables for repairs.