Auto industry leaders are urging the federal government to help speed along the sector’s recovery in its upcoming budget.
But they acknowledge that other sectors, such as including aviation, tourism and hospitality, have been hit harder by the COVID-19 pandemic and are therefore likely higher priorities for Ottawa as it looks to boost the Canadian economy.
“I think they have to be thoughtful about how they actually spend their resources, and we’re cognizant of that,” said David Adams, CEO of the Global Automakers of Canada. “We’re hopeful for some recognition for the sector, but we recognize that there are lots of other sectors that have their own hopes and expectations on initiatives that would address the challenges that they’re facing as well.”
Deputy Prime Minister Chrystia Freeland recently said that the federal government would deliver a budget on April 19, its first in more than two years. Freeland is expected to outline how Prime Minister Justin Trudeau’s Liberals plan to stimulate the economy in the coming years.
The budget comes at a critical time for the auto industry, which saw sales plummet 20 per cent in 2020 from a year earlier, and is now facing a microchip shortage that threatens to hamper sales moving forward. It also comes as the industry invests billions into electrification and looks to meet federal and provincial emissions targets.
Still, despite the industry’s challenges, other sectors have been harder hit by the pandemic’s fallout. Aviation, for example, is struggling, with thousands of workers remaining on layoff as travel restrictions limit the number of flights at Canadian airports.
But, Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association, said auto manufacturing, which directly employs more than 129,000 people, can lead the way in the country’s economic recovery. He said the industry’s electrification push also aligns with the government’s goal of building a greener economy.
“We’ve got an industry that’s going through a major technological transformation, and it’s making investments right here in Canada. So, let’s make sure that succeeds,” he said. “That’s going to have huge benefits for the Canadian economy, not just coming out of COVID but for years and years to come.”
Adams and Kingston said automakers are hoping for clarity on the federal government’s long-term plans for its EV rebate program. The industry groups want to see a long-term funding commitment for it, as well as an increase in the number of eligible vehicles.
Currently, battery-electric, hydrogen fuel cell and plug-in hybrid vehicles are eligible for up to $5,000 in incentives. Vehicles with six seats or fewer that have a base-model MSRP of less than $45,000 are eligible for the rebates, as are those with seven or more seats that have a base-model price of less than $55,000.
“We’re just waiting on some consistent funding on the incentive program,” Adams said.
Industry groups continue to pursue a federal scrappage program, which would incentivize drivers to turn in older vehicles and buy a new one. Kingston said the environmental impact of getting older, less fuel-efficient vehicles off the roadways would line up well with the government’s climate goals.
“I think there’s a pretty compelling case for the auto industry, not just because of its economic importance but because of the environmental impacts of such a program,” he said.