TORONTO — The federal government has no plans to offer a more robust vehicle scrappage program in Canada, The Canadian Press has learned.
Environment Minister Jim Prentice spent the summer reviewing the current program, which offers $300 in cash or other small incentives to get older polluting vehicles off the road, and decided no changes were necessary, Prentice said.
The decision not to enhance the current system in Canada comes less than two weeks after the so-called “Cash for Clunkers” program was wound down in the United States.
The resounding success of the U.S. program, which offered consumers US$4,500 to trade in old vehicles for new, more fuel-efficient models, provided an undeniable boost to vehicle sales and forced the government to commit $2 billion above the $1 billion it had initially earmarked.
However, critics of the U.S. program and similar incentives in some European countries have said scrappage programs only serve to push vehicle sales forward and will result in even sharper declines down the road. It has also been criticized for boosting sales of Japanese and Korean vehicles while leaving most North American-produced models in the dust.
“There of course has been quite a controversy about whether these programs are resulting in any new vehicle sales or whether they’re simply accelerating vehicle sales people were going to make at some point in any event,” Prentice said.
It remains to be seen whether this will be the case in the U.S., where August vehicle sales increased by one per cent year over year, compared to months of steep declines experienced previously.
In Canada, total August vehicles sales fell 7.9 per cent in August compared to a year earlier.
However, Prentice said the program was never intended to boost the struggling auto industry, but was rather meant to get old, polluting vehicles off the road and help reduce tailpipe emissions.
“It was never intended as an economic stimulus measure. It was intended to have environmental objectives,” he said.