Auto Purchase Subsidy

[Canadian Turbo]

As we are having troubles in the auto world I think it is time to talk about another option out there, instead of top down stimulus what about bottom up? Or the idea that the government would provide a rebate, or discount to people who go out and buy a new car, lets say around $3,500 for argument sake. Therefore if you went and bought a new car the government would give you a cheque back for $3,500, now would this make you go out and take a look at something new? The idea would be that instead of just handing a few manufacturers some money this would actually help generate some sales and get inventory moving and help put some money back into the system and help some people make some money and maybe keep their jobs.

Obviously this would be a temporary stimulus and would not solve long term issues however if it was only offered for a few months it may only cost the government a reasonable amount. If you gave 3,500 per car, last months sales was just over 80,000 vehicles so that would be in the area of 280 million, so over a few months that would be maybe a billion or so, which is that any worse than just handing over a few billion to one company?

Currently in Germany they are offering a program like this, with a credit for "scraping" an old car and buying new and it gave a great boost to the sales (mostly of small cars) in February.

So just looking for thoughts and opinions on such an idea....

[Aleks]

Re: Auto Purchase Subsidy

you really want that Cube hey......hahaha.....I think it would be a good plan, I'm sure it would push a few people to go out and purchase that car they want, but I think only those that are already looking.....It would take alot more than that to get me to purchase something I hadn't thought of purchasing already....make sense?

[RobG]

Re: Auto Purchase Subsidy

I think it's a better approach, the government would also gain some popularity. I would be encouraged to help aid in moving the static product sitting some some lots, but would the rebate be only available on specific manufacturers?

[Kor]

Re: Auto Purchase Subsidy

I'd rather pass on my taxpayer money being used to help people make poor decisions about what car to buy.

[Canadian Turbo]

Re: Auto Purchase Subsidy

Is it really poorer then it just being "lent" to a company that has not been profitable since who knows when?

Guess I am just hoping so I can better justify a new car

[j_spot]

Re: Auto Purchase Subsidy

the government had a program close to this, but it ended at the end of 2008. I dont know why they didnt extend it.

http://www.ecoaction.gc.ca/ecotransport/ecoauto-eng.cfm

[Canadian Turbo]

Re: Auto Purchase Subsidy

That was just the eco program that gave you money back if you bought a fuel efficient car. I believe it was brought in by the Liberals and Harper quietly got rid of it, I am not sure if they still have the Green Levy on cars that get poor mileage but I know my Dad had to pay 4,000 on his R8 purchase last year.

[MusicalGenius]

Re: Auto Purchase Subsidy

It's a good idea, and it's one (type of plan) that's been floating in my head as a wish for a while. Same thing goes for the bank in the States, rather than giving the money directly to the banks or institutions, give it to the people who will spend it back into the economy. In your scenario it's directly related to a certain purchase, akin to the computer upgrade program offered right now. Where if a business wants to purchase anything new in regards to computers and other associated products, they get 100% reimbursement.

Of course there would be loads of red tape but it's still a government funded initiative for businesses to invest money into the economy.

I'd opt for a plan such as this one Blair, so long as there were regulations so that people didn't go overboard. I mean if you're not careful then it could end up something like the sub-prime mortgages did. Where someone who can't normally afford something then thinks they're able to and goes for something out of what their budget/income would allow for.

[Canadian Turbo]

Re: Auto Purchase Subsidy

Well I think the way it would work is basically you have to buy a car and then get reimbursed from the government so you would have to meet all the normal qualifications to get the car, so if you cannot get a loan then you cannot get the subsidy. Perhaps there should be a value cap too as maybe people who can afford to buy a 100K car don't really need any assistance or encouragement to buy a new car.


And since you brought up the computer item, it is not that companies get reimbursed it is just they are allowed to depreciate computer assets at 100% instead of the current rate of 55% for computer hardware assets using the Capital Cost Allowance system, which should encourage some businesses to spend money in the next 2 years as it is a better write off than normal.

[MusicalGenius]

Re: Auto Purchase Subsidy

Good call and catch with the computer bit was being vague and generalizing.

I like the cap idea as well, granted if you capped it then where would you set the limit and would there be any leeway. As in if the cap was $50,000 and a cars value was $51,000 you'd get a big line of people bitching and complaining. Something I'd like to add to this idea would be the potential for a combined incentive. If they brought back the environmentally friendly incentive and combined it with this it would further entice people to purchase new vehicles that would be less harmful to the environment. Not just putting the two together, but a combined rate.